Auto execs’ optimism for economic recovery is declining, survey says image

Optimism for an economic recovery in 2012 in the auto industry is decreasing as executives plan to reduce capital spending and hiring next year because of the uncertainty in Europe.

The KPMG Automotive Executive Survey, conducted last month, reached this conclusion after interviewing a series of automotive executives. The study revealed that 50 percent of auto execs plan to hire next year, compared with 63 percent in the survey last quarter. Capital spending is also on a downward spiral, as 62 percent plan to increase spending in 2012, compared with 71 percent last quarter.

Confidence levels are also decreasing, with 43 percent of respondents expecting the economy to improve next year, compared with 55 percent last quarter. Moreover, 73 percent of auto execs believe a full recovery won’t happen before the end of 2013 or later.

“One major finding of our most recent survey are the concerns that executives have over the macro economy, in particular the potential contagion with a European slowdown and the implications on the U.S. economy,” said Gary Silberg, national automotive industry leader for KPMG LLP in Chicago. “In addition to the uncertainty regarding the global economic environment, auto execs are challenged with intensified competition, pricing pressures and volatile commodity prices.”

However, not everything is gloomy: 77 percent of the surveyed executives expect increased revenue next year, as a result of expansion into new markets.