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Executives Expecting Rising Profits for Global Automobile Market
Feb 15, 2008

Senior executives of the automobile industry are optimistic about the growth in the global automobile market over the next five years, according to a survey by KPMG LLP.

A survey showed that automobile executives around the world are hoping growth in their business, as reported by
WLNS.

KPMG LLP, Audit and Tax Advisory Firm, conducted its annual survey in which 113 senior executives working in automobile industry were interviewed. They are expecting decent growth in the industry. The percentage of profit is expected to grow from 16% in 2007 to 26% in coming five years.

When it was asked to rate the technology, which would be at the focus in coming five years, 79% of the respondents gave priority to hybrid system while 78% gave importance to fuel cell technology.

Daron Gifford, Leader of company’s auto industry of KPMG, said that executives are optimistic about growth because they know that the global automobile industry is heading towards transformation in propulsion technologies like hydrogen fuel cells and gas-electric hybrids, as reported by
Business Week.

Hybrid Cars Market Outlook, a comprehensive analysis by
RNCOS on worldwide hybrid car market also says that hybrid fuel technology will have huge impact on the global automobile industry. Hybrid vehicles have an edge over the traditional technology vehicles as they are fuel-efficient, and give fast acceleration and low emission. The future of next generation vehicle depends on these features. Moreover, it is believed that economics of hybrid possession will also become more conducive for consumers in coming years.

Other reasons for optimism among executives include strong economic growth in developing countries like India and China (that has decreased their fears about global overcapacity) and improving cost framework as the North American makers won the negotiations last year between FM, Chrysler LLC and the United Auto Workers Union and Ford Motor.

24% out of total 113 executives said that the sale of vehicles would rise in China over the next five years. It may reach to 16 Million, equal to the US market or surpass the US market, if the economy of the country continues to grow at current pace. 72% executives said that the consumer demand would grow highest in India.

Betsy Meter, partner of KPMG, believes that the reason for huge optimism among executives is the fast evolving markets in the developing countries, which have surpassed the expectations of industry experts, owing to growth in population and affluence, as reported by
Livemint.

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