According to the annual KPMG survey of the global automotive industry, expectations for growth within the SUV sector have now hit rock bottom. Just 39% of European executives (down from 50% last year) believe the sector will grow this year.
At the same time, 84% of them agreed oil prices have now permanently changed consumers’ purchasing habits.
Mike Steventon, head of automotive at KPMG in the UK, said: “These results highlight the extent to which the industry is having to adapt and realign itself to changing customer preferences.
“The impact of oil prices and the desire for greater fuel efficiency are clear for all to see.”
SUV’s have enjoyed year-on-year growth for a decade. But with sales falling, the days of the sector being a key driver of industry profitability, may be coming to an end, says KPMG.
“Hybrids and passenger cars – particularly low cost cars – are predicted to be the key growth areas for the next five years but the jury seems to still be out on whether these segments can deliver the profits the industry needs as they need constant attention and restyling, as opposed to the rather more static, truck-orientated sectors,” said Steventon.
The KPMG survey – for which 150 senior executives at vehicle manufacturers and suppliers were interviewed – does highlight a growing bullishness over the likely sales of hybrid cars. Two hundred thousand hybrid units were sold in 2006 and 34% of industry executives expect that to grow to as much as 300,000 in 2007.
A further 37% feel that 300,000-500,000 units is a more realistic expectation. Although the segment is starting from a very low base, the fact that it can grow so rapidly off the back of a limited number of models suggests that hybrids are now becoming an established mainstream sector in their own right.
Another sector which executives expect to see grow is the luxury car sector. Fifty-seven percent of European respondents expected luxury vehicles to grow their market share (up from 37% last year). The larger outlay required to purchase a luxury car would appear to negate concerns over fuel prices. Quality and the strength of the brand remain the key concerns for luxury car manufacturers and purchasers.
Other key findings in the KPMG survey include: