Innovation critical to long term survival say auto industry CEOs according to PricewaterhouseCoopers survey



    TORONTO, Feb. 24 /CNW/ - According to the recently published Annual
Global CEO Survey by PricewaterhouseCoopers (PwC) in which 62 auto CEOs took
part, 92% recognize that innovation is a critical ingredient for long-term
survival. The key challenge currently facing auto industry CEOs is how to
balance the pressing demands of the here and now with the need to create a
business that can thrive in future years.
    A clear understanding of what customers want is essential with 95% of
auto CEOs citing customer information as key, 58% saying they would like more
information about customer preferences with only 14% currently receiving
adequate information.
    "Innovation requires substantial long-term investments, which are
difficult to make when a company is struggling with its very existence. It
also requires knowing consumers inside out," says Mark Walters, PwC Canada's
Automotive Practice Leader.
    Thirty-seven percent of automotive CEOs around the world believe that
increased product penetration into existing markets is the key to turning
around the auto industry. This year's results indicate a reversal from last
year, where 34% favoured new product development and 15% better market
penetration.
    Forty percent of automotive CEOs believe that structural changes to the
business model in their industry will have a positive impact on their
operations and on the industry's overall competitiveness. Many of the industry
leaders have announced plans to cut production significantly; indeed, the
PricewaterhouseCoopers Auto Institute predicts that the number of vehicles
manufactured in 2009 will be just 59.4 million - 13% less than in 2008.
    The global economic downturn has forced automakers to re-evaluate their
business models, which could put automotive suppliers and dealers at risk.
Survey results indicate that not all automotive CEOs have fully comprehended
the implications that the economic situation may have on their supply chains.
Some 38% are concerned about the security of their supply chain as a potential
threat to business growth over the long-term, while 81% identify efficient
sourcing and supply chain management as a key source of competitive advantage.
    "Automakers need to understand and manage the risks embedded in the
intricate network of suppliers. Troubled suppliers pose a real risk to every
car producer and their suppliers. The current economic environment makes it
critical for automotive companies to know the potential threats to their
business," comments Walters.
    The survey also found that 94% of CEOs feel that access to and retention
of key talent to achieve long-term success is critical. They are less
concerned about finding new employees with the right skills than with holding
onto existing employees and cultivating their intellectual capital.
    The trend towards flexible manufacturing will translate into fewer jobs
on the assembly line and not surprisingly, 39% of respondents expect to reduce
the number of employees in the next 12 months.
    The survey results show that 73% of automotive CEOs agree that a new
global climate deal is important or critical, and 70% feel clearer
communication about the threats and scope of climate change is required.
    Automotive companies have initiated sustainability studies and policies
to better understand climate change issues and greenhouse gas impacts on the
environment. As a result, companies are finding innovative approaches to
vehicle design, safety, and advanced-technologies to lessen their carbon
footprint. They are taking big steps to help sustain the environment for
future generations.
    The automotive industry will help play a role in addressing the business
implications of climate change by finding solutions to reduce their impacts on
the environment.
    "Automakers need to 'right-size' and re-evaluate their business models to
succeed long-term. The good news is that people will still buy cars around the
world. Automakers will have to consider how they go to market in the future to
meet consumer demand," says Walters.

    PwC Economic and Credit Crisis Task Force

    PwC recognizes that a global crisis requires a global and coordinated
view.
    The PwC Economic and Credit Crisis Task Force (the "PwC Task Force")
brings together a Canadian team of senior cross-functional experienced
practitioners who understand market volatility and the diverse challenges
facing companies today. By leveraging knowledge, experience and networks, the
PwC Task Force can advise and guide Canadian companies through a multitude of
capital market and economic crisis issues.
    For more information please visit: www.pwc.com/ca/managinginadownturn or
www.pwc.com/ceosurvey

    PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance,
tax and advisory services to build public trust and enhance value for its
clients and their stakeholders. More than 155,000 people in 153 countries
across our network share their thinking, experience and solutions to develop
fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP
(www.pwc.com/ca) and its related entities have more than 5,200 partners and
staff in offices across the country.
    "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario
limited liability partnership, or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network,
each of which is a separate and independent legal entity.




For further information:

For further information: Carolyn Forest, PricewaterhouseCoopers LLP,
(416) 814-5730, carolyn.forest@ca.pwc.com; Nina Godard, PricewaterhouseCoopers
LLP, (416) 941-8383 x 13520, nina.godard@ca.pwc.com

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