Attracting talent, managing risks top priorities for auto industry

Attracting and retaining talent, cutting costs, investing in innovation, managing risk and economic uncertainty rank as the top concerns for CEOs of automotive companies, according to PwC's annual automotive survey.

As respondents balance the need to attract talent while investing in innovation, 69 percent of plan to cut costs in the next 12 months, and 72 percent anticipate focusing more heavily on innovating to better existing processes and product development. Another 57 percent of respondents say their companies have been directly impacted by the U.S. debt crisis.

The survey also finds that 78 percent of respondents expect to modify their research and development and innovation capacity in 2012 in an effort to bring new products to market that meet stricter regulatory standards, changing consumer preferences and future growth needs.   

Managing operational risks as new government regulations and restrictions go into effect is another a top priority, and many countries now have new tariffs and tax increases to promote their own domestic automotive industries and retain jobs. Respondents say this is worrisome with 47 percent saying they are concerned about government protectionism.

"The global automotive industry is a growth business and companies continue to expand their footprint in emerging economies while weighing risks," says Rick Hanna, global automotive leader of PwC. "From regulatory factors to fluctuating currencies, automotive executives are pressured to find a balance between global operations, product innovation and securing top talent to compete."

Forty-six percent of respondents say finding the right talent is difficult because of a lack of skilled workers. Another 56 percent of respondents fear that the lack of key skills could stall growth, which is especially concerning in growth markets, such as China. To encourage future growth, 89 percent of respondents believe the private sector should invest and develop a skilled work force. While funds are tight, more than three-quarters of respondents have invested in some of the growth markets where they have operations, including China and Brazil.

Among growth areas, 38 percent of respondents say they are particularly interested in China as a top future market, followed by Brazil at 24 percent and the U.S. at 22 percent. According to PwC's Autofacts, a team of automotive industry specialists dedicated to ongoing analysis of sector trends, China is projected to produce 28 million units a year by 2018 as opposed to just 11.1 million units in the U.S. and 6.4 in Germany. 

The survey also reveals that the automotive industry has a need to adjust to changing consumer preferences and regulatory requirements in various markets. In fact, 59 percent of respondents have amended their products and services to accommodate the Chinese market. 

"Automotive companies need to carefully consider their global growth strategies," Hanna says. "Automotive companies recognize the importance of having strategies in place to meet varied regulatory requirements as well as producing vehicles to appeal to local consumer preferences. Determining the right investment in the brand, platforms and products for specific markets is imperative for long-term growth."

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