Connectivity, digitization to influence auto industry till 2025: KPMG

Connectivity and digitisation are the most important trends which could influence the global automobile industry from 2016 to 2025, said KPMG Global Automotive Executive Survey (GAES) released on Monday.

Based on interviews of 800 top auto executives in 38 countries, GAES shed light on business model disruptions, connectivity and digitization, customer data, new products and players in the industry and how data, consumer analytics and informational engineering will play a vital role.

According to 82 percent of the respondents, the auto industry will experience major business model disruptions in the next five years.

"In order to meet their current needs, becoming a customer-oriented service provider is of utmost importance. One way traditional car makers can add value and offer customised client experiences is by leveraging the massive amount of data that both the car and its drivers produce," said KPMG's global head of automotive, Dieter Beck, in a statement.

Nearly 20 percent of the respondents highlighted that by 2025, original equipment manufacturers (OEM) could simply become contractor manufacturers to information and communications technology (ICT) companies.

On the evolving situation in India, GAES said that a majority of Indian respondents said the industry will witness disruption in the years ahead.

"Connectivity and digitisation are likely to impact all automotive companies in India. Volume and mass market manufacturers are also expected to be affected as they are prone to lose customer relationships in the future to new entrants (likely from the ICT sector) in this space," said KPMG India's automotive sector head Rajeev Singh.

However, GAES found the use of data and informational engineering to be at a nascent stage and a change in customer mindset in providing data.

"A majority of the customer respondents across all age groups said that monetary benefits for their data is the most attractive benefit, followed by customer incentive schemes, and individualised service and customer experience," added Becker.

Other important influencing factors include macroeconomic factors, oil price volatility and fluctuating raw material costs among others.