The automotive sector continues to face a challenging road amid evolving consumer expectations and economic headwinds, according to Deloitte. In a new report, the consultancy explored automotive consumer trends impacting the rapidly evolving global mobility ecosystem.

Its 2024 Global Automotive Consumer Study examines a variety of trends and issues shaping the global automotive sector including interest in EV (electric vehicle) adoption, vehicle purchase intent, brand loyalty, connectivity features, and vehicle subscriptions. The study is based on a survey of more than 27,000 consumers from 26 countries conducted between September and October 2023.

 

EV adoption faces challenges

Despite price cuts and government incentives, EV adoption faces a multitude of challenges including higher interest rates and sticker prices, range anxiety, charging time, and availability of charging infrastructure, which are causing EV demand to soften in some markets.

“The automotive industry continues to face several challenges regarding the future of EV adoption,” said Masa Hasegawa, Principal, of Global Automotive, and Strategy and Operations Practices at Deloitte Consulting LLP. “As a result of current sticker prices and apprehension around range anxiety, some consumers are steering back towards ICE platforms. This presents a challenge for a wide variety of ecosystem stakeholders, including government regulators, that are making generational investments to achieve ambitious EV adoption targets on an aggressive timeline.”

In the U.S., intent to purchase ICE (internal combustion engine) vehicles is up 9% from 2023 (to 67%), signaling significant near-term challenges in the shift toward electrification. Globally, consumer interest in ICE vehicles also rebounded in Germany, Japan, and the Republic of Korea (up 4% in each market). Consumer interest in battery electric vehicles (BEVs) is highest in China (33%), while Japanese consumers continue to show the highest preference towards hybrid and plug-in hybrid electric vehicles (HEVs/PHEVs) (41%).

Amid moderating inflation, the time required to charge has taken over as the top concern hindering EV adoption in the U.S. (50%), Japan (48%), the Republic of Korea (48%), Southeast Asia (45%), India (43%), and China (42%). Driving range is top of mind in Germany (55%).

Overall, affordability remains a critical issue for the U.S. automotive industry as most consumers surveyed still expect to pay less than $50,000 for their next vehicle, including 81% of those planning to purchase an ICE vehicle and 74% of those planning to purchase an EV.

Despite ongoing concerns about climate change and reducing emissions, a desire to lower fuel costs is the main reason consumers choose EVs in the U.S., Southeast Asia, the Republic of Korea, Japan, and Germany. Only in India is concern for the environment the top motivator for purchasing an EV; in China, it’s the driving experience.

Nearly half (46%) of non-BEV intenders surveyed in the U.S. would expect a fully charged BEV to have a driving range of at least 400 mi to consider it a viable option for their next vehicle.

A majority of consumers surveyed are concerned about the “cradle to grave” environmental impact of an EV battery, particularly in India (89%), Southeast Asia (77%), and the Republic of Korea (69%). Consumers worldwide believe that a variety of stakeholders involved in the EV battery value chain should work together to develop a successful solution for collecting, storing, and recycling batteries after their useful life including car manufacturers (Republic of Korea, 33%), dedicated battery recyclers (China, 27%), and battery manufacturers (Germany, 23%). In the U.S., consumers surveyed would also prefer the responsibility fall to a company dedicated to battery recycling (20%).

 

Connected vehicle features and subscriptions

Despite stated consumer interest in connected vehicle services, automakers face a familiar challenge in how to best extract revenue and profit from such added-cost features. However, economic conditions for consumers in several markets may open new opportunities for vehicle-as-service or similar programs, especially among the younger demographics surveyed.

“Against the backdrop of continued economic uncertainty, U.S. consumers are becoming increasingly concerned with their forward financial capacity and the share of wallet that meeting their mobility requirements represents,” said Karen Bowman, Vice Chair and U.S. Automotive Leader at Deloitte LLP. “As a result, interest in vehicle subscriptions and other mobility-as-a-service solutions that focus on creating an effective balance between affordability and convenience will be an interesting trend to observe, especially among younger, urban demographics.”

When gauging interest in the benefits of connected-vehicle services, maintenance, and vehicle health updates top the list for consumers in India (88%), Southeast Asia (82%), and the U.S. (60%). Services designed to improve road safety and avoid traffic congestion ranked highest among consumers in China (81%) and Germany (56%).

Consumer willingness to pay extra for connected vehicle services is higher in developing auto markets such as India (71%), China (60%), and Southeast Asia (55%) compared to consumers in the U.S. (25%), Japan (23%), and Germany (20%).

When managing connected vehicle data, consumers in most of the surveyed markets cite vehicle manufacturers as the most trustworthy over dealers, insurance companies, or cellular service providers. Consumers surveyed in the U.S. remain skeptical, with 31% indicating they do not trust anyone to manage their data.

Over one-quarter (28%) of U.S. respondents aged 18-34 show interest in a vehicle subscription service. Convenience (38%), cost control and transparency (30%), and availability of vehicles (28%) rank as the most important characteristics of a subscription service. Similarly, U.S. consumers across all age ranges express concerns about vehicle availability or wait time (47%), followed by the total cost of ownership (43%) and losing the sense of ownership (39%).

For consumers aged 18-34, the idea of giving up vehicle ownership in favor of a subscription model is especially appealing in highly urban areas such as India (67%) and China (48%).