Thirty-seven percent of automotive CEOs believe increased market penetration is key to success, according to the PricewaterhouseCoopers Annual Global CEO Survey Automotive Edition

Detroit, January 21, 2009 - Thirty-seven percent of automotive CEOs around the world believe that increased product penetration into existing markets is the key to turning around the auto industry, while 24 percent feel that introducing new products is the answer, according to the Automotive edition of PricewaterhouseCoopers' 12th Annual Global CEO Survey, released today during the North American International Auto Show in Detroit. This year's results indicate a reversal of CEOs' priorities from last year, when 34 percent favored new product development and 15 percent better market penetration. This reversal indicates a correlation with the retrenchment that has been taking place across the industry. See Figure 1 below:

According to PricewaterhouseCoopers Automotive Institute, the number of vehicles manufactured globally will be 59.3 million in 2009. The erosion of vehicle demand has required automotive CEOs to implement immediate cost reduction measures and accelerate restructuring initiatives.

"Automakers need to re-evaluate their business model and look for new approaches in order to succeed in the long term." said Steve D'Arcy, global automotive leader, PricewaterhouseCoopers LLP. "Consumer demand will continue to grow worldwide, however, the companies that meet that demand will have the highest quality and the most flexible cost structures"

Forty percent of automotive CEOs believe that structural changes to the business model in their industry will have a positive impact on their operations and on the industry's overall competitiveness.

The global economic downturn has forced automakers to re-evaluate their business models, which could put automotive suppliers and dealers at risk. Survey results indicate that not all automotive CEOs have fully comprehended the implications that the economic situation may have on their supply chains. Thirty-eight percent are concerned about the security of their supply chain as a potential threat to business growth over the long-term, while 81 percent of respondents identify efficient sourcing and supply chain management as a key source of competitive advantage.

Eighty-two percent also indicated that information about their supply chains is important or critical to their companies' long-term success. However, only 41 percent of these respondents are completely satisfied with the information they get on this score. Forty-five percent say that they would like to receive more details, while eight percent say that the level of information they get is inadequate for their needs.

"Automakers need to understand and manage the risks embedded in the intricate network of suppliers," said D'Arcy. "Troubled suppliers pose a real risk to every automaker and to their large tier one suppliers. The current economic environment makes it critical for automotive companies to know the potential threats to their business."

Innovation & Talent
Ninety-two percent of automotive CEOs recognize that innovation is a critical ingredient for long-term survival. A vast majority of automotive CEOs (94 percent) agree that it is critical to have access to and retain key talent to achieve long-term success. They are less concerned about finding new employees with the right skills than with holding onto existing employees and cultivating their intellectual capital.

"Automotive executives are keenly focused on cost reduction measures, restructuring initiatives and improving balance sheets," said D'Arcy. "They must weigh the long-term investment needed to develop cutting-edge innovation and cultivate the talent of engineering teams."

Thirty-nine percent of respondents expect to reduce the number of people they employ during the next 12 months. As such, many automotive manufacturers and suppliers continue to make the necessary reductions in headcount to realize both short-term and long-term demands.

Global Climate Change
The risk of climate change needs to be addressed through collaborative global action and an improved understanding of the business implications. The survey results show that 73 percent of automotive CEOs agree that a new global climate deal is important or critical, and 70 percent also feel clearer communication about the threats and scope of climate change is important or critical.

Automotive companies have initiated sustainability studies and policies to better understand climate change issues and greenhouse gas impacts on the environment. As a result, companies are finding innovative approaches to vehicle design, safety, and advanced-technologies to lessen their carbon footprint. They are taking big steps to help sustain the environment for future generations.

The automotive industry will help play a role in addressing the business implications of climate change by finding solutions to reduce their impacts on the environment.

For more information on PricewaterhouseCoopers' 12th Annual Global CEO Survey --Automotive Industry Edition and to download, please visit www.pwc.com/auto .

The complete 12th Annual Global CEO Survey will be released on January 28, 2009, at the World Economic Forum Annual Meeting in Davos, Switzerland. For more details, go to http://www.pwc.com/ceosurvey , (available from January 28, 2009).

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