Auto execs predict growth for hybrids - East Valley Tribune: Business

Auto execs predict growth for hybrids

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Posted: Wednesday, January 4, 2006 5:28 am | Updated: 4:18 pm, Fri Oct 7, 2011.

DETROIT - Auto executives worldwide believe sales of hybrid cars and low-cost, fuel efficient models will outpace sales of sport utility vehicles, pickups and luxury models over the next five years because of lingering concerns about fuel prices, according to an annual survey released Wednesday.

Eighty-eight percent of the executives said they expect gas-electric hybrids to gain market share, up from 74 percent in 2004. Seventy-nine percent said they expect low-cost cars to gain share. Just 35 percent expect the luxury market to grow - compared to 48 percent two years ago - while 36 percent expect SUVs will gain market share.

There were some differences by region. More than half of the Asian and European executives surveyed predicted growth for SUVs, compared to just 6 percent of North American executives. North American executives were the least optimistic about luxury growth, while Asians were the only executives to predict much growth in the pickup segment.

The survey, by the auditing and consulting firm KPMG LLP, collected responses from 140 senior executives at 35 vehicle manufacturers and 105 suppliers. The sixth annual survey was distributed to 50 executives in North America, 50 in Europe and 40 in Asia in the fall of 2005.

KPMG said fuel prices are among the reasons for the shift in consumer preferences. Twenty percent of respondents said consumers would look for a more fuel-efficient vehicle if U.S. gas prices remained between $2.75 and $3 a gallon, while 45 percent said consumers would be swayed if gas prices went above $3.

"The rise in gas prices due to Hurricane Katrina left a lasting impression on the minds of consumers," said Betsy Meter, an audit partner in KPMG's automotive practice.

The survey predicts continuing market share declines for General Motors Corp. and other North American automakers. GM's global market share in the third quarter of 2005 was 14.6 percent, down from 15.4 percent the year before.

More than three-quarters of executives predict South Korean and Chinese brands will see the largest global share increases in the next five years, with Japanese and Indian brands behind. Only 19 percent believe North American brands will increase their market share in that time.

China is viewed as the most important growth market in the coming years, and executives predict non-Chinese Asian automakers are most likely to succeed there. Manufacturing will follow sales trends, with more than half the executives predicting new auto plants will be built in Asia, South America and Eastern Europe in the next five years. About half said there will be fewer plants in North America and Western Europe by 2010.

KPMG said surveys over several years have shown increasing pessimism about the future of North American automakers. In 2001, 56 percent predicted North American brands would make headway thanks to increased efficiency and competitiveness. Only 32 percent made that prediction in 2005.

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