Top automotive executives expect software and China’s growth to reshape the auto industry in the coming years, potentially heightening U.S. concerns about the growing influence of Chinese automakers.
The details: A KPMG survey of 775 senior executives found that many expect software and digital technology to overtake traditional vehicle engineering as the industry's key competitive battleground by 2035, according to Reuters.
About 51% of executives surveyed expect software and digital technology to become the industry's primary source of competitive differentiation by 2035.
Roughly 92% of companies require at least 12 months to deploy a new AI, software, or digital capability across their organizations, with more than a third needing over two years.
More than half of respondents said continuous transformation has become the industry's operating model as companies navigate technological, geopolitical, and market disruptions.
Why it matters: The growing emphasis on software and digital technology could reshape how dealers compete for customers, while putting greater pressure on dealers to stay current on evolving technologies and communicate their value to buyers.
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Between the lines: The Asia-Pacific region leads in investment in AI and emerging technologies, with 57% of respondents reporting significant spending, compared with 52% in Europe and 48% in the U.S., per Reuters, as Chinese automakers expand their production capabilities and partnerships.
China has become central to many automakers’ evolving technology strategies, with companies ranging from General Motors to Toyota strengthening alliances with Chinese automakers.
Chery announced Wednesday that it is open to partnerships with U.S. automakers as it prepares to launch a brand in Canada early next year, Reuters reported.
China’s vehicle production has grown from 13.9 million in 2010 to more than 34.5 million vehicles in 2025, exceeding the combined output of the U.S., Japan, India, Germany and South Korea.
Bottom line: The automotive industry's shift toward software-driven competition, coupled with China's expanding manufacturing and technological influence, could put greater pressure on U.S. dealers to adapt to evolving vehicle technologies, consumer expectations, and the potential emergence of new market rivals.
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