Toronto, Ontario – Innovation is a critical ingredient for long-term auto company survival, according to a report by PricewaterhouseCoopers (PwC). The survey asked 62 auto CEOs about key challenges facing the auto industry, with 92 per cent citing the need for innovative products and technology.
The key challenge, according to PwC, is how to balance the pressing current demands with the need to create a business that can thrive in future years.
A clear understanding of what customers want is essential, with 95 per cent of CEOs citing customer information as key, and 58 per cent saying they would like more information about customer preferences, with only 14 per cent currently receiving adequate information.
“Innovation requires substantial long-term investments, which are difficult to make when a company is struggling with its very existence,” said Mark Walters, PwC Canada automotive practice leader. “It also requires knowing consumers inside out.”
Of those surveyed, 37 per cent of CEOs believe increased product penetration into existing markets is the key to turning around the auto industry. This year’s results are a reversal of last year, where 34 per cent favoured new product development, and 15 per cent better market penetration.
Of the CEOs, 40 per cent believe that structural changes to the business model in their industry will have a positive effect on their operations and on the industry’s overall competitiveness. Many have announced plans to cut production significantly, and PcW predicts that the number of vehicles manufactured in 2009 will be just 59.4 million, down 13 per cent from 2008. Some 38 per cent of CEOs are concerned about the security of their supply chain as a potential threat to long-term business growth, while 81 per cent identify efficient sourcing and supply chain management as a key source of competitive advantage.
The survey also noted the following:
– 94 per cent of CEOs feel that access to and retention of key talent is critical to long-term success, and they are less concerned about finding new employees with the right skills, than with holding onto existing employees
– The trend toward flexible manufacturing will translate into fewer jobs, with 39 per cent expecting to reduce the number of employees in the next 12 months
– 73 per cent agree that a new global climate deal is important or critical, and 70 per cent feel clearer communication about the threats and scope of climate change is required