Fuel Efficiency Is the No. 1 Priority for the World's Car Buyers


Fuel efficiency remains the top concern among new car buyers, and that priority is likely to boost demand for hybrid and electric vehicles during the next five years, according to a report released Thursday by accountancy KPMG.

The survey of some 200 senior auto-industry executives worldwide showed that even as most of them -- 80% -- predict demand for electric and hybrid vehicles rises during the next half decade, many also believe most new car buyers won't be able to afford electric vehicles without government subsidies.

About half of the executives polled were based in Europe, while the remaining half were split equally among Asia and North America.

Despite electric vehicles' lack of affordability, the executives polled said investment in their development is important -- more so than any other currently available alternative-fuel technology. Nearly 90% said they plan to invest in hybrid systems, battery electric power or hydrogen fuel-cell technologies during the next five years.

KPMG's survey, conducted late last year, also showed a trend towards more niche vehicles -- cars and trucks developed specifically for certain tasks or markets. Demand for so-called purpose-built vehicles is expected to grow mostly in Europe and North American, while emerging markets, including China, will remain focused on providing safe, cheap transportation.

Detroit's Big Three Likely to Gain Ground Worldwide

The world's automakers will also be looking for more ways to collaborate on developing and sharing new technology, the report found. Among the major auto companies, 68% are entering alliances or joint ventures with suppliers rather than seeking capital and going it alone in most markets of the world.

Alliances are a good way to get access to specialized technological know-how, in addition to sharing risk and cost," said Dieter Becker, KPMG's global head of automotive research. That's particularly true when it comes to hybrid and electric power-train technology, Becker said, adding that such joint ventures may blur the differences between suppliers and manufacturers.

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The survey, also showed a growing number of auto executives expect Ford Motor (F), General Motors (GM) and Chrysler Group to gain worldwide market share during the next five years. However, expectations for Volkswagen (VLKAY), Hyundai Motor and Chinese automakers are even greater.

The percentage of executives who expect Ford's slice of the global pie to increase by 2015 rose to 43% in the current survey, up from 29% a year ago. Similarly, 40% said they expect GM to gain market share worldwide, up from 13% last year, while 24% see Chrysler advancing, up from 7.5% in 2010, when the automaker's future remained uncertain.

"The restructuring efforts of the past several years have helped U.S. auto manufacturers emerge more efficient and more competitive," Gary Silberg, leader of KPMG's automotive industry group.

Despite the radical changes that have taken place in the domestic auto industry, two-thirds of executives said they believe the U.S. has too much production capacity, followed by Japan and Germany. Still, while many believe overcapacity exists, most believe it is lower than a year ago.

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