Global Automakers Will Significantly Increase Spending On New Technologies, Hybrid and Alternative Fuel Vehicles, Says KPMG Survey

Execs cite fuel efficiency as extremely important to new car buyers

Jan 07, 2010, 05:30 ET from KPMG LLP

DETROIT, Jan. 7 /PRNewswire/ -- In response to consumer demand, senior automotive executives are expected to increase their investment in new technologies to produce more environmentally-friendly, fuel-efficient vehicles, according to the 11th annual global automotive survey conducted by KPMG LLP, the U.S. audit, tax and advisory firm.

Of the 200 senior executives surveyed, nine in ten expect manufacturers and suppliers to focus on new technologies, while 88 percent predict manufacturers will increase investment on new models/products and 78 percent say suppliers will do the same.

Hybrid Seen As Most Important Fuel Technology

In line with consumer expectations, when asked to rate the importance of alternative fuel technologies to the industry over the next five years, hybrid fuel systems came out on top (almost 85 percent), followed by battery electric power (68 percent), fuel cell electric power (63 percent), and biodiesel (42 percent).

"There's no doubt that automaker focus on technology will result in great leaps in alternative and hybrid fuel vehicles, with consumers and the environment reaping the benefits in the long run," said Gary Silberg, National Automotive Industry leader for KPMG LLP. "The consumer mindset on fuel efficiency is forcing automakers to build more fuel efficient cars and to create new product that satisfies demand."

Fuel Efficiency Cited As Key Purchase Factor

When asked what would influence consumer purchase decisions over the next five years, fuel efficiency was most frequently cited (94 percent), fairly flat from last year's high of 96 percent, strongly ahead of other factors, followed by environmental friendliness (just over 80 percent), safety innovation (71 percent) and vehicle styling (61 percent).

Not surprisingly, when asked which vehicles the executives expect will see sales increases over the next five years, hybrid fuel vehicles (almost 93 percent) was most frequently named, followed by other alternative fuel vehicles (83 percent), low cost or introduction cars (82 percent), cars (66 percent), cross-overs (46 percent) and small pick-up trucks (just under 45 percent).

"Automotive manufacturers are in the challenging position of being asked to compete on both technology and cost," added Silberg. "With global consumers still feeling the pinch of the recession, those OEMs who can deliver on this equation will be the driver's seat."

When asked to name which vehicles might see an increase in the total cost of incentives (including discounts, rebates and free offers) during the next year, the top three predictions included SUVs at almost 53 percent, followed somewhat surprisingly by hybrid fuel vehicles (almost 50 percent) and other alternative fuel vehicles (48 percent),

In the KPMG survey, conducted during late September through early November 2009, the 200 executives interviewed represented vehicle manufacturers and suppliers in the United States, Canada, Mexico, United Kingdom, France, Germany, Sweden, India, China, South Korea, Japan, Thailand, Brazil, 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.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (http://www.us.kpmg.com), is the U.S. member firm of KPMG International. KPMG International's member firms have 137,000 professionals, including more than 7,600 partners, in 144 countries.


    Contacts:                       Kevin Beagley/Ray Zardetto
                                    KPMG LLP
                                    Tel: (312) 665-5010/(201) 307-8494
                                    kbeagley@kpmg.com/
                                    rzardetto@kpmg.com

SOURCE KPMG LLP



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