Automotive Sector Warned of ‘Readiness Gap’ as AI and Geopolitics Redraw Industry Map

 

 

KPMG report reveals 86% of car executives are investing in AI, but only 20% are prepared for the transition as firms pivot to ‘friendshoring’ strategies.

 

 

The global automotive industry is at a critical "pivot point," with a new report warning that while investment in artificial intelligence (AI) is surging, the vast majority of firms are fundamentally unprepared for the transition.

 

According to a study by KPMG, 86% of automotive executives are currently pouring capital into AI, yet only 20% admit their organisations are truly ready to implement it.

 

This "readiness gap" comes at a time of unprecedented pressure from soaring costs, geopolitical volatility, and a cooling electric vehicle (EV) market.

 

 

 

 

The ‘Five T’s’ of Survival

The report identifies a small elite—just 15% of organisations—that is successfully navigating current global uncertainties. These leaders are utilising a strategy termed the "Five T’s": Transformation, Technology, Trust, Tensions (management), and Thriving Together.

 

Dr Andreas Ries, Global Head of Automotive at KPMG International, noted that the industry is being "completely reimagined" rather than merely evolving.

 

"Organisations that wish to remain competitive must undertake a major strategic overhaul to meet changing consumer expectations and geopolitical conflicts," Dr Ries said.
 

 

 

 

Software-Defined Future

By 2030, the landscape is expected to be dominated by Software-defined Vehicles (SDVs). The study highlights several key industry shifts:

 

Automation as Standard: 87% of executives believe autonomous driving will be a standard feature across all vehicle segments by 2030.

 

Cybersecurity Risks: In the EMEA region, 71% of leaders cited digital security as a top-tier concern, as cars become increasingly connected.

 

R&D Focus: Executives expect AI to deliver the greatest gains in Research & Development (48%) and supply chain efficiency (46%).
 

 

 

 

The Customer Disconnect

Perhaps most startling is the industry’s apparent "blind spot" regarding its buyers. Only 16% of executives currently view customer satisfaction as the primary driver of long-term profit.

 

This contrasts sharply with "frontrunner" organisations, 48% of whom prioritise a customer-centric model as their core strategy.

 

This disconnect is particularly visible in the EV sector, where growth has been hampered by high price points and inadequate charging infrastructure, making digital customer retention more difficult than anticipated.

 

 

 

 

 

Shift to ‘Friendshoring’

To mitigate the risks posed by global trade wars and fractured supply lines, 68% of firms have begun restructuring their operations.

 

Strategies such as "nearshoring" and "friendshoring"—the practice of manufacturing in allied nations—are replacing traditional global supply chains in a move toward "local-for-local" production.

 

 

 

 

The Thai Transition

For Thailand, the stakes are particularly high. As the premier automotive hub in Southeast Asia, the country is moving from a volume-based manufacturing base toward a high-value, tech-driven model.

 

Tossapol Mengveha, executive director of Advisory at KPMG Thailand, concluded that digital and green transitions are no longer luxury choices.

 

"Success in the next phase will be determined by strategic investment in digital transformation and local supply chains," he said. "Data governance and sustainability are now essential factors for competing on the global stage."