A whopping 93 percent of automotive OEMs and suppliers say they have seen an increase in demand for their vehicles, parts and services in the past year. Those numbers are reported in the 2012 Dykema Automotive Institute Survey: Industry Challenges. Due to the jump in business, 77 percent surveyed said they had "made substantive changes" to handle the growth.

But the study wasn't all good news. A third of survey participants said they expected raw material costs to be a significant challenge in the coming year. Tight lending was the second most cited concern in the study.

And it looks like more mergers and acquisitions are planned for the coming year. The study showed 56 percent of respondents planned to move forward with an acquisition.

Other issues that concern automotive executives are class action litigation, legislation concerning energy and environment and financially-troubled suppliers. The survey also asked executives if their business was prepared for a major natural disaster, with 41 percent saying they had not devised a crisis management plan.
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2012 Dykema Automotive Institute Survey: Industry Challenges

While Automotive Industry Shows Signs of Recovery, OEMs and Suppliers Confirm Challenges Are Ahead By Way of Raw Material Costs, Natural Disasters and Emerging Technologies
October 17, 2012

DETROIT-The automotive industry is showing signs of recovery, but automotive executives still see a number of challenges in the year ahead, according to the 2012 Dykema Automotive Institute Survey: Industry Challenges. The survey was unveiled today at Dykema's Automotive Institute Forum in Detroit.

Measuring the attitudes and perspectives of executives at OEMs and suppliers, the survey reveals that with the financial crisis and recession continuing to wane, an overwhelming 93 percent of respondents have experienced an increase in demand for their vehicles, parts and services in the past year. As a result, 77 percent of those surveyed have made substantive changes to handle the influx.

With that in mind, while 43 percent of respondents confirmed their companies did not move forward with an acquisition in the past year, largely due to valuations, 56 percent of respondents seem prepared to do more M&A in the coming year, saying they plan to move forward with an acquisition.

Despite the optimistic forecast, more than a third of respondents (39 percent) believe that raw material costs will pose the greatest challenge to their company's supply chains in the coming year. While this is the main concern among those surveyed, 21percent of respondents also listed banks' limited financial lending to auto companies as an additional cause for concern.

"For the auto industry, these are interesting times. Every major company has gone through tremendous upheaval and dealt with changes to every aspect of its operations," said Aleks Miziolek, Director of Dykema's Automotive Industry Group. "The survey shows that while the automotive industry is emerging strongly from the depths of the global recession, there are many challenges still on the horizon for automotive executives that may impact the long term success of the industry."

The DAI survey also gave insight into the industry's view on emerging technologies. While companies are investing more in innovations designed to make cars safer, more than half of OEMs said distracted drivers present the biggest liability issue with connected vehicle technologies. Privacy is also a major concern, with 52 percent of respondents identifying the unauthorized use of data as a key privacy issue. Meanwhile, a quarter of the industry representatives surveyed worry that consumers could reject technology, such as vehicle tracking, due to privacy concerns.

Added Miziolek, "With market forecasting presenting an increasingly difficult challenge for our industry, we believe that our survey results will help inform both OEMs and suppliers in such key areas as supply chain management, privacy and data security issues tied to connected vehicle technology, class action litigation, regulatory issues and mergers and acquisitions (M&A)."

According to Dykema, the survey yielded a number of other prominent conclusions, including:

Class actions remain a real source for concern, particularly for OEMs, due to their potential to adversely affect an automotive company's brands, corporate reputation and bottom line. Twenty-two percent of respondents, most of them OEMs, report an increase in class action lawsuits in the past two years. In addition, 58 percent of those surveyed confirmed their organizations have taken steps in the past two years to try to reduce their exposure to class action litigation.
The top legislative issue for 30 percent of automotive companies is energy and environmental legislation. 26 percent say the main issue is transportation legislation, followed by tax reform (15 percent).
Raw material costs pose the greatest challenge ahead to supply chains, according to 39 percent of respondents. Meanwhile, 21 percent of respondents list banks' limited financial lending to auto companies as the biggest challenge, while 19 percent reference financially troubled suppliers. Only 13 percent of respondents overall say labor union issues are the primary challenge.
The auto industry is not fully prepared for another natural disaster. In the wake of the March 2011 tsunami that hit Japan, the Evonik fire and other recent natural disasters that have impacted the automotive supply chain drastically, 41 percent of respondents stated they have not instituted crisis management teams to be used under Force Majeure.

In July 2012, Dykema distributed the survey via e-mail to a group of senior executives and advisors in the automotive industry including CEOs, CFOs and other company officers.


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  • 22 Comments
      bearmeans
      • 2 Years Ago
      do not worry obuma will buy more cheap steel from china !!
      ogservice
      • 2 Years Ago
      I'm pretty sure the American auto industry's two biggest concerns are the Japanese and German auto industries.
      • 2 Years Ago
      [blocked]
      kev
      • 2 Years Ago
      Higher cost and lower wages???
      Daddy
      • 2 Years Ago
      I would think the three biggest worries for the U.S. Auto industry should be: Unions and their High Cost Demands; Productions ability to price (Competitively) your product; High Quality of parts, to ensure a high quality product.
      Travisty
      • 2 Years Ago
      I'd say lack of easy credit (as in, "so you have a credit score of 400 and are upside down on your current car by ~$15k, but that's ok, we can just roll that over into your new car loan, which is only 7% interest for the next 8 years...") is probably a GOOD thing.
      Frank S. Pedigo
      • 2 Years Ago
      No problem . Just do ike Ann Romney did in 2009 . She was part of an investment group who bought out Delphi from GM . They then closed 28 of 29 US plants and laidoff over 25,000 AMERICAN WORKERS and moved the factories to China . Poor Ann only made $115,000,000 that year off this traitorous act . Just think how many more jobs her husband will ship out ?
        ohger1
        • 2 Years Ago
        @Frank S. Pedigo
        Try reading the UAW contracts, and then see if any company with foreign competition can survive....
          • 2 Years Ago
          @ohger1
          [blocked]
          • 2 Years Ago
          @ohger1
          [blocked]
      lobo7606
      • 2 Years Ago
      Two biggest concerns: Obama and Biden.
        • 2 Years Ago
        @lobo7606
        [blocked]
        calderasf
        • 2 Years Ago
        @lobo7606
        Seems that saving the auto industry is already forgotten by you.
      calderasf
      • 2 Years Ago
      What national disaster could hurt car sales? Seems after any large disaster, flood earthquake people need to replace cars destroyed.
      rmkensington
      • 2 Years Ago
      But without class action lawsuits how would I get coupons and random $5 checks?
      • 2 Years Ago
      [blocked]
        bocavert
        • 2 Years Ago
        Mitt, just like his father who liquidated American Motors, took his profit. closed the factories, dealerships, Let all the employees go, suppliers, families and careers, Zip. .. The easy way out. Oh, didn't Bain Capital do the same thing? In the Gypsy World they call it a Bust Out. Oh, not everyone is familiar with the expressions, Gypsy, Traveler, Grifter, Romany.
          ohger1
          • 2 Years Ago
          @bocavert
          And if your dad was running AMC, it would have gone bankrupt. Nothing on Earth could have saved it, or the dozens of car manufacturers in the U.S. that went away in the same way years before you were born..
      brennemanbelkin
      • 2 Years Ago
      Wlk into a dealership with twenty bucks and a Timex and you'll drive home in a new car. Long term, this is a disasterous business plan.
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