Emerging markets and alternative fuels offer hope
TORONTO, Jan. 8 /CNW/ - Nearly half of senior global automotive
executives believe that declining revenue growth will plague the automotive
industry for the next 5 years, according to Momentum: KPMG's Global Auto
Executive Survey 2009. In addition, 77 percent of respondents expect a
dramatic increase in insolvencies, up from 36 percent last year. Given this
reality, executives are anticipating more restructurings and M&A activity in
the industry overall.
"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 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
"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.
About KPMG in Canada
KPMG LLP, a Canadian limited liability partnership established under the
laws of Ontario, is the Canadian member firm affiliated with KPMG
International, a global network of professional firms providing Audit, Tax,
and Advisory services. Member firms operate in 145 countries and have more
than 123,000 professionals working around the world.
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