A new report from KPMG reveals that the global automotive industry stands at a pivotal moment, with only 15% of companies demonstrating the strategic capabilities needed to thrive in the next decade. The firm’s 25th Annual Global Automotive Executive Survey, based on responses from 775 senior executives worldwide, identifies a “Five Ts” framework that distinguishes industry leaders from their competitors.
Deep Industry Division on Future Direction
The survey exposes a striking contradiction in executive sentiment: while 69% of respondents anticipate traditional original equipment manufacturers (OEMs) will regain strength, nearly the same percentage (68%) expect new market entrants to emerge as dominant players. This near-even split underscores profound uncertainty about who will shape the industry’s future.
“The industry is probably in the most volatile situation it’s ever been in—geopolitical shifts, technology leaps, and growing political influence,” said Thomas Schäfer, CEO of the Volkswagen brand, in an interview for the report.
Technology Investment Outpaces Preparedness
Despite heavy investment, the automotive sector faces a critical readiness gap. While 86% of companies are investing heavily in artificial intelligence and emerging technologies, only 20% of executives who identify technological disruption as a top threat say they feel “very prepared” to address it.
This disconnect is particularly concerning given that 36% of executives expect their company’s business model, products, or operations to be completely transformed within the next three years. Among the top-performing companies identified in the study, this figure jumps to 71%.
Supply Chain Transformation Takes Center Stage
Sustainability and supply chain transformation emerged as the most disruptive factor facing the industry, ranking ahead of technological disruption. The research shows that 68% of companies are actively restructuring their supply chains through strategies such as near-shoring, friend-shoring, and local-for-local production.
Companies demonstrating high preparedness for supply chain disruption significantly outperform their peers, with 94% reporting they are ahead of profit targets compared to just 45% of less-prepared organizations.
Customer Experience Paradox Emerges
A concerning gap exists between industry confidence and customer focus. While nearly 60% of automotive executives believe they are ahead of customer satisfaction targets, only 16% identify customer satisfaction as critical to long-term profitability. In contrast, leading companies are five times more likely to prioritize customer satisfaction as essential to business success.
“The companies that succeed over the next decade will not be the biggest, the fastest or even the most technically advanced. They will be the ones that are most aligned with the realities of a radically transformed industry,” said Dr. Andreas Ries, Global Head of Automotive at KPMG International.
The Five Ts Framework for Success
KPMG’s analysis identified five strategic imperatives that distinguish industry leaders:
Spearhead Transformation: Leading companies focus on value over volume, with 71% expecting complete business model transformation compared to the industry average of 36%.
Master Technology: While maintaining strategic control over critical systems, top performers are twice as likely to say technological breakthroughs will drive business growth (42% versus 20%).
Earn Trust: Leading companies prioritize product quality and customer satisfaction at significantly higher rates, with 63% focusing on product and service quality compared to 15% of other companies.
Navigate Tensions: Successful organizations demonstrate superior supply chain resilience, with 81% actively restructuring their operations compared to 68% industry-wide.
Thrive Together: Strategic partnerships are crucial, with 77% of companies stating that alliances are important to business growth. This figure rises to 96% among companies highly prepared for supply chain transformation.
Regional Variations in Strategy
The survey reveals distinct regional approaches to transformation. Chinese OEMs lead in technology integration and rapid development cycles, often completing new vehicle development in under 25 months. European companies focus on balancing electrification investments with maintaining internal combustion engine capabilities, while American firms prioritize supply chain resilience and autonomous vehicle development.
Consolidation on the Horizon
Industry consolidation appears inevitable, with 69% of executives expecting fewer OEMs by 2030 and 65% anticipating supplier consolidation. This trend reflects both market saturation in mature regions and the need for greater efficiency in an increasingly complex technological landscape.
Looking Forward
The automotive industry faces simultaneous pressures from electrification, digitalization, geopolitical tensions, and changing consumer expectations. Success in this environment requires what KPMG terms “orchestrated transformation” across multiple domains rather than excellence in any single area.
As one survey respondent noted, the challenge is not just technological but cultural, requiring companies to balance the speed of tech-sector innovation with the safety and reliability standards that define automotive excellence. The companies that master this balance while building resilient, customer-focused operations are positioned to lead the industry’s next chapter.
The full implications of this transformation will likely become clearer as the industry navigates the remainder of 2025 and beyond, with early indicators suggesting that the gap between leaders and laggards will only continue to widen.