GLOBAL KPMG REVIEW



According to the 11th automotive KPMG review, senior global automotive executives believe their industry will stabilise over the next five years with new investment and growth on the horizon.



However, the 200 senior executives representing vehicle manufacturers and suppliers worldwide said they continue to face certain economic headwinds, such as better but still constrained credit markets, and a lack of clarity with regard to the impact of new government regulations and stimulus programmes.



Accordingly, executives still viewed profitability as a significant issue for 2010, although just more than one-quarter of them expected vehicle manufacturer profits to increase, while almost 40% expected profits to be stable, with 33% expecting a decline.



While this year’s survey results were considerably more optimistic than last year, global executives were seen to remain cautious, continuing to keep a close eye on cash flow and cost control.



The respondents believed the winners would be those companies able to gain market share in an uncertain economic environment, while also leveraging global products and supply chains.



When asked to predict global market share winners over the next five years, the auto executives identified various new Chinese and Indian vehicle manufacturers, as well as existing global players Kia/Hyundai, Toyota, Honda and Volkswagen.



Ford climbed more than two-fold among the respondents in the 2010 survey, as 29% of executives expected its market share to increase this year, compared with 13% of the respondents last year.



Nearly three-quarters of KPMG survey respondents believed the number of alliances, mergers and acquisitions during the next five years would increase for vehicle manufacturers.



According to the survey, the specific global drivers of alliances, mergers and acquisitions would include too much debt and risk of bankruptcy (89% of respondents), access to new technologies and products (84%), potential for product synergies (83%), and access to new markets and customers (82%).



When asked about the most important issues affecting the global auto industry over the next 12 months, 85% of the respondents noted these to be developing new technologies, while just more than 84% pointed to developing new products, and another 80% said reducing costs.



In a related question, nine out of ten executives in the KPMG survey expected vehicle manufacturers to increase their investment over the next two years in new technologies and new models/products, while just fewer than 30% expected investment in new plants.



The KPMG survey respondents overwhelmingly agreed that the sale of hybrid fuel vehicles could help the auto industry get back on its feet.



Around 93% of respondents considered that sales of hybrids would increase the most over the next five years, followed by other alternative fuel vehicles (83%) and low cost cars (82%).