Notable market growth in Brazil, Russia India, China (the Bric countries), as well as other emerging markets, is a predominant trend in this year’s KPMG Global Automotive Executive survey, which polled 200 auto executives from 31 countries.
In the survey, released in South Africa this week, an average of nearly 6 out of 10 respondents say they will increase their investments in the Bric countries, which are expected to account for nearly 50% of all global vehicle sales by 2018.

China is the first choice for investment, followed by India, Russia and Brazil, and then South Africa, in fifth place. Following South Africa as an investment destination is Indonesia, Turkey and Vietnam.

“South Africa has for the first time also been highlighted as an investment destination,” says KPMG Africa Automotive leader Gavin Maile.

Not only are Bric countries expected to see a surge in vehicle sales, but automakers in these countries are also setting their sights on export markets in the next three to five years.

“This situation is similar in South Africa, where there is an export focus as the number of vehicles manufactured cannot be absorbed within the local, or African, market,” says Maile.
In addition to exports, it is expected that Bric countries will build production hubs for their vehicles close to Western markets.

In the Americas, 39% of respondents expect Mexico to become a production hub for the European market, while 70% favour Eastern Europe.
“Given the opportunities of Eastern Europe as a hub, combined with strong local growth potential, it can be expected that this region will increase in importance as an automotive player in the near future”, says KPMG global automotive head Mathieu Meyer.
Europe Taking Strain
As the race to conquer the high-growth emerging markets picks up, sales and production declines remain a concern, especially in Western Europe, where a sizable proportion of respondents expect sales and production to decrease in Spain, Italy, France and the UK.

The US seems to have managed the turnaround as more than 40% of respondents expect that vehicle sales will either remain steady or increase.
A majority of respondents for the Bric countries, as well as Indonesia, Malaysia, Mexico and South Africa, predict an upward sales trend.
To counter dips in sales and output, automakers are looking at ways to manage capacity. Twenty-five per cent see industry consolidation, joint ventures or alliances as an appropriate solution. However, approaches differ widely among various countries and regions, with no common solution identified to date.
In terms of which automakers are expected to fare well in market share over the five-year period, just two come from the West – Volkswagen and BMW. Four Chinese manufacturers are among the top ten.

US top automaker Ford slid down the ranking from eighth in the KPMG 2012 global auto survey to fourteenth this year, just above General Motors.

And what drives sales among consumers?

Consumer interest in fuel efficiency for cost reasons is the primary factor in vehicle purchasing decisions, according to 92% of survey respondents. Environmental concerns such as reducing carbon dioxide emissions are still important, but slipped from second place in the KPMG 2012 global auto survey to fourth this year.
Twenty-nine per cent of car manufacturer and supplier executives say they will invest in downsizing and optimising internal combustion engine (ICE) technology.

Just over half of respondents say that ICE optimisation will offer the greatest potential for clean, efficient engines for the next six to ten years.

“There is an increasing realisation that the ICE has further scope for optimisation,” said Meyer. “This a quite a turnaround in direction and a sign that some of the newer technologies are taking longer than expected to emerge.”
Investment in plug-in hybrid technology will be key for 24% of car manufacturer and supplier respondents, while only 8% say they will invest in pure battery technologies.