According to an annual survey by audit and accounting firm KPMG LLP, more than 3 out of 4 auto executives expect more bankruptcies in their industry. The survey of 200 top executives from automakers and suppliers around the globe found 77% expect more industry bankruptcies as compared to just 36% who expected an increase in bankruptcies a year ago.
The survey was conducted in the fall, before the US government offered a federal loan package to General Motors and Chrysler LLC to allow them to avoid threatened bankruptcy filings. Other governments around the world are considering assistance for their own automakers due to the sharp downturn in global sales. The survey also found that 46% of the executives believe the profit outlook for the overall industry will be volatile over the next 5 years and another 24% see profitability continuing to decline. Only 15% of those surveyed expect profits to improve.
Ms Betsy Meter, a partner in KPMG"s auto practice, said that she believes concerns about bankruptcies are still high, despite the fact that GM and Chrysler have received emergency funding to avoid running out of the cash they need to operate. She added that "I suspect it"s moderated slightly, but I think there"s a great level of uncertainty."
It may be noted that, while most automakers around the globe haven been hit hard during this recession, the three US automakers are still viewed as particularly vulnerable by industry executives. More than 60% of those surveyed believe that GM, Ford Motor and Chrysler will continue to lose global market share in the coming years, while comparable percentages believe that Toyota Motor, Hyundai/Kia, Honda Motor and Volkswagen will all gain share. In addition, about 80% of the executives said they believe Chinese and Indian automakers will gain market share.