2016 Automotive Consumer Study - Deloitte US | Audit ...s ahead for fully autonomous driving Consumer opinions on advanced vehicle technology Perspectives from Deloitte's Global Automotive

What's ahead for fully autonomous drivingConsumer opinions on advancedvehicle technologyPerspectives from Deloitte's Global Automotive Consumer Study

What's ahead for fully autonomous driving | Consumer opinions on advanced vehicle technology

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Consumers are at the heart of the extended automotive value chain, which generates trillions of dollars for auto manufacturers, suppliers, dealers, financial institutions, oil companies and a host of other organizations.1

Many companies that are part of this value chain are undergoing massive change in response to new technologies and new models for mobility that are coming to market at an exponentially faster pace and fundamentally transforming the movement of people and goods unlike anything seen since the dawn of the 20th century.

Consumers will ultimately choose the winners and losers among the companies and brands vying to deliver convenient, low-cost and customized mobility solutions. Consumers have the power to fall in love with innovations that are more economical or make their lives easier or safer, and then propel the brands that create those innovations to globally iconic levels. They can become lifelong loyal customers, and they can just as easily turn their backs on products, services and companies they’ve trusted for decades. And that can happen faster and faster in this rapidly changing environment.

Deloitte's Global Automotive Consumer Study builds on automotive consumer research Deloitte’s Automotive practice has been conducting since 2009. Informed by a continual outreach to global consumers through focused modules that survey consumers multiple times a year, Deloitte's Global Automotive Consumer Study delves into topics like consumers' interest in vehicle technologies, mobility choices, willingness to pay and customer digital engagement. Our research platform also allows for the rapid fielding of modules to test themes and trends that may emerge at different points in time, while maintaining a core of longitudinal date for comparisons over time. The result is a constant stream of data that helps deliver insight into consumers’ mobility choices, and the factors that influence those decisions.

The following pages explore consumer interest in advanced vehicle technologies, including self-driving technology, advanced safety and powertrain systems, cockpit technologies and more. We highlight which technologies consumers’ desire most, how much they are willing to pay for those features, their trust (or lack thereof) in full self-driving technologies, and who they trust to bring those technologies to market. We focus on six countries – the United States, Germany, Japan, South Korea, China and India in this report, and compare and contrast consumer sentiment in these markets – as a proxy for consumers worldwide – while 17 countries and over 20,000 consumers participated in the overall study.

Our hope is that you find these latest insights exploring consumers’ technology preferences useful, and continue to look to Deloitte's Global Automotive Consumer Study, and our global Automotive practice for the latest perspectives on how consumers worldwide are approaching their mobility choices.

Joseph Vitale, Jr. Global Automotive Leader Deloitte Touche Tohmatsu Limited

Craig A. Giffi Vice Chairman US Automotive Leader Deloitte LLP

On the road with consumers worldwide


4

(Driver remains in complete control)

(Combines at least two functions)

20%

30%

40%

50%

60%

70%

80%

Basic automation Advanced automation Limited self-driving Full self-driving

US

Germany

Japan

South Korea

China India

Percentage of consumers who prefer different levels of vehicle automation

There is significant opportunity for automakers to capitalize on the success of individual self-driving features such as self-parking and lane control.

What’s ahead for autonomous vehicles?

Source: Deloitte Global Automotive Consumer Study

Today, there is a lack of consensus among consumers and their most preferred advanced vehicle technologies, and ...Interest in different levels of autonomous vehicle technology varies across global markets. Consumers in China and India appear most interested – perhaps due, in part, to the high number of accidents and road fatalities caused by human error.


5

(Driver remains in complete control)

(Combines at least two functions)

20%

30%

40%

50%

60%

70%

80%

Basic automation Advanced automation Limited self-driving Full self-driving

US

Germany

Japan

South Korea

China India Gen Y/Z consumers are generally more

interested in fully autonomous vehicles

... enthusiasm for fully autonomous vehicles has flattened and even declined in several markets Although interest in full self-driving capabilities has risen in both China and the US since 2014, the same cannot be said for other global markets, where interest has remained flat or declined, according to our survey.

China

India

Japan

Germany

57%Pre/Boomers Gen X Gen Y/Z

50%

33%

20%

60%

58% 62%

US 24% 36% 57%

35% 40%

SouthKorea 49% 47% 37%

28% 32%

64%

Pre/Boomers

Gen X

Gen Y/Z

Consumer interest in fully autonomous vehicles, by generation

Change in consumer preference for full self-driving vehicles since 2014

-16.5%

-7.1%

-2.8%

+0.6%

+3.0%

+4.2%

South Korea

India

Germany

Japan

US

China

Significant decrease Significant increaseFlat




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Percentage of consumers who feel full self-driving vehicles will not be safe

Many consumers remain skeptical about a self-driving car’s safety

Despite consumer interest today in fully autonomous vehicles, they have concerns with safety. And ...

SouthKorea

Japan US Germany India China

81% 79% 74% 72% 64% 62%

While preference today for full self-driving vehicles varies, consumers at present appear consistent in their concerns regarding the safety of fully autonomous vehicles.



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... consumer opinion appears to diverge on whom to trust to bring self-driving cars to marketIn several global markets, opinions diverge between auto and tech companies in terms of who people trust the most to make fully self-driving cars a reality of everyday life.

In some of the largest automotive markets, consumers appear to trust tech companies more than (or as much as) they trust automotive companies to bring fully autonomous technologies to market.

Types of companies consumers trust most to bring fully autonomous vehicles to market

76%

51%

47%

44%

34%

27%

16%

26%

27%

48%

29%

58%

8%

20%

20%

7%

36%

15%

3%

6%

1%

1%

Japan

Germany

US

SouthKorea

India

China

Traditional car manufacturer New autonomous companyExisting tech company Other



8

More experience and successful examples would help build consumer trustHaving an established track record of fully self-driving vehicles operating safely on public roads is an important factor that could encourage consumer support for autonomous vehicles.

Percentage of consumers who feel an established track record of fully autonomous cars being safely used would make them more likely to ride in one

China

81%

India

74%

South Korea

70%

US

68%

Japan

59%

Germany

47%



9

Percentage of consumers who feel they would be more likely to ride in a fully autonomous vehicle if it were offered by a brand they trust

China

79%

India

77%

South Korea

US Japan

46%

Germany

34%

54%54%



10

Viewed as most useful Viewed as somewhat useful Viewed as least useful

On the road to a fully autonomous future

Consumer preferences indicate that the road to self-driving must be paved with safetyAcross the six focus countries, four technologies delivering advanced, predictive safety capabilities were consistently ranked as the most preferred when compared to a variety of advanced technology features.

Also noteworthy is what is not useful. For example, features that provide customized entertainment, notification of places of interest and technologies that manage daily activities are universally viewed as least useful – an important finding for manufacturers considering investing resources to offer these features in future vehicles.


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Viewed as most useful Viewed as somewhat useful Viewed as least useful

Advanced technology features that consumer say are most and least useful


Technology feature Category US Germany Japan South Korea China India

Recognizes objects on road and avoids collision Safety 1 1 1 2 1 1

Informs driver of dangerous driving situations Safety 2 3 4 3 3 4

Blocks driver from dangerous driving situations Safety 3 2 2 1 2 2

Takes steps in medical emergency or accident Safety 4 4 3 4 4 3

Diagnoses and sends maintenance notifications Connectivity 5 14 12 5 6 5

Enables remote shutdown of stolen vehicle Cyber security 6 13 8 14 8 8

Helps enhance fuel efficiency Fuel efficiency 7 5 6 11 12 7

Enables vehicles-to-vehicle and road communication Connectivity 8 10 5 9 5 11

Prevents hacking into vehicle systems Cyber security 9 15 19 17 22 13

Prevents theft by restricting unauthorized access Cyber security 10 7 16 20 18 10

Enables use of advanced lightweight materials Fuel efficiency 11 11 14 12 7 12

Enables interactive vehicle operational information Convenience 12 16 18 19 20 17

Enables usage of alternative fuels Environment 13 6 9 6 11 6

Automates tasks for comfort and convenience Convenience 14 12 10 7 9 14

Lowers the impact on the environment Environment 15 8 15 13 16 9

Enables hands-free interior controls Convenience 16 23 26 30 29 24

Monitors the physical health of the driver Safety 17 9 13 16 13 15

Enables high-speed, long-distance, highway "auto-pi lot" mode Self-drive 18 17 11 8 15 19

Enables remote/automatic software updates of the vehicle Connectivity 19 25 24 21 31 22

Allows use of smartphone applications through the vehicle dashboard Connectivity 20 28 32 29 27 26

Enables full self-driving capabilities Self-drive 21 20 7 10 14 20

Coaches the driver to drive safely Cost efficiency 22 18 17 18 10 16

Makes available adjustable settings to enhance vehicle performance Performance 23 21 20 15 23 18

Assists in locating, reserving, and navigating to a parking space Service enabler 24 19 25 25 17 21

Enables the use of self-healing paint Miscellaneous 25 24 23 27 25 32

Provides passengers with customized entertainment while driving Convenience 26 32 30 28 30 28

Provides notifications when places of interest are near Service enabler 27 26 31 31 26 23

Automatically pays parking and toll fees Service enabler 28 27 22 26 21 30

Empowers customer to personalize vehicles Miscellaneous 29 30 28 22 28 27

Allows the driver to control automated home systems Service enabler 30 29 29 24 24 29

Enables low-speed urban “auto pilot” mode Self-drive 31 22 21 23 19 25

Helps manage daily activities Convenience 32 31 27 32 32 31


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Generally, consumers are willing to pay a little extra for access to advanced technology features, but ...Percentage of consumers who are NOT willing to pay more than $500 for various advanced vehicle technologies

Automakers in Japan are under growing pressure from regulators to standardize more advanced safety features, rather than leveraging them for extra profit.

90%

84% 86% 86% 68% 71% 63%

75% 65% 62% 63% 52% 48%

65% 63% 63% 57% 49% 40%

72% 75% 68% 59% 54% 56%

87% 87% 73% 72% 69% Cockpit/ convenience

Connectivity

Self-drive

Alternative powertrain

Safety

JapanGermany SouthKorea

US China India

Are people willing to pay for advanced technology?


2


13

US Germany JapanSouth KoreaChinaIndia

$700

$360

$1,590

$360

$1,780

$415

$1,440

$700

$1,370

$925

$1,140

$2,400

... the amount consumers are willing to pay has declined significantly since 2014Since 2014, there has been a considerable decline in stated willingness to pay. Even Japan, where consumers tend to pay for new technologies, posted a 48 percent drop in the average amount consumers are willing to pay for advanced automotive technologies.

Overall expected price which consumers are willing to pay for advanced automotive technologies (2014 and 2016)*

* The dollar value for each country represents the average of overall weighted prices across the five tecnology categories (safety, connectivity, cockpit/convenience, self-drive, and alternative powertrain). The non-USD currency has been converted into USD by using the average exchange rates in 2016.

2014 2016

Consumers expect advanced technology features that were once considered premium options to become standard features that do not increase the price of the vehicle.



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Honk for hybrids and alternative powertrainsGlobal demand for hybrid vehicles could rise significantly in the next three to five yearsConsumer interest in alternative powertrain technologies could signal an opportunity for automakers, particularly in Asian markets like China, Japan and South Korea where consumers are significantly more interested in an alternative powertrain for their next vehicle.

Consumer preference for various powertrain technologies in their next vehicle


76% 73% 72%58% 58%

47%

17%12% 19%

32% 36%43%

7%15% 9% 10% 6% 10%

US India Germany South Korea Japan China

Gas + Diesel Hybrid Other alternative


15

Pre/Boomers Gen X Gen Y/Z

55%

29%

26%

20%

51%

25%

30%

26%

53%

29%

26%

26%

China

47%

37%

39%

Japan

India

US

Germany

51%

44%

36%

South Korea

Percentage of consumers, by generation, who would prefer an alternative powertrain in their next vehicle



16

Plenty of room for mobility services to grow and disrupt traditional notions of car ownership ...Ride-hailing services are not heavily used yet in many markets (particularly in Japan, where the regulatory environment discourages use of mobility services). Use of these services in India and China far outpace other global markets. In fact, almost half of consumers in emerging markets like China and India use ride-hailing services at least once a week, eclipsing the US and South Korea, and well ahead of Germany.

Percentage of consumers who use ride-hailing services, by frequency

China has the largest share of total worldwide ride-on-demand downloads at 43 percent of the global total in 2016.


Do consumers prefer to ride or drive?

3

15%25%

55% 50%

73%87%

38%32%

22% 31%

20%

9%

47% 43%

23% 19%7% 4%

India China US South Korea Germany Japan

Never Rarely At least once a week


17

... but the adoption of ride-hailing services in urban and non-urban settings varies between countries

Percentage of consumers who use ride-hailing services, by frequency and area

Never Rarely At least once a week

South Korea

Urban Non-urban

20%

31%

49% 50%

32%

18%

United States

Urban Non-urban

43%10%

23%

67%36%

21%

China

Urban Non-urban

44%

32%

24% 31%

34%

35%

Urban Non-urban

Germany9%

24%

67% 79%

15%

6%

India

Urban Non-urban

47%

38%

15% 15%

39%

46%

Urban Non-urban

Japan6%

10%

84% 90%

7%

3%


Note: Ride-hailing (or ride-sharing as it’s better known in some global markets) is defined in this study as mobility services wherein consumers hire a car/driver via their mobile device.


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Percentage of consumers who use ride-hailing services at least once a week, by generation

Ride-on-demand, folded more broadly into shared mobility and transportation services, will disrupt car ownership, especially in India. 4

Gen Y/Z consumers are more inclined to use mobility services, and ...Perhaps unsurprisingly, younger Gen Y/Z consumers in most global markets are more likely to use ride-hailing services as compared to older consumers.


India

53%

41%

30%

51%

38%

20%

44%

17%

4%

20%

19%

20%

14%

7%

2%

7%

3%

2%

China

US

South Korea

Germany

JapanPre/Boomers

Gen X

Gen Y/Z


19

Germany

20%

35%

26%

Japan

34%

57%

South Korea

22%23%

28%

China

27%

37%

44%

India

46%

58%

66%

US

43%43%

64%

16%

Pre/BoomersGen XGen Y/Z

Percentage of consumers who use ride-hailing services that question whether they need to own a vehicle in the future, by generation

... those young consumers who regularly use ride-hailing are also more likely to question their need to own a vehicle than older consumers



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About the Global Automotive Consumer Study

India(1,750)

China (1,750)

Japan (1,750)

South Korea (1,750)

Brazil(1,250)

South Africa(1,250)

Canada(1,250), 1,000 Capturedin English, 250 in French

Italy(1,250)

France (1,750)

United Kingdom(1,250)

Germany(1,750)

Belgium (1,250),750 captured in Dutch,

500 in French

United States(1,750)

Mexico(1,250)

Thailand (500)

Indonesia (500)

Malaysia(500)

The Global Automotive Consumer Study surveyed over 22,000 consumers in 17 countries around the world.

All the data included in this report has been derived from the study unless otherwise noted.


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Note: Pre/Boomers: Born before 1965; Gen X: Born between 1965-1976; Gen Y/Z: Born after 1976 (sample excludes consumers under 16 years of age)

The findings in this report represent male and female consumers across multiple generations living in the United States, Germany, Japan, South Korea, China and India.

Respondents, by generation

Respondents, by gender

n=1,769

n=1,759

Male

Gen X

Female

Pre/Boomers

Gen Y/Z

n=1,752

n=1,751

n=1,752

n=1,754

South Korea

South Korea

41

48

53 46 48

474350

47 54 52

535750

36

63

34

61

17

222334

18 20 21

454441

18 14

China

China

Germany

Germany

US

US

India

India

Japan

Japan


23

Joseph Vitale, Jr. Global Automotive Leader Deloitte Touche Tohmatsu Limited [email protected]

Gina Pingitore, Ph.D. Managing Director C&IP Center for Industry Insights Deloitte Services LP [email protected]

Steve Schmith Automotive Marketing Leader Deloitte Services LP [email protected]

Craig A. Giffi Vice Chairman US Automotive Leader Deloitte LLP [email protected]

Ryan Robinson Research Lead C&IP Center for Industry Insights Deloitte Canada [email protected]

Bharath Gangula Automotive Research Lead Deloitte Services LP [email protected]

Authors

Endnotes1 2014 annual GDP listed at $17,420.7 billion. US Bureau of Economic Analysis, “Gross Domestic Product: Fourth quarter and annual 2014,”

released January 27, 2015, www.bea.gov/newsreleases/national/gdp/2015/pdf/gdp4q14_adv.pdf, accessed September 18, 2015.2 The Wall Street Journal, “Toyota Safety Features Linked to Self-Driving Strategy, Technology Chief Says,” October 19, 2016.3 Morgan Stanley Research, “Autos & Shared Mobility: Global Investment Implications of Auto 2.0,” April 19, 2016.4 Ibid.

Acknowledgments

We would like to thank the tremendous team that helped with the development of this research and report, including Michelle Drew Rodriguez, Manufacturing Insights Leader, C&IP Center for Industry Insights; Bee Animashaun, Global Automotive Sector Specialist, Deloitte Touche Tohmatsu Limited; Robert Libbey, Manager, Market Research; Srinivasa Reddy Tummalapalli, Assistant Manager; Sandeepan Mondal, Senior Analyst; Ankit Mittal, Analyst; and Jason Karew, US Automotive Sector Specialist, all with Deloitte Services LP.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

© 2017 Deloitte Development LLC.

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2016 Automotive Consumer Study - Deloitte US | Audit ...s ahead for fully autonomous driving Consumer opinions on advanced vehicle technology Perspectives from Deloitte's Global Automotive