Automotive Capital Confidence Barometer

Economic outlook

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As the slowdown persists in developed and emerging economies, automotive companies are less optimistic about the future than they were six months ago.

More than 60% of automotive executives expect the global economic downturn to persist for another one to two years, while 7% predict it will last more than two years. With slow growth expected to continue, many companies are focusing on bottom line improvements and low-risk organic growth opportunities. Few see the urgency for completing major M&A transactions in such an uncertain climate.

How long does your organization expect the global economic downturn to persist?

Local economic sentiment weakens

In line with the global results, local economic sentiment has also declined. When asked their perspective on the state of their local economies, 31% of automotive executives cited an improving environment in October 2012, compared with 47% in April 2012.

What is your perspective on the state of the local economy today?

Confidence in earnings and growth drops

There has been a significant decline in confidence around economic and employment growth over the past six months. Confidence in economic growth dropped from 45% to 26% during this period and confidence in employment growth dropped from 41% to 24%. There has also been a decline in expectations for corporate earnings, with only 33% of respondents positive about the outlook in October 2012, compared with 40% in April 2012.

Please indicate your level of confidence in the following industry drivers at the global level

Fifty-three percent of respondents are facing revenue and margin pressure as a result of the automotive fallout from the Eurozone crisis. Other important challenges noted by respondents include supply chain risk (25%), credit availability (23%) and counterparty default risk (22%). Automotive companies are now more focused on protecting their base business as opposed to capturing growth through acquisitions or undertaking other transformational events.

What are the most significant challenges facing your business in light of the Eurozone crisis? (Select two)

Fewer expect to create jobs

In light of economic challenges, the percentage of respondents planning to create jobs has decreased from 45% in April to 22% in October. The percentage of those who plan to maintain their workforce has increased significantly from 47% to 68%. This may reflect a wait-and-see attitude among companies that are simultaneously unwilling to take risks and reluctant to lose flexibility should better times return.

With regard to employment, which of the following does your organization expect to do in the next 12 months?


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