DETROIT -

Opinions gathered through KPMG’s 12th annual global automotive survey should be welcome news for the Big 3. Following years of economic uncertainty and industry restructuring, the survey showed global auto executives expect domestic automakers to increase market share during the next five years.

What prompted that sentiment? Survey participants said domestic OEM growth will be spurred by product innovation, restructuring activities and continued improvement in product quality.

The firm stressed the outlook marks a dramatic turnaround in their expectations from a year ago.

In polling 200 senior executives in the global automotive industry for the 2011 automotive survey, KPMG also discovered that industry executives remain focused on investing in alternative fuel vehicles. Furthermore, the survey indicated these executives plan to increase investment in new plants and products continue to invest in emerging markets for growth.

The most noteworthy findings, however, were promising outlooks for Ford, General Motors and Chrysler.

When asked to predict global market share winners over the next five years, KPMG discovered that Ford jumped to 43 percent of survey participants seeing market share gains compared with 29 percent in 2010 and 13 percent in 2009. 

GM saw the most significant climb among the respondents in this year’s survey. Forty percent of executives expect GM’s market share to increase during the next five years, up considerably from 13 percent in 2010 and 15 percent in 2009.  

Meanwhile, KPMG pointed out Chrysler also saw a double-digit increase in the number of executives predicting improvement — finishing at 24 percent this year versus just 7.5 percent a year ago.

Although U.S. automakers saw the most significant improvement compared with 2010 survey data, the firm explained executives identified Chinese brands, as well as existing global players Volkswagen (No. 4 in 2010), Hyundai/Kia (No. 2 in 2010), Indian brands (No. 3 in 2010) and BMW (No. 9 in 2010) as the top five market share winners this year. KPMG added Honda ranked seventh, just ahead of Ford, and Toyota ranked ninth just in front of GM.

“This year’s survey results clearly demonstrate that the restructuring efforts of the past several years have helped U.S. auto manufacturers emerge more efficient and more competitive,” explained Gary Silberg, national automotive industry leader for KPMG.

“Moreover, despite the economic challenges they continued to invest in new product innovation,” Silberg continued. “The efforts have paid immense dividends for the industry and today we see a completely different landscape for U.S. automakers. As a result, competition today among global automakers is intense and that’s a trend that will certainly continue.”

In fact, Silberg also noted global executives surveyed in 2007 expected the U.S. auto turnaround. When asked about when they expect the restructuring to be completed by domestic OEMs, 64 percent of the executives surveyed said before 2011.

And when asked if the restructuring will allow the Big 3 to be more efficient and competitive, Silberg indicated 59 percent of respondents felt that would be the case — with only 10 percent disagreeing.

“What’s remarkable is that no one could have predicted the economic crisis, yet auto companies stayed the course and managed to come out of it healthier, despite incredibly significant challenges,” Silberg stated.

“We also can’t ignore the unprecedented role the government played in supporting the U.S. auto industry,” he interjected.

Top Investments

The survey found the auto industry is heavily investing in future technology, new products and safety improvements.

When asked where manufacturers would increase investment over the next two years, new products (97 percent), new powertrain technology (93 percent), and improvements to safety performance (87 percent) were the top selections. 

“Another indication that the industry is getting healthier is that these execs are telling us that investment is back on the table this year,” Silberg offered.

“Vehicle manufacturers understand there is pent-up demand for new cars, especially in the United States, and we’re seeing some significant investment in new products and technology,” he went on to say. “In addition, more than half the execs expect increased spending on new plants, as we’ve recently seen with several automakers bringing new, state-of-the art facilities online to replace older capacity that has been phased out.”

What about Alternative Fuel Technologies?

In addition to production-related investments, KPMG pointed out auto executives also say they will be increasing their focus on alternative fuel technologies, specifically hybrid fuel systems, battery electric power and fuel cell electric power.

Despite the apparent focus on electric power, the firm determined seven in 10 respondents said that the industry won’t be able to offer an electric vehicle that is as affordable as traditional fuel vehicles for mainstream buyers for at least four years.

So what are the most effective ways of making electric vehicles affordable for mainstream buyers? KPMG found the most popular responses were government subsidies (38 percent), automakers partnering with energy providers to generate after-sales revenues on e-components (20 percent), and consolidation among e-car technology partners (13 percent).

What about government subsidies for alternative vehicles? Executives’ responses were mixed. The company revealed 24 percent expect subsidies to increase; 34 percent say they will remain the same. But 43 percent of participants predict a decline.

“Ultimately the automakers will not be successful with these models until the vehicles become competitive without subsidies,” Silberg speculated. 

With regard to investment in global growth markets, executives surveyed predict increased investment in China (58 percent), India (50 percent), Brazil (41 percent) and Russia (33 percent).

Forecast for Mergers and Acquisitions

By and large, those surveyed appear to believe M&A will increase over the coming year.

The survey showed 64 of respondents believe the number of alliances, mergers and acquisitions during the next five years will increase for vehicle manufacturers.

According to these executives, the specific global drivers of the M&A activity include access to new technologies and products (88 percent), access to new markets and customers (88 percent), product portfolio diversification (79 percent) and potential for product synergies (77 percent).

Elsewhere, the survey revealed 62 percent of participants also think M&A will increase for tier-one suppliers versus 71 percent in 2010. The predicted increase for tier-two suppliers was 47 percent. For dealers, it was 46 percent.

Survey Background  

KPMG said it interviewed 200 global executives from October through November. Those questioned represent vehicle manufacturers and suppliers.