BY James Williams
Automotive production in Western Europe will be less than 5 percent by 2030, according to KPMG’s ‘Global Automotive Executive Survey 2017’ – its annual state of play analysis of the industry.
Following the UK’s decision to leave the European Union (EU), 65 percent of automotive executives believe that the EU as it is today “will be history in 2025”. This scenario would not only jeopardise the free trade zone within the EU, but also “disruptively affect the automotive industry worldwide”.
Now in its 18th year, the study assesses the current state and future prospects of the worldwide automotive industry, gathering the opinions of almost 1000 executives from 42 different companies.
Respondents believe that the end of the EU would trigger an automotive production shortage in Western European countries by 2030 – in addition to the globalisation and development of China’s sales market – which would see car production fall from 13.1 million to 5.4 million within 13 years.
The survey states: “Not only will macroeconomic risks and geopolitical turmoil have a significant impact on the automotive sector in Western Europe, the emergence of China as the most important automotive sales market will also lead to dramatic dependencies for some auto manufacturers in the region”.
Furthermore, 76 percent of executives agree that China will dominate more than 40 percent of its global share of vehicle sales by 2030, and will continue to keep its “pole position as world leader for sales in the automotive industry”.
It is also estimated that China would need to sell a total of 43 million vehicles to reach its predicted figure. Over 56 percent of global executives believe that the country is a “high growth market for traditional and mass volume manufacturers”.
The survey notes that “China is absolutely seen by executives as a high growth market primarily for mass and volume manufacturers as well as for premium manufacturers. This leads to the conclusion that innovations will be developed for China but not necessarily by Chinese players”.
Overall, the effect of Brexit could prove to be more damaging to Western Europe than first thought. The threat of a depleted EU could see British automotive trade diminish.