Many of the trends and shifts identified have implications for automotive industry FDI:

• Japanese sales growth is maturing; market-share gains will come from South Korean and Chinese brands.
• Foreign vehicle manufacturer and supplier investment in China will increase, but profits there might come under pressure. An eventual auto-maker shake-out appears likely.
• North American makers’ loss of global market share will slow down.
• Higher profits are slipping further into the future, to 2006 or 2007, but losses are expected to have peaked, for the time being, in 2003.
• The car’s comeback will continue, while SUV, pick-up and minivan sales will stabilise at or near present levels for the next few years.
• Luxury vehicles will lose some appeal.
• New technology will be as important as new models in attracting customers.

Only 29% of respondents said they would increase investment in new plants in the next five years, compared with 43% in the previous year.

Overall, the results indicate a cautious mood in the industry, with executives more focused on products, technology and costs than on expanding their physical presence. If this sentiment prevails, 2005 could be a relatively quiet year for automotive FDI.

Andreas Dressler is a director of KPMG’s Global Location & Expansion Services.

E-mail: ADressler@kpmg.com