Almost half of automotive executives expect six of the world’s top 10 car manufacturers to be headquartered in China by 2035.
KPMG International’s latest Global Automotive Executive Survey found 48% of respondents expected that outcome, as software, batteries and digital services reshape competition.
The research, based on responses from 775 senior automotive executives worldwide, also found 51% expected software and digital technology to become their company’s main source of competitive differentiation by 2035.
The findings point to growing competitive pressure from Chinese manufacturers, alongside a shift in how automotive businesses expect to generate value from vehicles and associated services.
KPMG’s analysis links China’s growing influence to its capabilities in electrification, software and digital innovation.
Nicolas Nowicki, partner at KPMG France and head of automotive for the Europe, Middle East and Africa region, said: “The industry’s competitive map is being redrawn.
“Technology is changing what customers value, how companies differentiate and where future profit pools may emerge.
“China’s growing influence is one of the clearest signals of that shift, but success will depend on more than geography or scale. It will depend on the ability to deploy technology, build the right ecosystems and adapt as markets diverge.”
BYD, SAIC and Geely are already in the top 10 largest global manufacturers and so there are three manufacturers that could be displaced by the continued growth of other Chinese brands.
There are no specific figures within KPMG’s research on the other brands that are currently in the top 10 that are under pressure.
However, all brands in Europe are feeling the pressure and some have already called on governments to step in with trade tariffs on Chinese manufacturers.
The big pressures facing established brands
- Honda: Maintaining global scale as Chinese competitors grow, while strengthening its electric and software capabilities.
- Nissan: Rebuilding its product range and competitiveness while cutting costs and restructuring manufacturing.
- Ford: Defending its European passenger car business against Chinese rivals, alongside the stronger foundations of its commercial vehicle and US operations.
- Stellantis, including Vauxhall, Peugeot, Citroën and Fiat: Protecting sales and margins across overlapping mainstream brands as Chinese entrants compete on price, equipment and finance offers.
- Volkswagen Group: Defending its substantial Chinese business and accelerating software and EV development while managing a high cost base.
AI and software deployment remains a challenge
Despite the anticipated importance of technology, the survey identified a gap between investment and implementation.
Respondents reported that, on average, only 36% of AI and software initiatives had progressed beyond pilot projects and been adopted across their organisations.
Some 92% of companies needed at least 12 months to deploy a new AI, digital or software capability across the business, including more than a third requiring over two years.
Meanwhile, 49% described their software-defined products and over-the-air update capabilities as established or embedded. The figure was 42% for their overall software-defined vehicle strategy.
Investment also varied by region.
Significant investment in AI and emerging technologies was reported by 57% of respondents in Asia Pacific, compared with 52% in Europe and 48% in the Americas.
Customer trust and partnerships gain importance
Half of executives believed customer trust in digital and connected features would significantly influence which companies succeed over the next three years.
The share of value creation enabled by external partnerships and business networks was expected to increase from 30% currently to 44% within three years.
KPMG also found 52% of respondents agreed continuous transformation had become the industry norm, as businesses faced simultaneous pressures from technology, geopolitics, sustainability and changing customer expectations.
Dr Andreas Ries, global head of automotive at KPMG International, said: “The companies that move fastest to translate technology into customer value, while retaining the flexibility to respond across markets, will be best placed to lead the next phase of the industry.”
Ensure you always receive AM insights. Make us a preferred source of news on Google