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Mixed outlook for automotive

Many senior automotive executives are pessimistic about the likelihood of profits improving in the motor industry in the coming years.

Issues of oversupply, demand for more diverse model ranges and the continued attacks by Asian brands on new car markets means vehicle manufacturers are being forced to become more efficient globally.

But Mike Steventon, UK head of automotive at KPMG, says the UK’s motor industry is in a relatively strong position, thanks to the presence of all the major carmakers.

“Here we are well represented both in the retailing and manufacturing side. We’re not immune from the global problems but we have a bit of a comfort zone,” he says.

Last week KPMG published its annual survey of 140 automotive executives from across the globe. The study shows many are sceptical about the ability of US and European manufacturers such as General Motors, Ford and Daimler-Chrysler to become more efficient and competitive before the end of the decade. Nevertheless, carmakers realise they must tackle over-production.

Steventon says Europe is “a highly attractive market” for the Asian brands, and many executives see it becoming a battleground for market share.

Dealer consolidation “will be the real dynamic” over the new decade, says Steventon. He believes some of the UK’s leading motor retailers will achieve real scale. They will also want pan-European growth, with the booming markets of Eastern Europe looking particularly tempting.

“The real goal for dealer groups must be to convert the dealership into a mere point of sale, with the back-office roles centralised. This industry really needs to move into the 21st century and adopt a more efficient business model,” he says.

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