Automotive

78%

of automotive CEOs plan to make changes to R&D capacity

15th Annual Global CEO Survey

Automotive industry insights

Douglas R. Oberhelman - Chairman and CEO Caterpillar, US
Caterpillar CEO Douglas R. Oberhelman talks about economic volatility, surviving a trough, and creating the company's strategy.

Automotive CEOs are concerned about euro zone prospects and bullish on China. They're cutting costs, improving processes and products and working on increasing their resilience to macro risks. What else did they tell us?

The sovereign debt situation in Europe is a source of concern Western Europe is traditionally an automotive stronghold, so concerns about the impact of the sovereign debt crisis on demand for new vehicles are weighing heavily: 57% of automotive CEOs say their companies have been directly affected. The Euro itself is also a cause for concern; 76% see exchange rate volatility as a reason for caution.

They're cutting costs by focusing on innovation, global platforms 82% of automotive CEOs say they’ve implemented a cost-reduction initiative over the past 12 months, and 69% plan to cut costs further in the next 12 months. That doesn’t always mean cutting heads: 72% intend to focus more on innovating to improve existing processes. We think that includes increasing their reliance on global platforms.

China is still driving growth CEOs rank China tops on their list of growth markets. They're looking to grow their customer base, and they're responding to local needs. 59% are tailoring products specifically for China. And as Caterpillar CEO Doug Oberhelman points out, understanding the future competition is another big motivator.

China remains a growth market for auto

Disruptions in Japan had a huge impact on sector supply chains The automotive industry was hit hard by Japan's earthquake and nuclear crisis in 2011. 48% of automotive CEOs say it had a direct financial impact, 20 percentage points higher than across the total sample. They're increasing supply chain resiliency in response; 41% report changes to strategy, risk management or operational planning.

Talent is a top priority It’s difficult to find the right talent. 56% of automotive CEOs fear lack of key skills could drag down growth. 46% of them say the task is getting even tougher, mainly because there aren’t enough skilled candidates. Finding and keeping high-potential middle managers is one major challenge. Having skilled production workers who are located in the right places and have the right knowledge is another concern.

Filling the talent gap

Quotes

Douglas R. Oberhelman

Chairman and CEO Caterpillar, US View profile

Certainly I’m concerned about the debt bubble around the world. How we all manage that is something to watch. That’s essentially what we’re seeing in Europe today, how they manage their heavy debt load. The United States has been going through it, and many other countries are up against the wall on debt, as well. How that manifests itself with other actions on the banking system and financial system is something we watch every single day.

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

Our growth model is based on two to three fundamentals. First, our company’s ability to compete on technology, product and cost: we have created a great deal of focus in our systems on high-technology, high innovation and high quality. These systems create an enduring business. This was the domain of the western world but we have changed that.

The second fundamental is the continuous evaluation of mega-trends in the market. We did that three years ago and found infrastructure, energy and oil and gas to be the clear mega trends in India, so we are participating in those – and we have got into mining commodities too.

For us, automotives is the base business – but it’s also a mega trend in India. My estimate is that in the next 10 years, it will grow to three times the size it is today.

CEO survey: Explore the findings

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Embracing volatility

Local approaches to global growth

Risk resilience

Facing the talent challenge

Innovating on multiple fronts