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Auto profits coming soon?
Firm's annual survey of auto execs finds they're more optimistic about a return to the black.
January 7, 2005: 8:14 AM EST

NEW YORK (CNN/Money) - Auto executives are a bit more bullish on their profit outlook, although most still see a return to strong profits at least a year away, according to an annual survey by accounting firm KPMG.

The survey of 110 global auto executives, released Friday, shows that 23 percent thought that a return to strong profitability would take place in 2006. Another 22 percent believe that profits will take place in 2007. But 16 percent said they believe a return to strong profits could take place as soon as 2005.

In the previous two years, the survey found auto executives generally looking for a return to profits three years out, and relatively few looking for a return to profits as soon as the year ahead.

"Our survey this year has definitely found improved profit levels emerging sooner rather than later, and this is very encouraging," said Brian Ambrose, national industry leader for KPMG's automotive practice.

One factor in the improving profit outlook could be an expectation that incentives such as cash-back offers and below-market financing may be topping out, according to the survey. It found that only 35 percent of executives expect further increases in incentives, down slightly from 38 percent who saw more attractive offers in the year-earlier survey and 48 percent two years ago.

The survey also found that many believe that the traditional Big Three -- General Motors Corp. (Research), Ford Motor Co. (Research) and the Chrysler Group unit of DaimlerChrysler (Research) -- could see their prolonged market share losses slow, or even turn around.

The survey found that 55 percent of the executives from auto manufacturers around the globe expect to see North American brands remain the same or increase their global market share during the next five years. That's up from only 42 percent in the year-ago survey.

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"North American manufacturers have really focused on product, launching a wide variety of new and exciting model offerings," said KPMG's Ambrose. "In the end the consumer wins, in terms of choice, product quality and affordability."

But the executives surveyed expect Asian auto manufacturers to continue to gain share, and for the European manufacturers to be the losers in the competition for U.S. market share. The survey found that 25 percent are looking for a drop in European auto manufacturers' market share, more than twice as many as in the year-earlier survey.

The survey was conducted in October and November. It was released Friday ahead of the North American International Auto Show, one of the industry's premier annual gatherings. The show kicks off Sunday in Detroit.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.