A new survey by accounting and consulting firm KPMG found that auto industry executives are more pessimistic about the recovery of the U.S. economy than they were just three months ago. Forty-two percent of the executives surveyed in October expect the economy to improve next year. When the survey was conducted in July, 58% said they expected to see improvements in the economy in 2012.
Seventy-three percent of executives polled in the October survey said they don’t expect a full recovery to take place until late 2013 at the earliest.
KPMG said that upwards of 50% of 89 auto industry executives polled in the October survey work for companies that generate over $10 billion in annual revenue. KPMG spokesman Manual Goncalves said that unlike the firm’s annual survey, which is conducted in January, the October and July surveys were limited to only executives with U.S. automotive firms.
KPMG National Automotive Industry leader in the U.S. Gary Silberg said, “There’s a sense of this cautious optimism where they see this growth opportunity, and they’re willing to invest. All the CEOs I’ve talked to feel this way.”
According to Silberg, many of the executives polled are concerned about the impact federal regulations, including recently proposed changes to CAFE standards, will have on the industry. As a result, many are scaling back their hiring and capital spending projections. Only 50% of those surveyed expect to see an increase in hiring in 2012.
In a statement Silberg said, “One major finding of our most recent survey are the concerns that executives have over the macro economy. In addition to the uncertainty regarding the global economic environment, auto executives are challenged with intensified competition, pricing pressures and volatile commodity prices.” But he went on to say, “Auto executives remain bullish, building on the momentum of the past two years and continue to invest heavily in new product development and product innovation.”
The October survey also found that 77% of executives polled expect to see increases in revenue, primarily as the result of new products and expansion into new markets over the next three years.
Silberg said, “If you look at their balance sheets internally and you see the restructuring and the cash flow of these profits and the bottom line, it gives them confidence. It’s the confidence that’s generating cash funds.”
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