Automotive CEOs Warn Low Cost Competition is Key Threat, According to PricewaterhouseCoopers Annual Global CEO Survey

DETROIT, Feb. 7, 2005 -- CEOs of automotive companies see low-cost competition as the biggest threat to the future of their sector. The Eighth Annual PricewaterhouseCoopers Global CEO Survey found 73 percent believe such competition will threaten the revenue growth of their company over the next 12 months.

Of all the sectors canvassed in the survey, automotive was the most concerned by the threat of low-cost competition. It is also the most concerned by the detrimental impact of losing key talent. Oil pricing is seen as the third greatest threat, while inflation emerges as one of the least important.

On a more positive note, the survey also found there has been significant expansion in many automotive companies. Sixty-six percent have accelerated expansion plans, 63 percent have increased research and development and 50 percent have opened new plants or offices.

Stephen D'Arcy, PricewaterhouseCoopers Global Automotive Leader, said: "The survey indicates there has been a high level of development and expansion in the automotive sector. When balanced with the widespread concern over low cost competition it can be interpreted as a cause for some concern. However, the best automotive companies are putting methods in place to capitalize on the enormous opportunity presented by low cost and rapidly growing economies."

In terms of development opportunities in specific global territories, China is viewed as by far the most popular, with India taking the second spot.

The automotive sector had the highest response to offshoring non-core business functions, with 49 percent saying they are doing this currently. Seventy-five percent said offshoring helps reduce their costs and 52 percent believe it enhances shareholder value.

Governance, risk management and compliance (GRC) are the focus of this year's survey and 89 percent agree it is a value driver and source of competitive advantage for automotive. This is the highest positive return of all the sectors studied. Consequently the management of GRC is approached with rigor. Ninety-six percent are confident the information they receive is accurate and 87% are confident it is complete. Eighty-six percent believe their organization is managing GRC effectively, which is nearly 10% higher than other manufacturing sectors.

D'Arcy added: "GRC has a direct impact on both reputation and brand so it is essential for automotive companies to at least maintain their high benchmark. The survey demonstrates GRC is being taken very seriously but this must continue if the industry is to retain its competitiveness beyond just the next twelve months."

Notes:

1. The survey is drawn from interviews with over 1,300 CEOs globally, and was released on 25 January at the World Economic Forum at Davos by Global CEO of PricewaterhouseCoopers Sam DiPiazza. A copy of the full PricewaterhouseCoopers Global CEO Survey can be downloaded at http://www.pwc.com/globalceosurvey .

2. For more information on PricewaterhouseCoopers' Automotive practice, please visit http://www.pwc.com/auto .

3. PricewaterhouseCoopers (http://www.pwc.com/ ) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 120,000 people in 139 countries, we build relationships by providing services based on quality and integrity.

PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.