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Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Fordprodline1 thumbnail
Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Fordprodline1 thumbnail
Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Fordprodline1 thumbnail
Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Fordprodline1 thumbnail

Turnaround to the top

Jan. 11, 2012

"This year’s survey results clearly demonstrate that the investments in new products and product innovation over the past several years have helped U.S. auto manufacturers become more competitive. Moreover, it is a clear indication that perceptions of U.S. automakers and auto quality have changed.” –Gary Silberg, national automotive industry leader for consulting firm KPMG LLP

It’s a great feeling, to say the very least, to witness what can almost be called the rebirth of the U.S. automotive industry. From being left perilously close to the ash heap of history a little more than five years ago, the now-rechristened “Detroit Three” – Ford Motor Co., General Motors, and Chrysler – are all back in the black; not only profitable, but selling high-quality products consumers and critics alike are taking a shine to.

It’s a testament to sheer perseverance on the part of automotive engineers, assembly workers and – dare I say it – executives to have stayed the course through some of the worst times imaginable in order to achieve a turnaround of this magnitude … and the best part is, they ain’t done yet.

That, at least, is the feeling one gets after leafing through the 13th annual global automotive executive survey conducted by global consulting KPMG LLP – a survey that found, in a marked turnaround after years of economic uncertainty and industry restructuring, global auto executives saying that U.S. auto brands will continue to increase market share over the next five years.

KPMG’s poll of 200 C-class global automotive executives – conducted from October through November last year – representing vehicle manufacturers and suppliers mainly said this “American resurgence” is being spurred by product innovation, continued improvement in product quality and restructuring activities.

The rise in optimism for U.S. OEMs represents a significant turnaround from KPMG's 2007 survey, when few predicted market share gains, or a steady climb in global rankings, stressed Gary Silberg, the firm’s national automotive industry leader.

Now, while many of those executives also believe several European and Asian OEMs will gain share – especially Chinese and Indian automakers, which are starting to come on strong – they also think Ford is more likely to grow market share than Nissan, Toyota and Honda.

In fact, Ford was the only U.S. OEM to rank in the survey's top 10 most likely market share winners, Silberg said.

“As recent sales figures might demonstrate, U.S. OEMs have much stronger product portfolios, and as a result they are returning to profitability,” he noted. “But in addition to the re-emergence of the U.S. automakers, perhaps the most intriguing story in the global auto industry is the enormous momentum we're seeing from the Chinese and Indian OEMs.”

Given their lower current base market share levels, it is not surprising to see predicted market share growth for brands such as SAIC, Chery and Tata, although the majority of that growth will come from their domestic markets in the short-term, Silberg pointed out.

“However, these companies will continue to change the global automotive landscape in the coming years as sales and exports from those countries continue to climb,” he stressed.

All that aside, it seems the Detroit Three are well position to face this looming competition on the automotive horizon – at least in the opinion of the automotive executives in the trenches.

When asked to predict global market share winners over the next five years, nearly half (47%) of the executives polled by KPMG believed Ford, ranked 8th, would register market share gains, up from 43% at the start of 2011 and 29% in 2010.

As an apparent positive indication of the Chrysler/Fiat combination, 39% of executives expect the combined Fiat/Chrysler Group to gain market share. Slightly fewer automotive executives in KPMG’s survey foresee GM increasing market share in the next five years, with GM ranked 15th – finishing at 38% this year versus 40% at the start of 2011, but still up considerably from just 13% in 2010.

However, by comparison, KPMG's 2007 auto study found 62% of global executives projecting a decrease in market share for U.S. OEMs, with only 14% expecting an increase. In that study, however, 64% of the execs expected the restructuring of U.S. OEMs to be completed before 2011. And when asked if the restructuring would allow the OEMs to be more efficient and competitive, 58% of the respondents in the 2007 study believed that would be the case, with only 10% disagreeing.

China and India are the markets that will bear watching going forward, KPMG’s survey found, though the U.S. remains ranked as the number two market in the world for automotive production and sales.

KPMG’s poll found 39% of auto executives estimate the annual volume of unit sales in China will exceed 22 million units by 2016, with another 36% predict unit sales between 20 million and 22 million units annually.

Additionally, 32% of auto executives predict Chinese OEMs will export more than 1 million cars annually within the next one to two years, and another 42% predict 1 million exports within two to five years.

However, executives still predict the U.S. will remain second to China, in terms of unit production and sales volume over the next five years, though China is expected to be the largest in terms of auto production volume by 2016, and is also expected to build the most manufacturing capacity by 2016.

“As such, it comes as no surprise that China is expected to become the most overbuilt BRIC [Brazil-Russia-India-China] country in five years' time,” Silberg noted. “Overcapacity in emerging markets will undeniably become an issue in the near-term, and will likely result in a ripe market for mergers, acquisitions and alliances.”

At the end of the day, though, it’s nice to see the U.S. automotive industry thriving again – and, hopefully, it’ll keep right on doing so as the next wave of global competition gets ready to roll.

About the Author

Sean Kilcarr 1 | Senior Editor

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