Diesel technology ‘a thing of the past’, say UK automotive executives

Almost two thirds (62%) of UK automotive executives view diesel technology as a thing of the past, expecting the traditional powertrain technology to eventually vanish from the manufacturers’ portfolio, a survey suggests.

KPMG’s global automotive executive survey 2017 found 93% of UK automotive executives are planning to invest in the technology for battery electric vehicles over the next five years.

For the first time, battery electric vehicle technology has overtaken connectivity and digitalisation as the key trend in this year’s survey. The report revealed that 90% of UK automotive executives expect battery electric vehicles to dominate the automotive marketplace by 2025.

John Leech, UK head of automotive at KPMG, said: “Improvements in the cost and range of battery technology, coupled with growing concern over the emission of both carbon dioxide and nitrogen oxides from diesel engines, means that almost the whole automotive industry believes that the mass adoption of electric cars will happen during the next decade.”

The survey also found that 74% of UK automotive executives think that until 2025, more than half of car owners today will not want to own a vehicle, as self-driving technology and mobility as a service will take priority.

Leech said: “The UK is particularly suited to the early adoption of self-driving cars consumed as a service.

“Our greenbelt policy has created a relatively dense urban population which, when coupled with our high fuel prices, means that so-called ‘robot taxis’ offer a greater cost saving to the UK public, compared to European or North American markets. I believe robot taxis will revolutionise UK urban transportation in the second half of the next decade.”

With consumers shifting to using cars but not owning them, it is likely there will be fewer cars and therefore less money to be made from building vehicles in the future. This does not worry the majority of automotive executives: 85% of the respondents said they are convinced that their company will generate higher revenues by providing new digital services, than selling cars alone.

“Carmakers plan to sell a myriad of new digital services to vehicle users,” said Leech. “Today, carmakers already make substantial profits from the sale of consumer finance and annual vehicle insurance but this will grow in the future as innovative services such as remote vehicle monitoring and the integration of the car as a focal point in people’s ever more connected lifestyles are demanded by consumers.

“For the auto industry this implies that pure product profitability is outdated. Carmakers’ success will not be evaluated solely on the quantity of vehicles sold, but on the customer value over the whole lifecycle - especially when the digital ecosystem will be ready for the market.

“So OEMs need to rethink. More than three out of four executives believe that one connected car can generate higher revenues over the entire lifecycle than 10 non-connected cars.”