Technological advances, including digital economy, social media, mobile devices and big data, will transform business in the next five years, according to 79 percent of automotive CEO respondents to PwC’s 17th Annual Global CEO Survey. The survey also finds that 57 percent of automotive CEOs have a program underway or completed, or have a strategy in place to implement a change around technology investments.
The study, “Fit for growth: The automotive industry—Where it's going and how it plans to get there,” also reveals that the majority of automotive CEOs see a need to adapt their supply chains, and 20 percent have already started or completed change programs. Fifty-six percent of respondents said they are somewhat or very concerned about supply chain disruption being a potential business threat to their organizations.
This means CEOs are improving regional supply-chain and logistics strategies to create an efficient flow of resources and products, including building where their customers are, said PwC. The survey finds that China, the world's largest new vehicle market, tops the list of countries that automotive CEOs consider important for overall growth, followed by the United States.
"From the purchasing process and ownership experience to in-vehicle infotainment and fuel-efficiency expectations, technological advancements are radically changing the automotive industry," said Rick Hanna, PwC's global automotive leader, in a statement. "Technology is playing a growing role within company operations and future growth. Beyond the customer, automotive CEOs are betting on advancements in technology when managing their supply chains, driving innovation, developing integrated infrastructure models and attracting talent."
Other concerns cited by automotive OEMs include availability of key skills, raw materials costs and rising labor costs in high growth markets. They are also aware of the challenges around changing market dynamics and advancements in technology influencing the need to invest in building infrastructure in new cities and replacing or update infrastructure in older cities. Fifty-seven percent of automotive OEMs are concerned that inadequate basic infrastructure could threaten growth, compared to 47 percent of CEOs overall.
"Change is here and leading companies are closely evaluating every aspect of their business," said Hanna. "Today's automotive CEOs should understand the issues at hand and address them on a much larger scale. In order to have transformational growth, CEOs are taking these challenges and turning them into opportunities."
Here are ten key automotive takeaways from the study.
44% of automotive CEOs believe the global economy is improving. That's up from 16% last year. (Click image to enlarge)
86% of automotive CEOs say their companies have implemented cost reduction measures in the past 12 months. (Click image to enlarge.)
90% of automotive CEOs are somewhat or very confident of growth over the next three years. (Click image to enlarge.)
Company Confidence Grows
47% of automotive CEOs are confident in their company's growth over the next three years, while 16% say they are very confident. (Click image to enlarge.)
78% of automotive CEOs are worried about increasing tax burden, followed by government response to fiscal deficit and debt burden (74%), and exchange rate volatility (74%). (Click image to enlarge.)
Only 11% of automotive CEOs are planning a domestic M&A in the next 12 months. (Click image to enlarge.)
Automotive CEOs report several potential business threats including new market entrants, availability of key skills, and supply chain disruptions. (Click image to enlarge.)
Tech Advances Top Transformation
79% of automotive CEOs believe technological advances such as digital economy, social media, mobile devices and big data are key trends transforming the industry. (Click image to enlarge.)
Automotive CEOs recognize the need to make some changes to capitalize on the top three global trends. (Click image to enlarge.)
Good Corporate Citizenship
95% of automotive CEOs agree it's important to promote a culture of ethical behavior and 93% say it's important to ensure the integrity of the supply chain. (Click image to enlarge.)