DETROIT -- A new industry survey shows that automotive industry executives are less optimistic about the economy than they were three months ago, but remain mostly positive about 2012 business forecasts.
Accounting and consulting firm KPMG conducted the study in July and October.
The October survey found 42 percent of the executives polled expect the economy to improve in 2012 -- down from 58 percent in July, KPMG said in a report issued this week.
Likewise, 73 percent don't foresee a full economic recovery until the end of 2013 or later, up slightly from 71 percent who said the same in July.
The survey measured the responses of 89 executives, more than half of whom work for companies that generate more than $10 billion of revenue annually, the firm said.
"There's a sense of this cautious optimism where they see this growth opportunity," Gary Silberg, national auto industry leader for KPMG said. "And they're willing to invest. All the CEOs I've talked to feel this way."
KPMG conducts an annual global automotive survey every January, but this one was reserved to executives in the United States, said Manual Goncalves, spokesman for KPMG.
Execs on edge
"We'll likely do a quarter over quarter survey going forward," Goncalves said.
Many of the executives, Silberg said, remain on edge about how government regulations -- such as the new CAFE standards proposed this week -- will impact their companies.
KPMG found more regression regarding plans for hiring and capital spending in 2012, it said. The outlook is less optimistic than it had been for hiring and capital spending, too.
Fifty percent of executives surveyed after September expected to add employees next year, compared to 62 percent who said they would in July.
A similar decline was found in projections for capital spending: in July, 71 percent expected to increase capital spending. Now, only 62 percent expect to do so.
"One major finding of our most recent survey are the concerns that executives have over the macro economy," Silberg said in a statement. "In addition to the uncertainty regarding the global economic environment, auto executives are challenged with intensified competition, pricing pressures and volatile commodity prices."
Enhancing manufacturing efficiencies, reducing overhead costs and restructuring existing operations were frequently selected as factors that would have the most positive impact on profitability, the report said.
But some challenges remain with commodity costs, capacity and transparency.
"Auto executives remain bullish, building on the momentum of the past two years and continue to invest heavily in new product development and product innovation," Silberg said in the statement.
"Companies are looking for suppliers they can trust and suppliers with the ability to 'grow as we grow,'" he said.
Silberg said auto executives feel good about the orders and numbers they're seeing. As such, they remain optimistic about revenue increases for the coming year.
Those surveyed believed new models and products -- as well as expansion into new geographic markets over the next three years -- will be key to increasing revenue.
In fact, 77 percent of executives surveyed expected their companies to increase revenue – up from 72 percent three months earlier.
"If you look at their balance sheets internally and you see the restructuring and the cash flow of these profits and the bottom line, it gives them confidence," Silberg said. "It's the confidence that's generating cash funds."