Asian vehicle brands are expected to make greater inroads into the global market at the expense of European marques, a survey has warned.
Cars made in Japan, India and China will increase their share of the global automotive market significantly over the next five years as consumers shift from US and European manufacturers, according to an annual industry study by KPMG.
The survey, based on inter-views with 140 senior executives at global automakers and suppliers, found increased competition and rising costs hurting the industry's overall profitability. Most of the bosses viewed profitability as either declining or remaining flat over the next five years.
"Expectations for the industry's future profitability around the world are low, even in China," said Betsy Meter, partner in KPMG's auto practice.
"Meeting consumer demand in regions around the world with high quality products is the formula for success."
Eighty-eight per cent of respondents expect Asian vehicle brands to increase in global market share over the next five years, at the expense of North American and European models. Korean and Chinese brands were viewed most favourably by executives, with 79 per cent seeing an
increase in Korean brands and 77 per cent saying Chinese brands would advance, KPMG said.
Almost two thirds (65 per cent) said Japanese brands would increase their share, while half (52 per cent) thought Indian brands would post gains.
In contrast, there is growing pessimism about the prospects for North American brands as 58 per cent expect those models to lose market share, up from 45 per cent who held that view in last year's survey.
Also, only 32 per cent agree that US automakers will become more efficient and more competitive over the next five years, compared with 39 per cent who held that view last year and 50 per cent in 2003. Ms Meter referred to planned plant and job cuts by General Motors and Ford as signs of a fundamental change in the industry.
She said: "Recent announcements by the North American manufacturers signal a fundamental shift for the industry, including recognising the need for capacity rationalisation and labour cost reductions as critical success factors for competing in the global marketplace."
Respondents are divided about the prospects for European brands as 34 per cent expect their global market share to increase, 28 per cent expect it to decrease, while 38 per cent believe it will remain the same.
The executives are not optimistic on the outlook for the industry over the next five years as 28 per cent expect profits to decline, 21 per cent predict they will be flat and only 16 per cent feel they will rise.
