Automotive CEOs are more optimistic this year, despite concerns about a wide range of threats. They see a need to respond to global trends, but many are just getting started – and only a minority think key departments are well-prepared.
CEOs are more optimistic about the economy
This year 44% of automotive CEOs believe the global economy will improve over the next 12 months and just 7% expect it to decline. That’s a U-turn from last year’s sentiment when just 16% of automotive CEOs expected the economy to improve and 32% believed it would decline.
although they see other threats looming.
Automotive CEOs are more concerned than their peers about a whole host of threats, from exchange rate volatility to high or volatile energy costs and raw materials prices, from shifts in consumer spending and behaviours to inadequate basic infrastructure and supply chain disruption. Political and economic threats are looming too; 78% of sector CEOs worry about an increasing tax burden, compared with 70% of CEOs overall. Around three-quarters of automotive CEOs say they are concerned about government responses to fiscal deficit and debt burdens too.
CEOs think they can cope – but aren’t so sure about the competition
Most automotive CEOs are optimistic about their own company’s ability to cope; 34% are very confident of revenue growth over the next 12 months, and that figure jumps to 47% looking forward three years. But they’re notably more pessimistic about the prospects for the industry, with just 7% saying they’re very confident of the sector’s growth prospects over the next 12 months, and only a few more – 16% -- very confident looking out over three years.
Automotive companies have been re-trenching.
In the past 12 months, 86% of automotive CEOs say their company has implemented cost reduction measures, more than across the overall sample. And fewer report M&A activity or outsourcing. That holds true for the coming 12 months as well.
But a transforming world will mean ramping up efforts to change..
Automotive CEOs see a need to change most aspects of their business to respond to transformative global trends, but customer growth and retention strategies, talent strategies and use and management of data and data analytics stand out, with nine out of ten CEOs acknowledging a need to change. In all of these areas, many are just getting started. For example, only around a quarter already have programmes underway or completed to adapt both talent strategies and companies‘ approach to data.
..so companies will need to get ready fast.
Fewer than four in ten automotive CEOs believe that their customer service, HR, and IT departments are well-prepared to make the needed changes. Just 44% of CEOs feel their sales department is well-prepared to make changes, and 39% see customer service as well-prepared.
44%of automotive CEOs expect the global economy to improve in the next 12 months
86%of automotive CEOs say they cut costs this year
Chief Executive Officer, Michelin Group
Chairman and Chief Executive Officer, Cummins Inc.
President and Chief Executive Officer, Dana Holding Corporation
James R. Verrier
President and Chief Executive Officer, BorgWarner Inc.