While the global economic climate may still be fairly dire, a new report suggests that for the UK auto industry growth will be driven by new technology and investment into alternative fuel powertrains over the coming few years.
While rising oil prices might seem to pose a threat to auto makers, according to the latest industry analysis, new powertrains, which offer better fuel efficiency, will prove key to reducing the impact rising prices at the pump can have on demand for vehicles.
No surprise then that business analyst, KPMG’s new ‘2011 Global Automotive Executive Survey’ of over 200 global automakers, reports that investment in new powertrain technologies such as hybrid and battery electric, is a key priority for 93 per cent of auto executives. According to the report over seven in ten auto executives said they would enter into strategic alliances or joint ventures to fund the capital costs or to secure the necessary technology.
Sadly however, over half of the respondents to the study believe the auto industry will not be able to offer an electric vehicle that is affordable as traditional fuel vehicles for mainstream buyers until after 2015 without government subsidies.
Mike Steventon, Automotive Partner at KPMG in the UK, said: "One factor is common worldwide: the need to continue to develop the technology that will produce efficient, affordable electric vehicles.
“Even though the industry is still in recovery mode, the pace of technical leadership intensifies,” adding “With the rise of oil costs and fears over future supplies, it’s no real surprise that fuel-efficiency is considered the single biggest factor for consumers when buying a vehicle. The challenge is whether in this period of fiscal belt tightening, governments can afford to subsidise the introduction of electric vehicles,” he explained.
Around 80 per cent of those surveyed say that hybrid and electric vehicles will see the lion’s share of growth of any vehicle category over the next five years. Nonetheless, many respondents are expecting a continued support role from government, since they believe electric cars will not be affordable without subsidies anytime soon.
Over four in ten auto executives expect government subsidies to tail-off with only a quarter expecting it to increase but almost 40 per cent of respondents think that the most effective way of making electric vehicles affordable for mainstream buyers sooner is through government subsidies.
