Automotive industry leaders point to evolving market trends

Analysts see challenges and opportunities facing the automotive industry in the areas of connectivity, electrification, automation, and intelligent mobility, with electric vehicles gaining more attention from Chinese consumers.

Jin Jun, automotive industry leader at PwC China, said consumer preferences in the transportation industry are constantly evolving.

"While Chinese consumers remain highly enthusiastic and open-minded toward smart connectivity in the areas of intelligence and autonomous driving, the latter still faces challenges in terms of technological advancements and commercial applications."

In terms of powertrain preferences, the trend towards electrification is unstoppable. Chinese consumers, in particular, have shown a greater preference for pure electric vehicles compared with their German and American counterparts, Jin said.

Aiming to reflect the latest consumer attitudes within the automobile industry, PwC undertook a survey to gauge the changing mobility preferences of consumers. The survey involved 3,000 participants from Germany, the United States and China.

In the realm of electric cars, gasoline engines remain the most popular engine type in both the United States and Germany, followed by plug-in hybrid cars. However, Chinese consumers have shown a different preference, with pure electric cars being the most popular, surpassing both hybrid and traditional fuel engines, it found out.

It's worth noting that China's acceptance rate for battery electric vehicles (BEVs) is as high as over 90 percent. In contrast, Germans still hold reservations toward BEVs, with only 35 percent of them considering purchasing one, while Americans are more accepting of BEVs with a 50 percent consideration rate.

Value mining point

It gave implications for auto players that the rapid development of electric vehicles has brought about opportunities for value mining in their value chains, particularly in the areas of charging and batteries. And these two value chains intersect at two-way charging, which is an important value mining point in the charging and battery value chains.

Harald Wimmer, global automotive leader of PwC, said that the automotive industry is facing strategic challenges in the areas of connectivity, electrification, automation and smart mobility. To adapt to the constantly evolving consumer preferences, automotive industry players need to create differentiated experiences that cater to various customer needs.

Wimmer believed that in the future, establishing an ecosystem that goes beyond the core business will be the key to the success of car makers.

UBS, meanwhile, said that the changes in the domestic automobile market in 2020-2022 were more significant than in other global markets.

This is evident in the increase in electrification rates from 5 percent to over 30 percent, as well as the rise of Chinese-brand market shares from 37 percent to 50 percent, with the electric vehicle market nearing 90 percent, it said.

Paul Gong, executive director of UBS Investment Research and head of China auto research, spent a full day at the 20th Shanghai International Automobile Industry Exhibition, which is the first global top-tier auto show since the end of the pandemic, saying "we believe the enormous changes in the Chinese automotive market have taken many global automotive executives by surprise."

Although currently only accounting for 30 percent of the latest sales figures, Gong predicted that electric vehicles may make up as much as 70 percent of new car models hitting the market. Furthermore, they are garnering even greater attention from consumers.

"With the increase in market share, upgraded product structure, and enhanced brand value, it is clear that domestic brands have potential to outpace foreign brands in China."

At the auto show, Chinese companies unveiled a wider range of electric vehicles that garnered more attention than their Western counterparts. Several companies' management teams have reported a month-on-month recovery in sales in April, following weak retail sales in late February and early March, Gong said.

"We believe that this recovery in retail sales, coupled with the structural growth of Chinese companies in the global electric vehicle industry, is likely to become a positive catalyst for the industry."