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Fuel efficiency tops agenda at automakers; gasoline engine downsizing the key

Ninety-two percent of industry executives polled in KPMG's annual Global Automotive Executive Survey this year rated fuel efficiency as the number one criteria when it came to consumer purchase decisions, followed by safety innovations (78%), ergonomics and comfort (77%) and environmental friendliness (71%). Use of alternative fuel technologies came in sixth (62%) after vehicle styling (64%).

When it comes to alternative drive trains as a means of improving fuel economy and environmental footprint, KPMG notes that excitement has dampened regarding electric mobility. In fact 85% of automotive executives believe downsizing of internal combustion engines (ICE) offers the best chance for fuel efficiency and lower emissions. Only 24% of automakers are considering major investments in plug-in hybrids, and a minority of 8% see battery technology as their biggest investment. Half of the respondents believe electric cars will not become a viable alternative for at  another six to 10 years.

Backing up their confidence in ICE, 31% of automakers and 24% of their suppliers are investing the most in downsizing of this drive mode, while 18% of OEMs and 11% of suppliers are focusing on hybrid fuel systems, and 10% of OEMs and 18% of suppliers are turning their efforts towards batteries (range extenders). At the low end of focus are pure batteries (6% of OEMs and 13% of suppliers) and fuel cells (6% of OEMs and 11% of suppliers).

EV challenges
Concerning electric vehicle prospects, 79% of executives surveyed believe that government subsidies are needed if EVs are to become affordable, and two-thirds believe that EVs will represent just 15% or less of new car sales by 2025. Nevertheless, this still constitutes a sizeable market, with potential sales of up to 5.7 million EVs in China, 2.5 million in India, 3.8 million in the US, and 2.1 million in Europe.

Looking further ahead to 2027, the US and Japan have been identified as the most promising markets for EVs, albeit expectations are somewhat low. 40% of respondents in the U.S., for example, believe the share of EV registration for light vehicles in that year will be 16-20%, compared with 46% in Japan. Indian executives have the lowest expectations, with 25% feeling the share in their market will be 6-10% in 2027.

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