Sentiments toward the automotive market shifted among dealers, manufacturers, and other industry insiders in accounting and professional services conglomerate KPMG’s latest Global Automotive Executive Survey.
While current perspectives on the automotive market are far from pessimistic, expectations among industry leaders appeared to have been reigned in from early 2023 in several areas. At the onset of last year, inventory was slowly recovering, new car prices were heavily inflated, and the U.S. seemed to be headed toward a recession. However, at the start of 2024, inventory has outpaced all but the most optimistic predictions, transaction prices have returned to pre-pandemic norms, and the economy appears to be on track to achieve a so-called “soft landing.”
On car prices, only a third of car manufacturing executives believed MSRPs would trend downward over the course of 2024. The remaining two-thirds actually anticipate a 5% to 10% increase in new vehicle price tags over the next 12 months, even as the automotive market’s performance in December seems to suggest vehicle costs are going down.
Nevertheless, manufacturing executives also feel less prepared entering into 2024 than they did in early 2023. Just over one-tenth of survey respondents felt well-prepared for the new automotive market, down from over one-fifth last year. KPMG postulates this is due to technological advancements, such as artificial intelligence, which opens new possibilities but also creates additional costs, such as training expenses.
One of the most important takeaways from this year’s survey was how fast automaker executives have learned to show caution toward the electric vehicle segment. This is not to say that all manufacturers are pessimistic. KPMG notes EV market share expectations for the end of the decade ranged from 20% to 80% among survey participants. However, even as the average forecasts rose 4% in the U.S. from early 2023, the number of rosy predictions, those that foresaw the automotive market transitioning rapidly toward electrification, were far fewer this year. Executives now expect the EV segment to take much longer to grow, although some hope remains that consumer demand will spike once key obstacles, such as charging infrastructure and driving range, are solved.
