India among top 3 nations for global automotive investments in future: KPMG

India is among the top 3 most attractive destinations for future investments by automotive companies globally over the next five years, according to the 17th annual KPMG International Global Automotive Executive Survey (GAES), released Monday.

The survey based on views from around 800 global senior automotive executives (including 74 from India) ranks India third just after China (first) and Germany (second) as the preferred investment destination in the future.

This trend is being fuelled by India’s long-term market potential compared to the saturated and stagnant developed markets, narrowing industry margins creating pressure to reduce costs, the availability of skilled labour and improving the manufacturing environment in India.

Most major global car manufacturers have already planned additional capacity over the next couple of years in India, additionally component makers are also queuing up to establish research and development (R&D) centres in the country.

Factors like geographical proximity and perceived ease of operating were among the key influencers for respondents. For instance, almost a third of respondents from India and ASEAN regions rated India as the top destination for future investments, while most executives from South America rated Brazil as the No. 1 investment destination.

Investment in hybrid EV technology top priority

When it comes to sector specific investments, a majority of executives rate investment in power-train technologies for hybrid electric vehicles as the top priority in the next five years. The preference for hybrids is because they offer the benefits of electrification while still being appropriate for daily use.

Emphasizing the hybrid powertrain technologies as top investment priority, OEMs correspond well to consumers’ demand as they prefer hybrids over downsized ICE cars, likely because they cater to their needs for fuel efficiency and environmental friendliness, the report said.

Such focus on hybrids is far ahead of investments planned in other trends, such as battery-operated power-train and downsizing and optimization of internal combustion engines.

The executives also shared their views with the consulting firm on business model disruptions, connectivity and digitalisation, customer data, new products and the companies that are expected to survive in the constantly evolving automotive industry.