Attracting Right Talent and Managing Risk Top Priorities For Automotive Industry, According to PwC

More than two thirds of automotive CEOs plan to cut costs in the next 12 months as they balance the need to attract talent and invest in innovation.

DETROIT — Attracting and retaining talent, cutting costs, investing in innovation, managing risk, and economic uncertainty are top concerns among automotive CEOs, according to PwC’s 15th Annual Global CEO Survey automotive summary. More than two thirds of automotive CEOs plan to cut costs in the next 12 months as they balance the need to attract talent and invest in innovation. Of the 104 CEOs from 31 countries participating in the annual survey, 72 percent intend to focus more heavily on innovating to improve existing processes and product development.

As economic uncertainty looms, automotive CEOs are keeping their eye on the economic environment. Fifty-seven percent say their companies have been directly affected by the sovereign debt crisis.

More than three fourths of automotive CEOs plan to change their R&D and innovation capacity in 2012, allowing them to bring new products to market that meet stricter regulatory standards and changing consumer preferences, as well as to realize future growth.  

Managing operational risks while new government regulations and restrictions are implemented is also a top priority for automotive CEOs. Many countries have introduced new tariffs and tax increases to promote their own domestic automotive industries and retain jobs. This is a concern for many automotive CEOs, according to the report, with nearly half, 47 percent, concerned about government protectionism.

“The global automotive industry is a growth business and companies continue to expand their footprint in emerging economies while weighing risks,” said Rick Hanna, global automotive leader, PwC. “From regulatory factors to fluctuating currencies, automotive executives are pressured to find a balance between global operations, product innovation and securing top talent to compete.”

Forty-six percent of automotive CEOs said finding the right talent is a challenge due to a lack of skilled workers. In addition, 56 percent fear that the lack of key skills could drag down growth. This is particularly concerning in growth markets such as China. Eighty-nine percent of automotive CEOs believe that the private sector needs to invest and develop a skilled workforce to achieve future growth.  Although funds are limited, more than three-quarters of automotive CEOs have invested in some of the growth markets where they have operations, such as China and Brazil.

Automotive CEOs also specified that China and Brazil are key markets for future growth.  Once again, they are particularly interested in China, with 38 percent considering it a top future market, followed by Brazil at 24 percent and the U.S. at 22 percent. PwC’s Autofacts, a team of automotive industry specialists dedicated to ongoing analysis of sector trends, forecasts that China will produce 28 million units a year by 2018, compared with just 11.1 million units in the U.S. and 6.4 in Germany.

The automotive industry has also needed to adjust to changing consumer preferences and regulatory requirements in various markets. For example, 59 percent of automotive CEOs have modified products and services to accommodate the Chinese market.

“Automotive companies need to carefully consider their global growth strategies,” said Hanna. “Automotive companies recognize the importance of having strategies in place to meet varied regulatory requirements as well as producing vehicles to appeal to local consumer preferences. Determining the right investment in the brand, platforms and products for specific markets is imperative for long-term growth.”