KPMG's Global Study Finds Auto Industry Stalled on e-Business Progress

  Automotive Industry Trails Other Traditional Industries But Few Industries
             Have the Right Equation and Momentum Can Change Fast

    DETROIT, Jan. 10 The automotive industry is far behind
other industries in terms of e-business progress and must overcome significant
cultural, technological and security issues to move forward, according to the
results of a global B2B e-commerce study conducted by KPMG, the professional
services firm.

    KPMG's global study of automotive leaders from multinational OEMs and Tier
1 and Tier 2 suppliers in the United States, England, Germany and Japan was
conducted in October and November 2000.

    According to Brian Ambrose, national industry director of KPMG's
automotive practice, automotive chief executives need to follow two tracks to
be successful.  "First, they must adopt an e-business vision that encompasses
the entire value chain.  And second, they can force change in their own
organizations by instilling an e-business challenge that touches every
employee."

    KPMG's study found a lack of trust between suppliers and OEMs to be
holding back e-business progress.  "One of the hallmarks of successful
e-business is integration of the value chain," says Ambrose.  "Instead of
keeping all your cards close to the vest, share some of what you are holding
with your value chain partners. It isn't a zero-sum game where your win is a
value chain partner's loss.  It can be a win-win game where the whole value
chain shares information and objectives."

    In terms of their own organizations succeeding at e-business, Ambrose says
progress must come bottom-up, not top down.  "The CEO must challenge its
operating units to foster e-business ideas and initiatives.  It is then up to
the CEO and executive ranks to fund those ideas that are warranted and
leverage the successful ones, where possible, across the organization."

     "The good news," says Ambrose, "is that very few industries have the
right equation, and e-business momentum in the automotive industry can change
fast."

    Aside from the findings of its current B2B E-Commerce study, KPMG and the
Economist Intelligence Unit conducted another in June and July 2000 and found
the automotive industry trailing six other industries (financial services,
chemical, pharmaceutical, electronics, consumer markets, and communications)
in terms of e-business progress, measured by advances in technology and to
what degree senior management was involved in e-business implementation.  The
survey found that only 35 percent of automotive senior execs were actively
involved in e-business initiatives, which was by far the lowest response of
all industries, and quite lower than the cross-industry average of  58
percent.

    According to Ambrose, a company's entire senior management team needs to
be engaged in e-business for the transformation to take place and to set the
entrepreneurial tone.  "A healthy competitive environment in the ranks is a
good thing," he says.

    When asked about the potential barriers to e-business implementation, the
executives in the KPMG/EIU survey cited cost (51 percent), followed by the
need to re-engineer business processes (47 percent), and the lack of e-
business skills (45 percent).

    KPMG's current B2B e-commerce study finds that although technology costs
are a factor, many are 'waiting to see what the other guy does.'   "Business
drives technology," says Ambrose.  "It's not the other way around," he says.
"Automotive companies need to move their business agenda forward, and use
technology appropriately to do so."

    "Furthermore," he states,   "waiting to see what a competitor does is not
a sound strategy in the e-business world because those who take a leadership
position stand to gain the most in terms of strengthening their balance sheets
for acquisitions.  Leaders will be rewarded and followers forced to merge."

    In KPMG's latest study the majority of respondents reported widespread
concern about security issues.  Respondents cited security as one of the
factors prohibiting OEMs and suppliers from swiftly adopting digital
solutions.

    "E-business security is a widespread concern that few companies really
seem to understand," says Ambrose.  "There is a misperception out there that
smaller Internet projects don't need security protection by the nature of
size.  Security is one of the first e-business investments and one of the
wisest.  No one needs to have proprietary designs stolen or a production line
shut down because of network penetration."

    KPMG LLP, the accounting, tax and consulting firm, is the link between
business and technology, providing objective business advice of uncommon
clarity that helps clients achieve market-leading results. KPMG LLP is the
U.S. member firm of KPMG International. KPMG International's member firms have
more than 103,000 professionals, including 7,000 partners, in 159 countries.
KPMG's Web site is http://www.us.kpmg.com. KPMG Consulting, LLC is a leading
provider of Internet integration services and can be found on the Web at
http://www.kpmgconsulting.com or reached through the firm's site.