kpmg’s automotive breakfast 2019...—this graph shows the number of private and mixed-use cars...

KPMG’s Automotive Breakfast 2019

Luxembourg

—

2 April 2019

2© 2019 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

All rights reserved.

Document Classification: KPMG Confidential

Good morning and Welcome

Ugo PlataniaPartner, KPMG Luxembourg

Bruno MagalSenior Manager, KPMG Luxembourg

Julien BaudouinSenior Manager, KPMG Luxembourg

Joost OrtjensHead of International Business Development – Automotive, Automobility Cluster




Table of contentsThe Luxembourg automotive landscape1

KPMG’s Global Automotive Executive Survey 20192

Meet Kate, your artificially intelligent colleague3

The Luxembourg AutoMobility Cluster4

The Luxembourg automotive market

The Luxembourg automotive landscape




Source: Statec, Luxembourg portal for statistics; car categories: ‘private cars’ and “mixed-use cars” (M1)

The fleet evolutionThe Luxembourg automotive landscape

— This graph shows the number of

private and mixed-use cars (M1)

registered in Luxembourg on 1

January of each year.

— Growth has been stable over the

last decade. At this pace, the

total will reach 500,000 by 2026.

— Over the last two years, an

average of 33 new cars have hit

the roads every day.

1.16%

1.47%

-0.21%

390,736403,115

415,002

2.46%

0.84%

1.81%

2.53%

3.02%

2.12%

2.66%

2.23%

2.59%

3.17%

2.95%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total Growth

1.16%

1.47%

-0.21%




Source: European Automobile Manufacturers’ Association (ACEA)

The car fleet to habitant ratioThe Luxembourg automotive landscape

— No country in the EU has more

cars per inhabitants than

Luxembourg does.[1]

— Notably, the EU’s average ratio

has grown over the last two

years, while Luxembourg’s has

remained stable.

[1] San Marino, Monaco, Liechtenstein, and Iceland

were not surveyed.

739

612532

693 679

537578

476

593 572624

578 567 559

740 732 726 725 707 672 665620 611 610 605 590 587 585

0

100

200

300

400

500

600

700

800

Cars

pe

r 1

,00

0 r

esid

en

ts

The car fleet to resident ratio in 2016

2014 2016 EU Average 2014 EU Average 2016




New registrations’ market shares in 2018

New registrationsBrands 2018

Growth 2016–2018

1 Volkswagen 6 496 11.1%

2 BMW 4 955 -8.2%

3 Mercedes 4 778 4.2%

4 Renault 3 752 -20.7%

5 Audi 3 498 -18.7%

6 Peugeot 3 194 24.3%

7 Skoda 2 230 13.9%

8 Volvo 1 727 24.5%

9 Opel 1 811 -27.7%

10 Hyundai 1 787 -2.9%

11 Ford (D) 1 590 -30.9%

12 Fiat 1 616 11.4%

13 Citroën 1 913 20.8%

14 Seat 1 136 25.0%

15 Nissan 985 -17.6%

Other brands 11 343 17.7%

Total 52 811 4.3%

Volkswagen12.3%

BMW9.4%

Mercedes9.0%

Renault7.1%

Audi6.6%

Peugeot 6.0%Skoda4.2%

Volvo 3.3%

Opel 3.4%

Hyundai 3.4%

Ford (D) 3.0%

Fiat 3.1%

Citro…

Seat2.2%

Nissan1.9%

Other brands21.5%


— For the last two years,

registrations have increased at a

rate of 4.2%.

— 2018 was a record-setting year,

with 52,811 registrations.

— Toyota has fallen out of the top

15, while Seat has made its first

appearance.

— The top 5 spots remain

unchanged, though the numbers

have changed significantly since

2016.

– The gap between

Volkswagen and BMW is

1,541 registrations,

compared to 441 in 2016.

– The gap between Audi and

Peugeot is 300 registrations,

compared to 1,734 in 2016.

Source: Statec, Luxembourg portal for statistics; car categories: “private cars” and “mixed-use cars” (M1)




New registrations of the luxury fleet— More drivers are choosing luxury

cars, which represented 0.55%

of total registrations in 2018,

compared to 0.35% in 2016.

— In 2018, Porsche had a new

record 860 new registrations,

and may make the top 15 most

popular brands by 2021.

— 45% of luxury cars are

registered as company cars.



86

76

38

37

42

5

4

0

50

100

150

200

250

300

350

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Num

ber

of cars

Mc Laren

Rolls-Royce

Lamborghini

Aston Martin

Bentley

Ferrari

Tesla

— Porsche

860




Brand considerationsThe Luxembourg automotive landscape

— The overall brand rankings have

not changed in four years.

— German brands have kept their

market share, while French

brands have decreased in

popularity.


14.1%

10.4%

8.6%

8.1%

5.9%

5.3%

4.5%

3.9%3.6%

3.2%3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Evolution of the market shares for automotive brands

Volkswagen

BMW

Audi

Mercedes

Renault

Peugeot

Ford (D)

Citroën

Opel

Hyundai




Vehicles ageThe Luxembourg automotive landscape

Source: Statec, Luxembourg portal for statistics; car categories: “private cars” and “mixed-use cars” (M1). (b) ACEA pocket guide 2018-2019

— Luxembourg’s car fleet remains

younger than the EU average.

— However, it is nevertheless

aging, with fewer cars under two

years old and more over ten.

— Half (51%) of Luxembourg’s cars

are fewer than five years old,

down from 55% in 2014.

— The oldest car, a De Dion

Button, is 124 years old.

Average age of

vehicles in 2016

6.3 years

11 years

Vehicles age evolution in Luxembourg

23.1% 24.0% 23.8%

27.6% 26.4% 27.0%

28.6% 27.9% 26.6%

20.7% 21.8% 22.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Less 2 years 2 - 5 years 5 - 10 years More than 10 years




Car fleet per fuel typeThe Luxembourg automotive landscape

— Since 2015 and ‘Dieselgate’,

diesel has been far less popular.

— Perhaps counterintuitively, the

reduction of the diesel market

share (-5%) has not benefited

alternative fuel types (+0.8%).


34.67%36.69%

39.17%

64.21%61.81%

58.95%

1.09% 1.47% 1.87%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Evolution of vehicles per fuel type

Petrol Diesel Electric / Hybrid/Other Linear (Price Spread Diesel vs. Fuel based on 1 L.)




Source: Statec, Luxembourg portal for statistics; car categories: ‘private cars’ and ‘mixed used cars’

The electric and hybrid car fleetThe Luxembourg automotive landscape

— This car type’s market share of

1.51% translates to 6,266 cars

on the road.

— Since 2016, this type of car has

nearly doubled in popularity (led

mostly by hybrid cars (PHEV,

HEV)).

— Across the European Union,

5.1% of vehicles use alternative

fuels.


0.81%

1.00%

1.51%

4.30%

4.70%

5.10%

0

0.01

0.02

0.03

0.04

0.05

0.06

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Evolution of full electric (BEV) and hybrid cars (PHEV, HEV)

Electric Hybrid Total EU Average




23.8%

27.0%

26.6%

22.6%

Charging pointsThe Luxembourg automotive landscape

— In 2017, it was planned that 800

charging stations for electric

cars be installed by 2020.

— Due to delays in P+R readiness,

this project is now estimated to

finish in 2021.

— The number of charging points

has more than doubled since

2016, in line with the upward

trend in electric and hybrid car

registrations.

Source: Chargy

104

246

446

646

800

0

100000

200000

300000

400000

500000

600000

700000

800000

0

100

200

300

400

500

600

700

800

900

2017 2018 2019 2020 2021

Mile

s t

ravele

d

Charg

ing P

oin

ts

Number of charging points by Chargy

Charging points on duty Charging points planned

Miles travelled (20kWh/100km) Linear (Miles travelled (20kWh/100km))




Company cars— As of 1 January 2019, there are

86,481 company cars on the road in

Luxembourg (20.9% of all cars).

— Since 2017, this number of has

increased by 1,583 units, though its

market share has decreased by

1.1%.



20.9%79.1%

Weight of company cars in the Luxembourg car fleet

Company cars

Private cars

Environmental considerations




23.8%

27.0%

26.6%

22.6%

The evolution of C02 emissionsEnvironmental considerations

— CO2 emissions stabilized in

2015, when diesel started to

lose market share in favor of

gasoline.

— Luxembourg is not on pace

(looking at 2007–2017 data) to

meet the EU recommendation of

95g CO2/km in 2021: as of

2017, the country is predicted to

reach just 111g CO2/km.

— The EU recommendation of 88g

C02/km by 2030 currently looks

unattainable.


125

116

111

126

118

95

67

50

70

90

110

130

150

170

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

g C

O2

/km

EU recommendation 2021

EU recommendation 2030 (estimation)

Evolution of the average g C02/km in Luxembourg and neighboring countries




Calculation of the premium for 500,000 cars registered

Monitoring of CO2 emissions in EUEnvironmental considerations

— The premium grid has been

tightened in 2019 to encourage

manufacturers to meet the EU

recommendations.

— As of 2019, €95 will be charged

for each gram of CO2 exceeding

the emission target.

Source: European vehicle market statistics, 2018/2019

€24

€71

€119

€ 166

€1

€11

€31

€0

€20

€40

€60

€80

€100

€120

€140

€160

€180

0 €

50 €

100 €

150 €

200 €

250 €

300 €

350 €

0.5 1.5 2.5 3.5

Pre

miu

m a

mo

un

t, in

mill

ion

Exce

edan

ce c

ost

per

g C

O2

g CO2/km

EU legislation on CO2 emission

Cost per car since 2019 Cost per car Before 2019 Premium since 2019 Premium before 2019

Tax considerations




Annual vehicle tax— For cars registered after 1

January 2019 (M1), the annual

tax is based on fuel type and

CO2 emission level.

— The cost difference between

diesel and non-diesel, in annual

tax, is 33%.

— All else being equal, a diesel

engine emits an average of 10%

less CO2 than a gasoline

engine, but the tax nevertheless

favors non-diesel fuels.

Tax considerations

Source: https://www.acl.lu/Mobilite/Code-de-la-route-1/National/08-Taxe-sur-les-vehicules-routiers; Legilux: http://legilux.public.lu/eli/etat/leg/memorial/2006/244

30 31.5 36 40.5

54

69.3

86.4

105.3

126

148.5

172.8

198.9

226.8

3646.2

57.6

70.2

84

99

115.2

132.6

151.2

0

50

100

150

200

250

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180

Co

st p

er

ye

ar

in E

UR

CO2 per km Diesel Non-diesel Cost difference

https://www.acl.lu/Mobilite/Code-de-la-route-1/National/08-Taxe-sur-les-vehicules-routiers




Amended 2017 tax reform

Source: https://transports.public.lu/fr/contexte/initiatives/primes.html

Amended 2017 tax reform (applicable as from 1.1.2018)

Engine categories Level of CO2 emission Tax allowance

Cars and vans 100% electric €5 000

Cars and vans <50 g CO2/km €2 500

Tax considerations

— Luxembourg offers tax

allowances specifically for

hybrid company cars (on top

of allowances relating to fully

electric cars).

— The goal is to incentivize the

purchase of eco-friendly

automobiles.




Level of CO2 emissions Percentage of price of the vehicle purchased new (incl. VAT)

Gasoline (pure or hybrid)

or compressed natural gas

Diesel (pure or hybrid) Vehicle 100% electric or hydrogen

0 g/km 0.5

> 0–50 g/km 0.8 1.0

> 50–110 g/km 1.0 1.2

> 110–150 g/km 1.3 1.5

> 150 g/km 1.7 1.8

Benefit in kind – 2017 tax reformTax considerations





Impacts on taxes and salaryTax considerations


(a) Package of remuneration cash only

(b) Package of remuneration cash and non cash benefit

(c) 2019 tax brackets, tax credits and social security rates used

(d) (Net Salary + 700€) – 3019€

Without

vehicle

(a) (c)

With vehicle - 2019 (b)

Categories Diesel GasolineHybrid

GasolineElectric

Monthly gross salary 4 000 € 3 300 € 3 300 € 3 300 € 3 300 €

+ Benefit in kind 0 € 420 € 350 € 280 € 175 €

Social contributions 491 € 455 € 447 € 438 € 423 €

Taxes 530 € 441 € 421 € 402 € 372 €

Net salary 3 019 € 2 448 € 2 478 € 2 506 € 2 551 €

Gain on Taxes89€

(1 068€)

109€(1 308€)

128€(1 536€)

158€(1 896€)

Net Salary gain 129€

(1 548€)

159€

(1 908€)

187€(2 244€)

232€(2 784€)

Assumptions

Tax class 1

Car retail price EUR 35.000

Monthly leasing fee EUR 700

CO2 levels (gCO2/km)

Diesel 50 – 110

Gasoline 50 – 100

Hybrid gasoline 0 – 50

Electric 0

1.2% 1% 0.8% 0.5%

KPMG’s Remuneration Survey 2017




Frequency and popularity of leasing carsKPMG Remuneration Survey

Source: KPMG Remuneration Survey 2017

— For this 2017 edition, 78

financial companies from the

banking, insurance, and

investment funds sectors

participated in this survey.

— Company cars are still stars in

the fringe benefit world. The

extent to which this benefit is

offered depends greatly on

sector and the hierarchical level

of the employee concerned.

— Luxembourg’s tax reform* in

2017 prompted companies to

priorities operational leasing.

*Tax reform: The lump-sum valuation method for determining

the taxable benefit in kind from the use of a company takes the

car’s CO2 emission level into account, as well as its fuel type.

Kind of leasing

79%

6%

15%

K I N D O F L E AS I N G

Operational Financial Both

Are you provided with a company car?

27%

Staff

Middle

management

82%

Management

86%




Monthly car budget in 2017KPMG Remuneration Survey

Source: KPMG Remuneration Survey 2017

According to the 2017 survey, 66%

of respondents have a capped

company car budget. Monthly car

budget depends on employee’s

position.

Management level:

— GM: General Manager

— BU: Head of Business Unit

— DE: Department Manager

— TE: Team Manager/Expert

— AM: Assistant Manager

Is the monthly car budget given to

employees capped or uncapped?

Monthly car budget in €

34%

66%

Uncapped Capped

0

500

1000

1500

2000

2500

3000

3500

4000

4500

GM BU DE TE AM

Budget range

KPMG’s Global Automotive Executive Survey

THE RETAIL LANDSCAPE IS UNDERGOING A DRAMATIC TRANSFORMATION – 30–50% OF RETAIL

OUTLETS WILL BE REDUCED OR TRANSFORMED BY 2025.

CUSTOMER

VALUE

INDUSTRIAL POLICIES DRIVEN BY RAW MATERIAL AVAILABILITY DEFINES PRODUCT VALUE &

TECHNOLOGY AGENDA: EUROPE IS STILL ASLEEP AT THE WHEEL AND IS LETTING THE

INDUSTRY BE SYSTEMATICALLY DAMAGED.

PRODUCT

VALUE

LAST CALL TO SAY GOODBYE TO ONE SINGLE PLAYER MASTERING THE ENTIRE VALUE CHAIN –

FINALLY MORE AND MORE COMPANIES SAY HELLO TO CO-OMPETITION.

ECO-

SYSTEM

VALUE

THE INDUSTRY IS ABOUT TO FACE A RESTRUCTURING PHASE – PROFITABILITY WILL DECREASE

DUE TO HARDWARE/SOFTWARE COMPLEXITY, NEW BUSINESS MODEL DEVELOPMENT AND

REGIONAL SHIFT.

MEGA-

TRENDS

BEYOND

THE

OBVIOUS




Global Automotive Executive Survey 2019

MEGATRENDS BEYOND THE OBVIOUS

AUTOMOTIVE KEY TRENDS

MOBILITY & LOGISTICS

Seamless into the grid: Connectivity & digitalization is back as the #1 key trend

There is not one global answer – the world is a combination of islands

The perfect storm: the auto industry is about to run into a restructuring phase

60% of execs agree: we will no longer differentiate between transport of humans &

goods in future

Companies combining applied thinking (city, rural, countryside) with an ecosystem-

driven technology set-up (CASE) and infrastructure joint ventures (5G, electricity

grid,…) will be leaders in mobility


PRODUCT VALUE CUSTOMER VALUE ECOSYSTEM VALUE

Source: KPMG's Global Automotive Executive Survey 2019 | © KPMG Automotive Institute





PRODUCT VALUE

RETAIL OF THE FUTURE

Retail landscape transforms — nearly 50% of execs are highly confident that the

number of physical retail outlets will be reduced by 30–50%

82% of execs strongly agree that the only viable option for physical retail outlets will be

the transformation of becoming service factories, used car hubs or focus on ID

management


MEGATRENDS CUSTOMER VALUE ECOSYSTEM VALUE


The product continues to be the driving force behind retail strategy – 80% of execs

view the retail landscape mainly as product-driven

92% of execs agree that the aftermarket is most likely to become part of the OEM

business





PRODUCT VALUE

FUTURE OF COMBUSTION

ELECTRIC READINESS

Multiple drivetrain technologies will co-exist alongside each other – execs

globally believe in a fairly even split of BEVs (30%), Hybrids (25%), FCEVs

(23%) and ICEs (23%) by 2040

Fuel cells have the least investment priority among execs

For consumers, the most significant entry barriers into the electric world are price,

followed by charging and range




AUTONOMY READINESS

Separation instead of integration in islands of autonomy – human driven & autonomous vehicles

won’t mix, to which 71% of execs agree

Why not think in separate lanes for autonomous & electric vehicles and incorporate necessary

infrastructure for seamless charging and at the same time setting clear rules for behavior?

88% of execs agree to a product line by application (city, urban,…) than by class





PRODUCT VALUE

FUTURE OF COMBUSTION considering Belgium, Netherlands, France, Germany



— Consumers prefer hybrids and

ICEs over fully electric vehicles;

— Consumers have significant

doubts about the market maturity

of complete new alternative

technologies (BEVs, FCEVs);

— Hybrid vehicles is more preferred

by consumer between 41-50 years

old than between 18-24.

33%

of consumers in BE, NL, FR, DE

would go for hybrid electric vehicles.





PRODUCT VALUE

ELECTRIC READINESS considering Belgium, Netherlands, France, Germany



— For consumers in BE, NL, FR and

DE, the most significant entry

barriers into the electric world are

price, followed by range and the

uncertainty about future tech

developments;

— Consumers still focus on the

purchasing price of a car, but

neglect the TCO advantages e-

mobility offers due to the current

cheaper variable cost;

— Electric mobility is still far away

from being hassle-free and

seamless.

42%

of consumers think that the price of a

fully electric car is a critical factor in the

purchasing decision.





PRODUCT VALUE

FUTURE OF COMBUSTION considering Belgium, Netherlands, France, Germany



— ICE will still account for the

largest share of cars by 2030;

— FCEV, BEC and PHEV will

increase between 2020 and 2040,

whereas ICE will significantly

decrease;

— The future will be a mix of

different drivetrain technologies.

22%

Reduction of cars will be ICE between

2020 and 2040 according to

executives in BE, NL, FR, and DE.

v





PRODUCT VALUE

FUTURE OF COMBUSTION – Different corporate Diesel development strategies (Forecast 2020 – 2025) Focus on Europe and North America







PRODUCT VALUE

AUTONOMY READINESS considering Belgium, Netherlands, France, Germany



— Autonomous driving technology

is increasingly advancing,

premium cars are already

equipped with advanced driver

assistant systems;

— 15% of consumers in BE, NL, FR

and DE believe that fully self-

driving cars will never be

operational on the road;

— Fully autonomous vehicles will

require new infrastructure

concepts and a revised

regulatory environment.

67%

of executives in BE, NL, FR, DE

believe in an operational roll-out in

mature markets by 2030 the latest.




Meet Kate




Intelligent automation: A wide spectrum of technologiesMeet Kate

RULESBasic process

automation

LEARNEnhanced

automation

REASONCognitive

automation

like a human

ACTlike a human

THINK

The AutoMobility Cluster

Thank you for your attention

Q&A session

ContactsUgo PlataniaPartner Advisory, KPMG

Luxembourg

Tel: + 352 22 51 51 7358

[email protected]

Louis ThomasPartner Tax, KPMG Luxembourg

Tel: + 352 22 51 51 5527

[email protected]

Bruno MagalSenior Manager Advisory, KPMG

Luxembourg

Tel: + 352 22 51 51 7259

[email protected]

Julien BaudouinSenior Manager, KPMG

Tel: +352 22 51 51 7387

[email protected]


The information contained herein is of a general nature and is not intended to address the circumstances of any particular

individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such

information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on

such information without appropriate professional advice after a thorough examination of the particular situation.

© 2019 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of

independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights

reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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kpmg’s automotive breakfast 2019...—this graph shows the number of private and mixed-use cars...

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