Momentum - KPMG's Auto Executive Survey 2009

Au to m ot i v e
Momentum: KPMG’s Global

Auto Executive Survey 2009
Industry concerns and expectations 2009-2013
kpm g i nt e r n a t i o n a l
KPMG Global Auto Executive Survey 2009
Contents –
Foreword 01
Survey methodology 02
Executive summary 04
Introduction 06
Oil prices and the KPMG Global Auto Executive Survey 07
1/ Auto-making in crisis 08
2/ New markets 22
3/ Technology and innovation 26
4/ Beyond crisis: challenges and opportunities 34
Conclusion 40
© 2008 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent
member firms of the KPMG network are affiliated.
Foreword 1
Foreword –
KPMG’s Global Auto Executive Survey
2009 coincided with the unfolding of an
unprecedented global economic crisis with
profound implications for the automotive
industry. The expectations recorded in
this survey reflect the depth of the crisis.
The cautious optimism evident among It is clear that the near future is going to be These are difficult times. Yet the KPMG
automotive decision-makers in 2007 is very tough for the automotive industry. Yet Global Auto Executive Survey shows that
gone. In the last quarter of 2008, companies the KPMG Survey also shows that long-term many companies are well aware of the
expect lower revenues, lower profits, concerns have not greatly changed. When challenges they face – and that many are
more bankruptcies, and a long cycle of asked about long-term trends, opportunities ready to build on their strengths as they
restructuring to come. They see more and challenges, companies continue to say face those challenges.
overcapacity emerging, and they believe they retain a long-term focus on innovation
investment will slow. and technology – particularly fuel technologies.
These lowered expectations are not confined The 2009 Survey suggests that innovation
to the mature automotive economies. In China and technology are likely to be at the heart
and India too – economies where growth is of industry efforts to recapture profitability in
still high – companies believe that production the coming months and years. For example,
and sales in the coming five years will be innovation – especially process innovation –
considerably lower than previously anticipated. is still seen by companies as the best way
to cut costs, rather than attacking direct
A sharp lowering of expectations is hardly overheads. Companies also believe that
surprising, given the extent of the current product innovation will be key to rebuilding
Uwe Achterholt
downturn and its impact on auto sales. What sales: it is notable that despite the fall in
Global Chair, Automotive
is surprising can be found in the detail. For energy costs during the last few months,
KPMG in Germany
example, the KPMG Survey shows that many expectations of sales of hybrid and other
automotive companies saw today’s crisis fuel-efficient vehicles continue to rise
coming: our historical comparisons show sharply compared with previous years.
that concerns over the global economy have
actually been rising for the last three years. And in the midst of pessimism, companies
also tell us about success. They say that
effective management will be the key to
success. They do not believe that it is
marketing or brand power that will pull them
out of recession, but the leveraging of
technology and meeting customer needs.
2 KPMG Global Auto Executive Survey 2009
Survey methodology –
The KPMG Global Auto Executive Survey
2009 is the tenth consecutive annual survey
of senior global auto executives carried out
by KPMG firms. This year the survey is more
extensive than in previous years: 200
respondents took part in the survey between
September 22 and October 31 2008, including
companies in the Americas, Asia Pacific,
Europe, Africa and the Middle East.
Survey methodology 3
Survey participants Source:

by job title Key

Managers and senior managers
Directors
Head of department
2% ‘C’ level executives
7%
Others
5% Vice President
President
6%
39%
17%
26%
Survey participants Source:

by company type Key

Vehicle manufacturers
Tier 1 supplier
14% Tier 2 supplier
41%
46%
Each year we ask executives to describe A small number of questions in the survey
themselves and their companies. Although were asked of companies in the U.S. but not
we look for a balanced mix of auto-makers of companies in other countries (these were
and suppliers, this year* no respondents questions relating to U.S. restructuring plans
chose to describe themselves as Tier 3 and progress). Where these results are cited
suppliers, although in previous years the in the survey, they are also flagged as ‘U.S.
survey did include responses from Tier 3 only’ results.
suppliers. In order to present results that are
comparable with previous years, we have
therefore grouped Tier 2 and Tier 3 suppliers
together. This year’s results from Tier 2
suppliers are therefore compared with the
previous two-year results from a
combination of Tier 2 and Tier 3 suppliers.
* Research took place in the last quarter of 2008.

Report published in early 2009.
Executive summary –
The mood has changed, and the
change has been very rapid
Market share expectations continue

Only 12 months ago, companies were
beginning to express a cautious optimism
1/Auto-making in crisis to shift in favor of emerging Asian and
after several years of challenge. Companies mature Japanese and Korean brands
The 2009 KPMG Auto Executive Survey
saw a world where growth was strong, • Chinese brands have moved from
makes it clear that the fundamental issues
and emerging market growth was second to first place in market share
concerning auto-makers have been
unprecedented. They saw margins and expectations, and Indian brands from
rebalanced, but the pattern of concern
profits beginning to be rebuilt, as a result fourth to second place.
remains unchanged.
of long-term restructuring and globalization
• Expectations for U.S. auto-makers have
of manufacturing.
Key issues declined further from a low level.
• Product quality remains the most cited issue.
Today, much of that optimism has been • Europe, Middle East and Africa (EMA)
deferred, if not abandoned. In established • The deterioration of the global economy companies are markedly more optimistic
markets, sales are falling, investments are has continued to rise as a concern. on market share expectation than
being reviewed, and some very large auto companies in the Americas or Asia
• Labor relations continue to fall in importance.
companies are close to insolvency. Pacific (ASPAC).
Margins and profitability are expected

In emerging markets, prospects are being Auto industry assessments of levels of
to fall
scaled back far and fast, as consumer overcapacity have shifted for the worse
• The great majority of companies surveyed
markets are hit by rapid credit contraction and • ASPAC companies are most likely to consider
think there will either be no growth in
a sudden slowdown in overall growth rates. that the industry has overcapacity, while
profits or that profits cannot be predicted
companies in the Americas are least likely.
over the coming five years – and almost a
But auto-making is a long-term business with
quarter think profits will actually decline.
a long-term horizon, and long-term concerns Cost saving is a rising concern
have not changed. Automotive companies • Captive finance company profits are • Innovation (in manufacturing processes and
remain concerned with innovation and the expected to decline sharply. materials technology) is more important
leveraging of technology into products that than direct overhead cost reductions.
• The rate of bankruptcies is expected
will enter the market long after the current
to increase (in 2007 the rate was • The importance of low-cost country
downturn has worked through.
expected to decline). sourcing is falling.
• Tier 1 suppliers are by far the most likely

More M&A and alliances are expected
to consider that bankruptcies will increase.
• High costs and declining economies
will drive restructuring.
• Vehicle makers and dealers expected

to restructure most.
• Investment will grow more slowly – but

innovation investment will be resilient.
Executive summary 5
2/ New markets 3/ Technology and 4/ Beyond crisis:

New-market growth expectations
innovation challenges and
outside China have been rebalanced
Technology and innovation remain
opportunities
• Central and South America
key industry trends
expectations are resilient. Opportunities to find growth remain
• Fuel efficiency improvements,
• Potential for growth seen in alternative
• Africa and the Middle East will alternative fuel technologies and
fuels, fuel efficiency and emerging
also grow. environmental pressures are considered
markets.
the three most influential trends.
Chinese growth seen as significantly • ASPAC companies are more focused on
• Cost concerns are greatest among suppliers.
lower environment-related opportunities.
• Vehicle sales to grow more slowly
Fuel efficiency and alternative propulsion • Only limited opportunities seen in relation
over five years.
will drive product innovation to cost-cutting strategies.
• More than half of companies see • Hybrid systems continue to be the most
overcapacity emerging in the near term. important product innovations. External challenges dominate
• Global economy and financing costs are
• Export expectations are sharply reduced. • Electric and battery technologies are
seen as the key challenges.
growing in importance.
• Vehicle manufacturers most likely
• Overall, there is increasing strategic
to see environmental pressure
focus on technology.
as a challenge.
• ASPAC companies are most
innovation-focused.
Consumer purchases to become

more cost-driven
• For the consumer fuel efficiency now
more important than product quality.
• Affordability is increasing in importance.
• Consumers to become more discriminating.
Introduction –
Seldom has a year made
such difference
Last year’s KPMG Global Auto Executive Meanwhile, the market share winners of
Survey reported on an industry that saw previous years are expected to continue to
itself emerging from a long round of cost advance while the losers will do even worse,
cutting and restructuring. It saw itself say companies. The strong will get stronger,
emerging into a world where overall growth and the weak weaker.
seemed assured, and where both sales and
profits would be higher for companies that Yet what is also striking is that amid
were, in most cases, leaner and fitter. immediate concerns over downturn and
volatility, the auto industry maintains a
In 2008, all that has changed. long-term focus on basic issues, and
The momentum of optimism has been especially on technology, fuel efficiency and
checked: companies are now confronted the environment. On a five-year horizon, say
with a world gone into reverse, where companies, these issues continue to
growth is highly uncertain and where prices dominate their thinking.
and financial conditions are highly volatile.
This change is visible in many areas. It is Times have grown much harder – but the
visible in lower expectations for revenues fundamental drivers of automotive success
and profitability, higher expectations of have not greatly changed.
bankruptcy, and more pessimism on the
speed at which the industry can adapt to
challenging conditions. More companies
expect overcapacity to emerge in key
regions, and that sales and production
growth will fall in emerging markets in
particular. Investment is expected
to grow at a slower pace.
Oil prices and the KPMG Global Auto Executive Survey 7
Oil prices and the KPMG Global Auto

Executive Survey –
This year’s Global Auto Executive
Survey took place against a background
of financial instability and great volatility
in oil prices.
The survey was conducted from the end of This was in stark contrast to the background they report revenues and profitability falling,
September 2008, and through the following of the previous four years of the survey, overcapacity rising, and bankruptcy more likely.
month. During that period, the spot price of when prices rose consistently – the spot Perhaps more surprisingly, they also say that
West Texas Intermediate (WTI) crude oil fell price of WTI rose from US$33.01 a barrel on they expect the importance of hybrid and
from US$96.29 a barrel (on September 29) January 1, 2004, to US$99.64 on January 1, fuel-efficient vehicles to grow very strongly.
to US$61.92 a barrel (on October 27). At the 2008, spiking at US$141.06 a barrel on We believe this reflects the fact that oil
same time an unprecedented global financial July 1, 2008. Growth was high in the prices remain historically high. At the time of
crisis unfolded, and governments around the Organisation for Economic Co-operation publication, the oil price was around US$50
world committed large sums to bailing out and Development (OECD) countries and a barrel – lower in inflation-adjusted terms
banks and stimulating their faltering economies. at unprecedented levels in the four BRIC* than any of the previous three years.
emerging economies. But this is markedly higher than the
inflation-adjusted average over the past
What does this background of instability and two decades, when from 1988 to 2007 oil
price fall mean for this year’s survey results – averaged US$33.36 a barrel in inflation-
given that expectations built up over the adjusted terms (2007 dollars).
previous four years were being challenged
(Price sources: U.S. Energy Information Administration;
by very rapid changes in external conditions? inflationdata.com)
It is clear from the results that most, if not all,
*Brazil, Russia, India and China
companies answered the survey questions
fully aware of the extent of the downturn:
1/ Auto-making in crisis
Global economy How important is each of the following

issues to the current state
concerns rising of the auto industry?
Source:
Key
2006
2007
2008
90%
Product quality 96%
94%
87%
The global economy 81%
76%
85%
Reducing costs 86%
89%
82%
New technologies 83%
81%
81%
New products 79%
73%
72%
Affordability No data for 2006 and 2007
69%
Environmental issues 52% 63%
52%
72%
Product/pricing incentives 65%
70%
49%
Labor relations 59%
52%
40 50 60 70 80 90 100
% rating important 4-5 on a scale of 1-5, where 1 means “Not at all important” and 5 means “Extremely important”
The mood of the world’s auto industry has Yet in retrospect, it is clear that some of the However, the number of companies citing
reversed: after the relative optimism of 2007 industry’s most fundamental concerns have labor relations as important has fallen in
with its expectations of a gradual return to been on a rising track for some time. When 2008: just under half of companies rate labor
stability and prosperity, expectations in 2008 companies were asked what were the most relations as important in 2008, compared
have changed for the worse. important issues for the industry overall – with 59 percent in 2007. The number of
the question that reveals the relative weight companies rating labor relations as
of long-term concerns – in 2008, the unimportant has also risen sharply from
deterioration of the global economy rose to 9 percent in 2007 to 16 percent in 2008.
second place (from fourth place in 2007). This is consistent with the deterioration of
While traditional long-term concerns hold confidence in other areas in 2008: while last
their place in the rankings of overall issues year companies remained concerned about
(product quality remains the most cited labor shortages – especially in the fastest
issue, for example) companies have been expanding markets – in 2008, they appear to
consistently forecasting a deterioration of expect their key labor markets to loosen.
overall global growth for the last four years,
with concerns about the global economy
rising year on year from 2005.
Profits forecast to be Do you think the number of

bankruptcies will increase, remain
lower and more volatile the same, or decrease in the next

few years?
Source:
Key
As financial costs rise and raw material 50
costs remain volatile, expectations that 46% 2006

profitability over the next five years will 2007
also remain volatile have risen very sharply. 2008
An increase of expectations of ‘volatile 40 38%
37%
or unpredictable’ profits from 37 percent
of respondents in 2007 to 46 percent of
respondents in 2008 represents a sharp
30
rise in uncertainty and one that is all the
more striking in that the automotive industry 26% 26%
24%
relies to an unusual degree on long-range 23%
forecasting. The minority of companies
20 19%
predicting rising profits in 2007 (26 percent)
16%
has also fallen sharply in 2008, to only 15% 15%
14%
15 percent. The great majority of companies
(85 percent) think there will be either no 10
growth in profits, or that profits cannot
be predicted over the coming five years.
And almost a quarter (24 percent) think
profits will actually decline. 0
The profitability of the The profitability of The profitability of The profitability
industry will be volatile the industry will the industry will of the industry will
and unpredictable generally rise basically be flat generally decline
Suppliers seen as Of the following types of automotive

companies, which do you expect to be
least profitable among the most profitable over the

next five years?
(Multiple responses allowed)
Source:
80
76%
Who will suffer most from the expected Key
decline in profitability? Companies believe 2007
that the pain will be distributed 2008
approximately according to a respective 60
54% 56%
position in the automotive value chain: Tier 3 50% 50% 49%
suppliers, where profitability is in any case 45%
lowest, will suffer most (only 36 percent of 40% 40%
respondents see Tier 3 companies as 40
36%
profitability leaders). This pattern is the same
27%
as 2007, with one very significant exception:
the sharp decline in expectations for captive
20
finance companies. Expectations of their
profitability have collapsed from 76 percent
of respondents to only 54 percent,
reflecting the liquidity squeeze and the
0
recent unprecedented rise in the cost of
Captive Vehicle Dealers Tier 1 suppliers Tier 2 suppliers Tier 3 suppliers*
wholesale funding. finance manufacturer
companies
*In previous years Tier 2 and 3 suppliers were combined in the questionnaire
Asian finance companies

may suffer
On a regional basis, companies are in broad

agreement about the impact of what is
expected to be a very difficult period for
profitability – with one exception. Asia is
significantly more pessimistic about the
profit prospects for finance companies.
As both consumers and financial institutions
in Asia tend to have less debt – and thus,
in principle, more borrowing capacity
than their counterparts in Europe and
the Americas – this pessimism is all the
more striking, reflecting both the global
nature of the contraction in demand and
the narrowing of financing options.
Of the following types of automotive

companies, which do you expect to be
among the most profitable over the
next five years?
Source:
Key
Americas
80 EMA
ASPAC
64% 100
60 90%
55% 56% 55% 56%
52% 87% 87%
49% 48%
47%
44% 45%
80
40% 41%
73%40% 37% 40%
40 70% 36%
68% 68% 33%
65%
62%
59%
60
20
40
0
Vehicle Financial Tier 1 suppliers Tier 2 suppliers Dealers Tier 3 suppliers
manufacturer services companies
20
0
Declining Non-competitive Excess debt Pension liability Healthcare
revenue base cost structure benefit cost
Bankruptcies to rise Do you think the number of

bankruptcies will increase, remain
the same, or decrease in the next
few years?
Source:
Key
Companies say they expect that the rate of
bankruptcies will increase. The deterioration 2006
80 77% 2007
in expectations is both very steep and
represents a reversal of trend. Only 12 2008
months ago, companies reported increasing
optimism with expectations of increased
60 56%
bankruptcies falling year on year from 56
percent to 36 percent. In 2008, 77 percent 48%
of companies expected the rate to increase
– one of the largest one-year deteriorations 40 36%
in expectation in the survey. The number
31%
of companies expecting no change has
fallen sharply, while the number expecting
20%
bankruptcies to fall has declined to a barely 20
significant 3 percent. 13%
10%
3%
0
Increase Remain the same Decrease
Revenue loss a Which of the following do you think

are among the most important drivers
key concern of bankruptcy?

Source:
Key
Loss of revenues as demand growth slows 100
2007
or goes into reverse has taken over as the 90%
2008
most important driver of bankruptcy – cited 87% 87%
by 90 percent of respondents, compared

to 70 percent the previous year. However, 80
73%
it is striking that all the potential drivers of 70%
68% 68%
bankruptcy are cited more often in 2008 than 65%
in 2007 (multiple answers could be given), 62%
59%
60
suggesting that companies believe that
legacy cost structures, indebtedness
and social costs, including pensions
and healthcare, are all exerting greater
40
negative pressure in the deteriorating
business environment.
20
0
Declining Non-competitive Excess debt Pension liability Healthcare
revenue base cost structure benefit cost
Tier 1 suppliers see

most bankruptcies
Tier 1 suppliers are markedly the most likely

to consider that bankruptcies will increase, Do you think the number of
with 87 percent forecasting an increase, bankruptcies will increase,
against 75 percent of vehicle manufacturers remain the same, or decrease
(vehicle manufacturers are the only class of in the next few years?
company where any respondents believe that
bankruptcies may decrease. This may reflect Source:
their expectation of direct government KPMG Global Auto Executive Survey 2009
support packages during 2009). No Tier 2 Key
suppliers forecast a decrease in bankruptcies,
Increase
but they are also most likely to see the
Remain the same
bankruptcy rate as flat. There were no Tier 3
Decrease
suppliers in the 2009 survey – see
methodology note on page 3.
8%
13%
17% 33%
67%
75%
87%
OEMs Tier 1 supplier Tier 2 supplier
Chinese and Indian brands

to gain market share
Market share expectations continue to shift On a regional basis, EMA companies are
in favor of emerging Asian and mature markedly more optimistic on market share
Japanese and Korean brands; U.S. brands expectation than companies in the Americas
are expected to perform worst. Year on year or ASPAC – and in particular, they are more
Chinese brands have moved from second to optimistic on the prospects for European
first place in market share expectations, and brands (more than half of EMA companies
Indian brands from fourth to second place, see market share increases for VW
relegating Toyota from top position to third. and BMW).
Expectations of Honda’s market share have
grown, as have expectations for many
European brands. Meanwhile, expectations
for General Motors, Ford and Chrysler have
declined further from an already low level,
with 63 percent of respondents expecting
Ford to lose market share, 66 percent for
General Motors and 69 percent for Chrysler.
For each of the following companies,
over the next five years, will their
market share increase, remain the
same, or decrease?
Source:
Key
Increase
Remain the same
Decrease
100
7% 6% 11% 12% 9% 13% 14% 16% 28% 30% 17% 35% 32% 30% 66% 63% 69%
12% 16%
22% 28%
22%
26% 43% 45%
80
51%
81%
78%
39%
37% 53%
68% 67% 48%
60 44%
62%
60%
40
43%
40%
24%
12%
33% 33% 32% 21%
20
20% 20%
17%
15%
13%
10%
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Overcapacity Is there global overcapacity in

the automotive industry today?
to increase If yes, how much?
Source:
Key
Auto industry assessments of levels of 59%

2006
60
overcapacity have also shifted, for the 2007
worse, reflecting the declining demand 2008
expectations. Overall, more companies 48
44%
believe that overcapacity is now an issue,
and the proportion of respondents believing
it to be in the range of 11-20 percent has 36
32%
risen markedly year on year, from 32 percent 30%
to 59 percent. This assessment is confirmed 24%

by partial production suspensions announced 24
21%
20%
by a range of auto-makers during the two
15% 15%
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12
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Asian companies see Is there global overcapacity in the

automotive industry today?
most overcapacity (Multiple responses allowed)
Source:
100
Regional assessments of the level of 85% 86%

overcapacity do not differ markedly,
80
although ASPAC companies are most 77%
likely to consider that the industry has

overcapacity, while companies in the
Americas are least likely. Yet in all cases, 60
the proportion of companies seeing
overcapacity is high – even in the
Americas more than three quarters
of companies see overcapacity. 40
20
0
Americas EMEA ASPAC
Note: ‘Yes’ percentages represented
Cost saving is
innovation-focused
Amid declining revenues and falling

profitability, companies will need to cut
costs further. In 2008, companies were
generally more likely to rate cost savings
opportunities as important, compared
to 2007. Respondents continue to see
innovation (in manufacturing process and
materials technology) as a more important
cost-saving opportunity than direct overhead
cost reductions. The one area of potential
cost saving that has fallen –both in relative
and absolute importance in respondents’
ratings – is low-cost country sourcing,
reflecting the widespread belief that the
direct cost advantage of low-cost country
sourcing has largely been captured, and that
future savings will be found in process and
productivity improvements.
For auto manufacturers and suppliers,

rate their opportunity for future cost
savings in the following areas
Source:
Key
2006
2007
2008
Manufacturing process and 70%

technology innovations 67%
(including plant flexibility) 66%
59%
Low-cost country sourcing 65%
61%
67%
Product materials innovation 57%
61%
Overhead cost reduction 50%

including shared services 46%
36%
Healthcare, benefits 28%

46%
and pension costs 34%
29%
Direct labor 46%
32%
Computer modeling and 43%

43%
simulation in design 38%
31%
Local regional tax incentives 16% 26%
16%
48%
Restructuring No data for 2006 and 2007
58%
Supply chain management No data for 2006 and 2007
10 20 30 40 50 60 70
Suppliers see most cost-

saving opportunities
For auto manufacturers and suppliers,

Tier 2 suppliers have higher expectations
rate their opportunity for future
of finding cost savings in almost all areas
cost-savings in the following areas
except social costs and supply chain
management. In particular, they see more
Source:
savings potential in restructuring – reflecting
the likely productivity and profitability gains
in what is the most fragmented segment Key
of the automotive supply chain.
OEMs
Tier 1 supplier
Tier 2 supplier
100
90
80
77%
70%
70 68%69% 67%
65%66%
62% 63%
60 59%
57% 56%
55%
52%
50 49%49% 49%
43% 43%44%44%
41%
40
32%
29%30% 30%
30 28%
27% 27%
25%
20
10
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Manufacturers and dealers

face consolidation
Vehicle manufacturers and dealers will face This result echoes the responses given
consolidations in the next five years, say when companies were asked when they
companies. The level of expectation of thought restructuring among U.S. vehicle
mergers and acquisitions (M&A) and manufacturers would be largely completed.*
alliances over the coming five years is In this year’s survey, it was clear that
an important indicator of the impact of expectations of restructuring for better
operating conditions, as well as of the level profitability had been deferred, with 90
of competitiveness among companies: percent of respondents expecting the
both factors are likely to drive restructuring. cycle of restructuring to continue to 2010
Expectations of M&A and alliances have been or beyond, compared to 73 percent in 2007.
on a rising track since 2006 for all segments
of the industry except vehicle manufacturers. *Questions asked of U.S. companies only.
In 2008, companies expect such restructuring
to increase among vehicle manufacturers,
and they expect all M&A and alliance
activity to rise, with the biggest rises among
vehicle manufacturers (from 47 percent of
respondents to 71 percent) and dealers (from
49 percent of respondents to 60 percent).
For the following type of automotive
companies, do you expect alliances,
mergers and acquisitions to increase,
remain the same, or decrease over
the next five years?
Source:
Key
2006
2007
2008
80
72% 71% 71%
64%
64
61% 60%
59% 59%
52%
Tier 2
49%
47%
48 43%
Tier 3
41%
32
16
0
Tier 1 suppliers Tier 2 suppliers Dealers Vehicle manufacturer
M&A driven by
economic downturn
In 2007, companies were likely to see

restructuring driven by growth opportunities;
in 2008, the primary drivers of M&A and
alliances were more likely to be costs, the
risk of bankruptcy and rationalization in the
face of a declining economy. The perceived
importance of access to new markets has
fallen, while the potential for product
synergies and lowering raw material
costs has risen.
The importance of a declining economy

continues to rise as a restructuring driver
(as it has consistently over the last three
years), and the risk of bankruptcy is now
seen as significant by 73 percent of
respondents, compared with 55 percent
and 33 percent in the two previous years In general, which of the following
respectively. The number of respondents do you think will be among the most
citing a growing economy as a driver has important drivers of alliances, mergers
fallen from 66 percent in 2007 but still and acquisitions in the industry?
stands at 61 percent – a reminder that while (Multiple responses allowed)
recession grips the OECD economies, there
remains very significant growth in the four Source:
BRIC economies. KPMG Global Auto Executive Survey 2009
Key
2006
2007
2008
83%
Access to new markets and customers 95%
44%
85%
Potential for product synergies 75%
49%
80%
Access to new technology No data for 2006 and 2007
74%
67%
Raw materials cost pressures 35%
61%
66%
Expanding economy 23%
53%
65%
Direct labor cost pressures 31%
68%
Declining economy 58%
23%
33%
Pension and healthcare costs 55%
No data for 2006
73%
Risk of bankruptcy 55%
33%
20 32.5 45 57.5 70 82.5 95
U.S. restructuring cycle Will restructuring programs in the

U.S. enable U.S. OEMs to be
may yet succeed more efficient and competitive?*
Note: this question was asked before

October 31 2008 and does not take
into account any subsequently
announced restructuring programs
and discussions.
Source:
Key
60
58%
2007
2008
50%
48
* Question asked of U.S. companies only.
43%
36
30%
24
12
10%
6%
0
Disagree Neutral Agree
Despite the cash crisis that has engulfed The number of respondents who are neutral
U.S. vehicle makers, many respondents on the success or failure of restructuring
continue to believe that the U.S. makers has greatly increased – from 30 percent to
will restructure and become more 43 percent – but the number thinking that
profitable. A large proportion of respondents restructuring will fail has actually fallen
– 50 percent – continue to agree that the marginally, from 10 percent to 6 percent.
current restructuring plans of U.S. OEMs When asked when restructuring will be
will be successful. This level represents completed, the overall results show
a somewhat more pessimistic result than a tendency to defer expectations of
in 2007, when 58 percent agreed that completion, although the number
restructuring will be successful, although the expecting completion by 2010 has
decline must be set against a background of risen from 40 percent to 47 percent.
crisis among the U.S. major manufacturers
which has greatly increased uncertainty over
their long-term business viability, as well as
over the details of their short-term
restructuring programs.
Investment growth
to fall
Industry investment expectations have Respondents from companies in all

fallen across the board in line with other segments and regions of the industry
indicators of deterioration, although more overwhelmingly believe that Asia will build
than half of companies still forecast some the most manufacturing capacity in the
investment growth in all areas. But there next five years (84 percent of respondents).
is a clear division between the areas where Asian companies themselves are significantly
investment expectations are close to those more optimistic than others on the likelihood
of 2007, and areas where investment of increasing investment in almost all
expectations have fallen more sharply. potential areas of investment. The one
Companies expect innovation investment exception is expectations of rising
to be resilient: 91 percent of respondents investment in new technologies – although
see increasing investment in new models even there, the expectation is high at 90
(against 94 percent in 2007), and 92 percent percent of Asian respondents – and the
see increasing investment in new difference between Asia and other
technology (against 93 percent in 2007). regions is marginal.
Expectations of restructuring investment
are also roughly stable. However,
expectations of investment increases in Do you expect manufacturers to
marketing, new plants and logistics have all increase their investment over the
fallen significantly. next two years in the following areas?
Source:
Key
2007
2008
91%
New models/products 94%
92%
New technologies 93%
55%
Marketing and advertising 72%
52%
New plants 72%
60%
Logistics/distribution 69%
66%
Mergers and acquisitions 67%
52%
Vertical integration 51%
40 50 60 70 80 90 100
Multiple responses allowed
2/ New markets –
In a world now dominated by impending
recession in the OECD – together with rising
financing costs; falling confidence; and the
real threat of bankruptcy for more than one
of the established auto-makers – new markets
offer one area of consolation. Although the
impact of the global financial crisis is being felt
in every economy in the world, Brazil, Russia,
India and China still represent the growth
markets of today and the potential global
exporters of tomorrow.
Nevertheless, companies see momentum
slowing in new markets too. Compared with
last year, they believe there will be less
production growth, less export growth, and
more overcapacity emerging. The expectations
are for continued growth, but the forecast pace
is moderating very significantly.
2/ New markets 23
More balanced growth Which one of the following markets

or regions, other than China and India,
in new markets will have the greatest growth of

consumer demand in the next
three years?
Source:
Companies believe that even when China
and India are discounted, emerging markets
will still grow faster than any other region.
Expectations of growth over the next three 48
years in markets outside China and India 43%
are globally well-distributed. Expectations
are strongest for Central and South America,
reflecting the relative resilience of Brazilian 36
demand as economies elsewhere turn
down. Nevertheless, a significant minority 29%
of respondents also expect strong growth
in the Middle East and Africa, and again in 24
Russia and Ukraine. No respondents saw
any other region (such as South East
14% 14%
Asia, or any developed region) assuming
growth leadership. 12
6%
0
Russia Other Central and Eastern Europe Middle East
south-east South America and Africa
Asian country
China demand growth

In your opinion, what will be the
annual volume of units sold in
China in five years?
to slow Source:
Key
Less than 10 million
Expectations of a rise in demand for 10-12 million
vehicles in China have been revised 12-14 million
downwards. A year ago, most respondents 14-16 million
forecast vehicle demand in China at 12-16 16-18 million
million vehicles a year in five years time 18+ million
(59 percent of companies). Today, only
30 percent of companies believe that this 4%
10%
figure will be achieved. The number of 15%
20%
respondents seeing demand at only 10-12 13%
million units has risen from 13 percent to

30 percent, while the proportion of those
9%
forecasting even less – demand of less than
10 million units – has risen from 4 percent
to 10 percent. There has been a small rise 10%
30%
at the higher end of expectations, but it is
far outweighed by the downward revision of 25%
most respondents. China is growing, but the

growth rate is moderating and that will be 34%
reflected in vehicle sales, say companies. 20%
10%
2007 2008
Overcapacity already
emerging in China
There is a near-term problem of

auto-making overcapacity in China, say
the majority of companies. The proportion
of companies forecasting the emergence
of overcapacity as an issue within the next
five years has risen from 45 percent to
63 percent -- and more than a quarter of
companies now see the issue as immediate
(within the next two years). With Chinese job
losses mounting and domestic demand likely
to fall, companies are increasingly saying
that the Chinese auto sector is now overbuilt.
A remarkable 81 percent of all respondents
see overcapacity emerging within 10 years, and
99 percent believe the problem will eventually When will overcapacity in China
emerge – the clearest consensus expressed in become a serious problem?
the survey.
Source:
Key
1-2 years
3-5 years
6-10 years
10+ years
9%
20% 18%
27%
36%
18%
35%
36%
2007 2008
Note: Due to the rounding of percentages, the chart adds

up to 99 percent not 100 percent.
2/ New markets 25
Chinese export When will China sell a significant

number of cars in the U.S. market?
momentum falling Source:

Key
1-2 years
China’s momentum as a global exporter is 3-5 years
1%
slowing. Consistent with lower expectations 6-10 years
for production and emerging overcapacity, 10+ years
18%
companies are also growing more
26%
pessimistic about China’s sales overseas.
Asked when China would sell one million 31% 36%
or more vehicles in other markets (in 2007

companies were asked when China would
achieve one million plus sales in the U.S.
alone), expectations of that level of sales
being achieved within five years have fallen
sharply from 32 percent to 18 percent. This
fall is even more striking when the larger
arena of sales in the 2008 question is taken 46%
into account.
42%
In 2008, respondents were asked for the 2007 2008

first time, questions about the prospects
for automotive industry growth in India, Does not add to 100% due to rounding
Question phraseology varied between 2007 and 2008. In the 2007 survey the U.S. market was referred to rather than “other markets”
Brazil and Russia. Although there are no
previous survey results to allow comparative
findings for these markets, expectations
appear to be guardedly optimistic – especially
for India and Brazil. When asked to forecast
India’s achievement of one million or more
vehicles manufactured annually outside
India, a high proportion (58 percent) thought
that figure would be achieved within three
to 10 years.
In Brazil’s case, 55 percent of respondents

thought that market growth over the next When will China sell a significant
two years would be strong – no respondents (ie, 1,000,000) number of cars in
foresaw contraction. Expectations for Russia other markets?
were somewhat more cautious.
1%
However,
in contrast to the results for China, three Source:
quarters of respondents said that overcapacity KPMG Global Auto Executive Survey 2009
18%
would not emerge in Russia for at least six
26%
years, and the remaining 25 percent Key
considered that it would be 10 years or 31%
more 36% 3-5 years
before Russia’s automotive capacity would 6-10 years
be fully built up. 10+ years
46%
42%
2007 2008
Does not add to 100% due to rounding

Question phraseology varied between 2007 and 2008. In the 2007 survey the U.S. market was referred to rather than “other markets”
3/ Technology and innovation –

Given that the Global Auto Executive Survey
2009 took place against a background of
impending recession, global financial crisis
and the real threat of bankruptcy for more
than one leading auto-maker – and given
that most of the elements of this crisis were
already visible before the survey began –
it remains striking that auto companies remain
firmly focused on technology and innovation.
Fuel technology the What are the most important trends in

the automotive industry today?
leading trend (Multiple responses allowed)
Source:
30
29%
25
23%
22%
20
15
12% 12%
10%
10
7%
6%
5
4%
3% 3%
et r
n
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ar
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& ed
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, M ne
ve
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el
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om
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sy tec
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el
es ,
rie
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ffi
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iv
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ch
uc
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te
od
st
Pr
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la
of
se
U
In the formation of their strategies, this Costs, economic crisis and competition all
year’s survey shows clearly that auto-makers attract a much lower proportion of responses.
are looking beyond the current economic (Note that rising fuel costs are considered
and financial turmoil. Amid global conditions important by only 3 percent of respondents,
that amount to an economic and industry compared to 29 percent of respondents who
crisis, the world’s auto-makers still consider consider the manufacture of fuel-efficient
innovation and technology to be the most cars the most significant trend. This apparent
important trend over the next five years. contradiction must be interpreted in the
Fuel efficiency improvements, alternative light of a background of falling oil prices
fuel technologies and environmental during late 2008, leaving prices at less than
pressures are considered the three most half of their peak in mid-2008, but still at
influential trends. an historic high compared to the average
of the last two decades.)
Environment a priority
for vehicle makers
On a company basis, the view of the relative

importance of trends reveals important
priority variations according to business
segment. In particular, vehicle manufacturers
are much more likely to see environmental
issues as significant than are suppliers.
This is confirmation of views expressed
in KPMG firms’ interviews with auto
companies over the last year.
Suppliers typically say that environmental

concerns are issues for their customers, and
only indirectly issues for suppliers themselves;
and vehicle manufacturers tend to say that
environmental concerns are transmitted What are the most important trends in
directly to them by customers and by the automotive industry today?
regulators. However, suppliers are more
concerned than auto-makers with reducing Source:
costs, as cost pressure is typically transmitted KPMG Global Auto Executive Survey 2009
to suppliers by their customers. Cost concerns Key
increase the lower down the value chain the
company sits. OEMs
Tier 1 supplier
Tier 2 supplier
40
35%
35
30% 30%
30 29%
27%
25
20 19%19% 19%
15%15%
15
13%13%
12% 12%
10%
10 9% 9% 9%
8% 8%
5%
5 4% 4% 4% 4% 4% 4%
3% 3% 3% 3%
1%
0 0%
en ng
rs
s
is
el
gy
ty
s
ly f
ar
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ar
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io
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rie ion
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pe
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el
t-f ct
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Sw
Fuel technology the key

product innovation
Auto companies’ long-term focus on fuel Electric and battery technology has also risen
efficiency and alternative propulsion is also sharply in companies’ ratings of importance,
evident when companies are asked about from 60 percent to 82 percent. Overall, the
the relative importance of individual proportion of respondents rating individual
product innovations. In 2008, hybrid technologies as ‘unimportant’ has tended to
systems continue to be considered the fall slightly across the board, indicating an
most important industry innovations, and increasing focus on technology by all auto
with even greater conviction than in 2007 – companies.
91 percent of respondents consider hybrids
important in 2008, up from 79 percent in
2007. Sales expectations for hybrid vehicles
have also risen sharply: in 2007, only 27
percent of companies thought that hybrid
sales would exceed 800,000 units in the year
ahead; in 2008, 80 percent of respondents
think that sales will exceed 1.5 million units
in the year ahead.
For the following automotive product

innovations, rate the importance to
the industry over the next five years
Source:
Key
2007
2008
100
91%
90
82%
79% 78%
80
76%
70 67%
60% 61%
60
55% 56%
53%
51% 51% 50% 49%
50
41% 41%
40
31%
30
20
10
0
e
s
ch ery
ls
er
ns
or
es
gy
e)
se
m
og
c
co ria
al oth
sit
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iv
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ie
te
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ol
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ic
on ate
at
at
po
no
ba
st
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at
nd
rn
ov
sy
si
ch
m
m
em
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te
as
n
la
ed
an
te
rid
te
in
ed
l
no
nc
Te
al
yb
ll
c
ty
(e anc
on
ce
tri
ha
va
fe
rb
H
ec
rs
Et
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el
Sa
ca
Ad
pe
El
Fu
g,
% citing important on a scale listing important, neutral, and unimportant for 2008
and 4/5 on a scale 1 means “not at all important” and 5 means “extremely important” for 2007
Asian companies most For the following automotive product

innovations, rate the importance to
innovation-focused the industry over the next five years.
Source:
Key
Americas
100 EMA
93% 93%
ASPAC
90
86% 86%
83% 82% 82%
80 78%
75%
70%
70
66%
60%
60 57% 58% 58%
55%
52% 53% 52%
49% 50%
50
45% 46%
42% 41%
40
34%34%
30
20
10
0
s
ry
ns
ls
al
se
es
em
og
gn
ia
on
tte
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ie
iv
er
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si
gy
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rs
st
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at
D
va
at
de
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pe
lo
ic
sy
rn
no
m
d
rv
no
ec
ed
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an
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or
in
se
ed
lt
ch
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ra
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c
ty
el
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he
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an
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el
Sa
ot
em
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El
Fu
st
nd
si
l
Te
as
la
no
ha
Et
Regional ratings of the relative importance of

product innovations produce very significant
results: with a large degree of consistency,
ASPAC companies are more innovation-
focused by outlook than companies in the
Americas, and EMA companies are less
innovation-focused (in terms of their tendency
to rate technology issues as important). With
the single exception of their rating of electric
technologies, ASPAC companies tend to rate
all product innovations as important in more
cases than do companies in the Americas or in
EMA. Also with two exceptions (electric
technologies and advanced designs), EMA
companies tend to rate product innovations as
important in fewer cases. A comparable
pattern was evident when companies were
asked about the impact of alternative energy
on their M&A and alliance strategies: ASPAC
companies were more likely to report
more joint ventures, and less likely to report
‘no impact’ – although in this case, EMA
companies were also more likely to report
a strategic response than companies in
the Americas.
Cost will determine

purchase decisions
Expectations of the drivers of consumer Other cost issues come lower in the
purchases have changed significantly: ranking – sales incentives for example is
as economies turn down, companies now last – although this should not be interpreted
expect cost issues to take over from quality as an insignificant result at 59 percent of
as the leading determinants of consumer respondents, having risen significantly from
behavior over the coming five years. 45 percent of respondents in 2007. The
Although quality is cited by almost the same tendency is for all factors to receive higher
high proportion of respondents as in 2007 ratings from respondents in 2008, indicating
(85 percent this year, against 86 percent that companies expect to see more critical
last year), companies now think that fuel and discriminating customers in the next
efficiency is more important. Fuel efficiency five years.
is now rated as the most important issue
by a very high 96 percent of respondents.
Alternative fuel is rated highly at almost
last year’s level, while affordability rises in
significance from 69 percent to 83 percent.
Over the next five years, how

important will the following issues
be to consumer purchase decisions?
Source:
Key
2007
2008
100
96%
90
84% 86% 85%
83%
80
75%
72%
69% 70% 70% 69%
70
65%
62% 63%
59% 59%
60
54%
50% 49%
50
45%
40
30
20
10
0
an ,
fin es
ng
y
ty
el
gn
es
y
nc
ilit
lit
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fe
iv
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iv
rd
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ew
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ro
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Ve
En
4/ Beyond crisis:
challenges and opportunities –
The automotive industry is by nature
forward-looking: while the pace of innovation
implementation is fast, the cycle of much
automotive research and development can
be long. The maturing of emerging markets
is also a long-term issue, even though the
pace of change has accelerated in recent
years. The Global Auto Executive Survey 2009
reveals that automotive companies continue
to see opportunities not only in technology,
but also in the application of technology and
the management of consumer expectations –
as well as in the continued growth of
emerging markets.
New markets and fuel

technologies the key
opportunities
Companies remain focused on growth. ASPAC companies are much more likely to
When asked about the opportunities for the cite opportunities in alternative fuels and
automotive industry in the next five years, environment-friendly cars. This result is
companies point to what they consider to confirmed when companies were asked about
be businesses and markets that have been automotive trends: again ASPAC companies
insufficiently explored by the automotive were much more likely to cite the production
industry. Alternative fuels and fuel efficiency of environment-friendly cars as a significant
figure in the top three opportunities; emerging trend than were other companies.
markets rate as second in importance,
reflecting the fact that despite declining The conclusion has to be that in the global
expectations of sales and production growth Auto Executive Study 2009, ASPAC
revealed in responses to earlier questions, companies are more focused than others
these are still growth markets and are likely on the environment as an opportunity.
to remain so for the foreseeable future. It is
also striking that cost control is rated the least
significant of opportunities – in sharp contrast
to surveys in previous years, the expectation
of opportunity has shifted away from costs
and towards new products and new markets.
On a regional basis, the results point to one
important differential in emphasis.
What are the chief opportunities for

the automotive industry now and for
the next few years?
Source:
25
21%
20
19%
17%
16%
15
13%
12%
11%
10
6%
5%
5
0
s, g,
rs
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Ex
Economy and environment What are the most important

challenges facing the automotive
are key challenges industry over the next two to

five years?
Source:
25
20%
20
18%
15
14%
13%
11%
10
7% 7%
6% 6%
5%
5
4%
2%
l, ,
ita le
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Companies are highly concerned about

demand and financial costs. When asked
about challenges rather than opportunities,
respondents give a high rating to the global
economy and financing costs. However it is
significant that environmental concerns have
not been eclipsed by the global financial
crisis – the environment still ranks above
financing or technology issues. Also striking
is the very low proportion of respondents
rating low-cost country sourcing as a
significant challenge, suggesting that most
companies consider that the challenges of
capturing potential savings in emerging
economies are now well understood.
Vehicle makers see What are the most important

challenges facing the automotive
the environment as industry over the next two to five

years?
the key challenge Source:

Key
OEMs
40
38% Tier 1 supplier
Tier 2 supplier
35
33%
31% 31%
30%
30
28%
25
22%
21%
20 19% 19%
15% 15% 15%

15 14%
13% 13%
12% 12% 12%
10 9% 9%
8% 8% 8%
8% 7% 7% 7%
6%
5%
5 4% 4% 4% 4% 4% 4% 4%
3% 3%
2%
0% 0%
0
ts
is
ity
es
ng
s
rg
rn
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Responses by business segment to the

question of challenges reveal significant
differentials. Vehicle manufacturers are far
more likely than suppliers to consider that
environmental challenges are significant.
Tier 1 suppliers are far more likely than any
other companies to be concerned with a
challenge from competitors; Tier 2 suppliers,
which tend to operate the most labor-
intensive of automotive operations, are more
likely than any other companies to be
concerned with labor costs.
Success comes from

good management
In such difficult times, what is the key

success factor in the automotive industry?
Companies are most likely to give answers
that stress management rather than
technology. They are most likely to say
that success comes from the leveraging
of technology – not the raw development
of new technologies, but the application
of technology to product and processes.
The second most cited factor is meeting
customer expectations. Consistent with
results elsewhere in the survey, the
maintenance of brand image and the
manufacturing of safe vehicles is rated as
critical by very few companies (3 percent
in each case), suggesting that the great
majority of auto companies now feel that
they have reached a plateau of achievement
in building their brands and their reputations
for safety.
What are the critical success factors in

today’s automotive environment?
Source:
30
26%
25
20
17%
16%
15 14%
13% 13%
10
8% 8%
7%
6% 6%
5
3% 3%
0
ie ,
e
od h-
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e
s
s
ts
e
y
en ars
ns
es
gy
co dly of
ro
nc
ar
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ag
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pr hig
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ric
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ct
od t- ct
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qu tur
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t
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ity
ffi
ffi
/p
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n m nu
Br
od
ex
sa
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t-e
ty
tin
ng
tio on a
pr
uf
er
el
di
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nc vir g m
ap
os
gi
rin
Fu
ui
ay
an
om
te
ra
ad
/c
liq
tu
ria
St
fu en , e
M
ve
le
st
ac
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ng
op
ab
s
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cu
er
uf
y
ni
pr
rd
ilit
th
g
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ai
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tin
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O
nt
M
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ee
ai
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m
Brand no longer
guarantees success
On a regional basis, there is a broad measure

of agreement on many, but not all, success
factors. Competitiveness and affordability
of products is more important to EMA
companies. Companies in the Americas are
more concerned than others about profitability
and pricing – reflecting their earlier entry
into recessionary conditions. What is
perhaps most interesting, is that there are
two potential success factors – both traditional
areas of automotive business concern –
where there is a striking measure of agreement
(in terms of the small number of companies
that consider them critical) that these are
no longer prime concerns. Neither brand
image nor manufacturing safe vehicles is
cited as being key by more than 5 percent
of companies in any region, and brand image What are the critical success factors in
attracts no citations at all in the Americas. today’s automotive environment?
Almost all companies now consider that
technology, pricing and – to some extent Source:
costs – are the key success factors for KPMG Global Auto Executive Survey 2009
the future.
Key
Americas
EMA
ASPAC
40
38%
35
30
25 24%
22%
21%
20%
20 19% 19%
16%
15%
15 14% 14% 14%
13% 13%13%
12% 12%
11%
10%
10 9% 9%
8% 8%
7%
6% 6%
5% 5% 5%
5 4% 4% 4% 4%
3% 3%
2% 2% 2%
0%
0
od h-
ge
e
s
rs
ts
e
g
ns
es
s
y
l
ro
ar
ilit
er
iv
ag
in
g
pr hig
ca
uc
io
cl
an
lo
tit
nt
tc
ric
th
ab
im
hi
at
no
nt
ch
pe
co
O
al ing
tp
en
fit
ve
ct
d
ch
m
ro
to
pe
st
ci
ci
uc
an
qu tur
fe
co
te
ity
ffi
ffi
/p
Co
od
Br
ex
sa
ac
-e
t-e
ty
tin
ng
g
pr
uf
er
el
di
in
g
ap
os
gi
rin
Fu
ui
ay
an
om
te
ra
ad
/c
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ria
St
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ve
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ab
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M
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ee
ai
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M
Conclusion –
The results of the KPMG Global Auto
Executive Survey 2009 highlight the
impact of the global downturn on the
automotive industry.
• Sales and profitability expectations are The downshift in expectations is not

down sharply. confined to the mature automotive
economies of the OECD. Expectations for
• More bankruptcies are expected, and with growth in China and India have also proved
them, a return to intensive restructuring. very vulnerable to the downturn. But at the
• Costs will have to be cut, which in turn same time, expectations for Central and
means that process innovation will have South America, and for the Middle East and
to intensify. Africa, have proved fairly resilient. In the
longer term, companies still believe that
• Customers will become more emerging markets represent an area of
discriminating, and more concerned continuing opportunity.
with total cost of ownership.
Companies also see great opportunities in
new technologies – particularly alternative
fuel and fuel efficiency technologies. It is
remarkable that despite the fall in oil prices
during late 2008, companies have actually
increased their sales expectations for hybrid
and alternative propulsion vehicles – a result
that reflects the fact that oil prices remain
historically high.
The automotive industry is clearly facing

an unprecedented crisis – a crisis that
companies fully expect will reshape the
industry. But even amid crisis conditions,
the long-term concerns of automotive
companies remain strikingly stable:
developing and leveraging technology in
an era of gradual but inexorable shift away
from oil dependence. One of the lessons
of the 2009 survey is that companies that
manage that shift successfully are likely
to be the industry leaders of the future.
kpmg.com
KPMG’s KPMG’s
Global Automotive contacts Regional Automotive contacts
Uwe Achterholt Dieter Becker

Global Chair, Automotive Automotive – Europe
KPMG in Germany KPMG in Germany
uachterholt@kpmg.com dieterbecker@kpmg.com
Tel: +49 89 9282 1355 Tel: +49 711 9060 41720
Roland Schmid Jeff Dobbs

Global Executive, Automotive Automotive – U.S.
KPMG in Germany KPMG in the U.S.
rolandschmid@kpmg.com jdobbs@kpmg.com
Tel: +49 89 9282 1147 Tel: +1 313 230 3460
Fiona Sheridan Andrew Thomson

Global Senior Marketing Automotive – Asia Pacific
Manager Automotive KPMG in China
KPMG in the U.K. Andrew.thomson@kpmg.com.cn
fiona.sheridan@kpmg.co.uk Tel: +86 (21) 2212 2877
Tel: +44 20 7311 8507
The information contained herein is of a general nature and is not intended to address the circumstances of any particular © 2008 KPMG International. KPMG International is
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that a Swiss cooperative. Member firms of the KPMG
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 network of independent firms are affiliated with KPMG
act upon such information without appropriate professional advice after a thorough examination of the particular situation. International. KPMG International provides no client
services. No member firm has any authority to obligate
The views and opinions expressed herein are those of the interviewees and do not necessarily represent the views and or bind KPMG International or any other member firm
opinions of KPMG International or KPMG member firms. vis-à-vis third parties, nor does KPMG International have
any such authority to obligate or bind any member firm.
All rights reserved. Printed in the U.K.
KPMG and the KPMG logo are registered trademarks

of KPMG International, a Swiss cooperative.
Designed by Roundel
Publication name: Momentum: KPMG’s Global Auto
Executive Survey 2009
Publication number: RDL 1848
Publication date: December 2008
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Au to m ot i v e

Momentum: KPMG’s Global

Survey participants Source:

by job title Key

Survey participants Source:

by company type Key

* Research took place in the last quarter of 2008.

Market share expectations continue

Margins and profitability are expected

• Tier 1 suppliers are by far the most likely

• Vehicle makers and dealers expected

• Investment will grow more slowly – but

2/ New markets 3/ Technology and 4/ Beyond crisis:

Consumer purchases to become

• Affordability is increasing in importance.

• Consumers to become more discriminating.

Oil prices and the KPMG Global Auto

Global economy How important is each of the following

concerns rising of the auto industry?

Profits forecast to be Do you think the number of

lower and more volatile the same, or decrease in the next

costs remain volatile, expectations that 46% 2006

Suppliers seen as Of the following types of automotive

least profitable among the most profitable over the

Asian finance companies

On a regional basis, companies are in broad

Of the following types of automotive

Bankruptcies to rise Do you think the number of

Revenue loss a Which of the following do you think

key concern of bankruptcy?

by 90 percent of respondents, compared

Tier 1 suppliers see

Tier 1 suppliers are markedly the most likely

OEMs Tier 1 supplier Tier 2 supplier

Chinese and Indian brands

Overcapacity Is there global overcapacity in

to increase If yes, how much?

Auto industry assessments of levels of 59%

to 59 percent. This assessment is confirmed 24%

Asian companies see Is there global overcapacity in the

most overcapacity (Multiple responses allowed)

Regional assessments of the level of 85% 86%

likely to consider that the industry has

Note: ‘Yes’ percentages represented

Amid declining revenues and falling

For auto manufacturers and suppliers,

Manufacturing process and 70%

Overhead cost reduction 50%

Healthcare, benefits 28%

Computer modeling and 43%

Suppliers see most cost-

For auto manufacturers and suppliers,

Manufacturers and dealers

72% 71% 71%

In 2007, companies were likely to see

The importance of a declining economy

U.S. restructuring cycle Will restructuring programs in the

may yet succeed more efficient and competitive?*

Note: this question was asked before

Industry investment expectations have Respondents from companies in all

Multiple responses allowed

More balanced growth Which one of the following markets

in new markets will have the greatest growth of

China demand growth

Momentum - KPMG's Auto Executive Survey 2009

Momentum - KPMG's Auto Executive Survey 2009

• Tier 1 suppliers are by far the most likely

• Vehicle makers and dealers expected

• Investment will grow more slowly – but

• Consumers to become more discriminating.

• Sales and profitability expectations are The downshift in expectations is not