"Prior years' KPMG surveys saw modest improvements in optimism for the future; however, the 2008 survey saw a change for the worse as global economic instability intensified during the second half of 2008," said Doug Dawdy, Partner in KPMG in Canada's Transaction Advisory Services practice. "The short-term impact of this instability on the global auto sector is declining revenues and profitability, which can result in increased insolvencies. As such, distressed M&A activity in the sector is inevitable."
Although the global economic crisis has had an adverse impact on all markets, emerging markets continue to be perceived as the growth markets of today, and the development of alternative and new fuel technologies for the future are considered to be the most relevant industry trends anticipated over the next 5 years.
"Although the cautious optimism of 2007 is gone and global automotive executives have significantly lowered their expectations for 2009, the long-term outlook appears to exhibit a deferred optimism largely based on the growth opportunities represented by alternative fuel sources, new technologies and potential in emerging markets, " said Dawdy. "The economies in these newer markets have also been hit by a rapid credit contraction and, as such, automotive executives have certainly scaled back on their growth prospects, but clearly their future outlook demonstrates a belief that the emerging markets can continue to be a source of revenue growth in the future."
Survey respondents also indicated that, even after discounting the China and India markets, emerging markets will still grow faster than any other sector. Excluding China and India, growth expectations are strongest for Central and Eastern Europe, as well as Central and South America, particularly in Brazil.
In response to KPMG's survey, which asked the executives to identify the chief opportunities for the auto industry now and for the next 3 years, 21 percent said alternative fuel cars, 19 percent said the exploration of new markets, 17 percent said fuel efficient cars and 16 percent said developing new technologies.
"The economic slowdown we are experiencing is also having an impact on the consumer. As such, respondents are expecting cost to be one of the most important factors in consumer purchasing decisions this year," said Dawdy. "Ninety six percent of the respondents are convinced that lower fuel consumption will be the most important criterion in the next 5 years. This is a consumer trend we have already witnessed in 2008, and clearly the industry is going to shift its focus to respond to it."
KPMG's 2009 Global Automotive Survey was conducted during late September and October 2008. The 200 executives interviewed represented vehicle manufacturers and suppliers in Canada, United States, England, France, Germany, Sweden, India, China, South Korea, Japan, Thailand, Brazil, Mexico, Spain, Poland, Slovakia, Russia, Czech Republic, Italy, Switzerland, South Africa and Australia. KPMG has released an annual survey of automotive executives expressing their views on the state of the industry since 1999. This is the 10th annual survey of its kind.
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