China is leading the development of new business models and innovations, including battery electric vehicles (BEVs) and car-sharing, finds a recent KPMG survey.

KPMG’s 19th Global Automotive Executive Survey featured insights from a survey of 900 executives in the automobile and technology industry (including 135 from China), and around 2,100 consumers globally (including 251 from China).

A large number of auto executives highlighted China as their top pick for launching new mobility services and data-driven business models. Around one-fifth of global executives identified China as the number one country to launch new products/cars and new mobility services, up from 16 percent and 15 percent in 2017, respectively. Meanwhile, 15 percent of respondents said China is the place to implement new data-driven business models, up from 13 percent last year. US and Germany are also key destinations for pilot launches.

Huu-Hoi Tran, Partner and Head of Automotive China, KPMG China, says: “Growing mobility needs, insufficient public transportation and a wider acceptance on shared economy are driving innovation in intelligent mobility, new energy vehicles (NEVs) and autonomous driving. This is further boosted by central as well as local government support, which creates an attractive market for OEMs, startups and tech players.”

In addition, the survey finds that original equipment manufacturers (OEMs) from China are closing in on their competition in innovative technologies. Two OEMs from China, for example, were among the top 10 picks for survey respondents, when asked which manufacturers would be leaders in electric mobility and autonomous driving technology by 2025. A favourable infrastructure and regulatory regime in China is highlighted as a key growth driver, according to the survey.

In terms of areas with the largest potential, the survey highlighted a big difference in perception between Chinese and global respondents.

Global executives indicated China is likely to become a market leader in product-driven innovations, such as BEVs (35 percent) and fuel cell electric vehicles (25 percent). Chinese executives, on the other hand, indicated China’s strength in service-driven and business model innovations such as car-sharing (39 percent).

Tran says: “Urbanisation, traffic congestion and the slow development of public transportation in some cities in China require innovative mobility solutions. Car-pooling, sharing and hailing services, for example, are already widely accepted and we expect to see even more innovation, given the pace of digitalisation in China.”

Globally, auto executives identified fuel cell electric mobility as a key manufacturing trend, replacing battery electric mobility from last year’s survey. In China, executives continue to highlight connectivity & digitalisation as a key priority, followed by the increased adoption of big data analytics to create value.

Tran concludes: “China will maintain its fast pace in NEV development, while internet+ vehicles and intelligent mobility will also be key priorities. We expect Chinese players to achieve significant breakthroughs in these areas this year.”

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