The Center for Automotive Research and Ernst & Young's Global Automotive Center Seek A Profitable Business Model for the Automotive Industry

Three-Year Research Consortium Will Address The Industry's Most Critical Issues - Productivity A Central Theme

TRAVERSE CITY, Mich., Aug. 6 -- The Center for Automotive Research (CAR) and Ernst & Young's Global Automotive Center today announced The Auto Industry of the Future, CAR's research consortium that ultimately hopes to outline a new business model for the industry -- one that will promote profitability across the value chain.

"Today's high-volume, low-profit reality suggests that strategies of the '80s and '90s are no longer effective," said Dr. David Cole, chairman, CAR. "Profound change in the industry's current business model is needed."

The five areas identified by CAR as needing the greatest change are: productivity, product, production, people, and profitability. "Total industry success, whether defined by unit output, economic value added, or other measures is generally a combined function of these five factors," said Cole.

Productivity will be a central theme of The Auto Industry of the Future. "Productivity will determine the industry's ability to handle external pricing pressures, labor agreements, regulatory requirements, and other business pressures while becoming an attractive investment opportunity," said Mike Hanley, director, Ernst & Young's Global Automotive Center. "But traditional productivity measures have not accurately portrayed trends for the entire industry. One of the outcomes of this initiative is a study that will take a multifactor approach to productivity, which will include capital, and direct and indirect purchases, as well as labor."

The Auto Industry of the Future's first deliverable, slated for November 2003, will be a white paper on the 2003 United Auto Workers contract that will analyze the short and long-term impact of the agreement on the industry. Next is the multifactor productivity study, which will examine how well the industry "system" is converting inputs to output.

Future reports, which will be released approximately every six months over the next three years, will consider other critical factors such as industry structure, technology trends, manufacturing environment, labor relations, the role of e-tools, product development, and sales and service systems. The program will have three major elements:

   * A working discussion forum to bring stakeholders together for issue
     resolution,

   * A multi-disciplined research program, and

   * A data/survey center to provide supporting analysis and long-range
     forecasts.

  The Center for Automotive Research

The Center for Automotive Research (CAR) promotes the competitiveness of the global automotive industry and the development of responsible public policy by conducting unbiased economic and systems modeling research, developing advanced manufacturing methodologies, integrating socio-economic and technology analyses, and facilitating collaboration through forums and conferences. CAR possesses over 23 years of experience in developing industry consensus in partnership with numerous affiliates and government agencies. CAR's most valuable resource, aside from the skills of its specialized staff, is its access to the decision-makers that lead the companies and organizations that make up the world motor vehicle industry -- a series of working relationships built on trust arising from many successful projects and forums completed throughout the history of CAR. Additional information can be found at www.cargroup.org.

About Ernst & Young

Ernst & Young, a global leader in professional services, is committed to restoring the public's trust in professional services firms and in the quality of financial reporting. Its 106,000 people in more than 140 countries around the globe pursue the highest levels of integrity, quality, and professionalism to provide clients with solutions based on financial, transactional, and risk-management knowledge in Ernst & Young's core services of audit, tax, and corporate finance. Ernst & Young practices also provide legal services in those parts of the world where permitted. Further information about Ernst & Young and its approach to a variety of business issues can be found at www.ey.com/perspectives. Ernst & Young refers to all the members of the global Ernst & Young organization. For more information about our integrated services for the automotive industry visit www.ey.com/us/automotive.