Auto Executives Upbeat about Industry Prospects

Senior executives in the U.S. auto industry are bullish about their businesses and plan to increase capital spending, hiring and factory expansion over the next 12 months, according to the 2012 KPMG Automotive Industry Outlook survey.

Despite the slumping European auto market and persistent pricing pressures, 76% of the executives report that company revenue has increased from 2011, and 83% anticipate continued growth next year, KPMG says.

Among the survey's other findings:

Nearly three-quarters of respondents expect to increase capital spending over the next year. New products and expanded facilities are the top priorities.

Almost half predict their companies will be buyers in a merger or acquisition, and 10% say they will be sellers.

Finding a qualified workforce is the biggest barrier to expansion for 19% of those surveyed nearly double the level in 2011.

Two-thirds have expanded their workforce this year and 72% expect to hire more domestic employees in 2013. One-third say their U.S. headcount has returned to pre-recession levels or will do so by year-end.

Eight in 10 predict the U.S. economy will grow slowly or not at all next year, and 60% say it won't recover fully until at least 2014.

Three-quarters don't anticipate a rebound in Europe's auto market for at least another 18 months, including 15% who expect the slowdown to linger for more than three years.

About one-third report the European slowdown has had a moderate to significant impact on corporate profits. But KPMG says it was surprised to find that one in five cite no adverse effects on profits from the region's slump.

Among companies addressing their weakness in Europe, 46% are restructuring operations there, 43% are cutting costs and 40% are rationalizing capacity.

Two-thirds consider North America their primary growth market, followed by China and South America.