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Executives at carmakers and their suppliers fear the world's major auto industries are still producing too much, despite drastic cutbacks, a KPMG survey suggests.
Hyundai Getz cars are seen parked at the port for shipping to Europe in Chennai, India. A survey of auto industry executives reveals overcapacity concerns remain. (M. Lakshmann/Associated Press) In the survey of 200 senior leaders at global automakers and suppliers, almost 90 per cent of North American respondents said overcapacity is still a problem, despite numerous closures and tens of thousands of jobs lost in recent years.
Despite drastic belt-tightening and shuttering of factories worldwide, according to KPMG's 2010 Global Auto Executive Survey, 88 per cent of respondents said auto industry overcapacity remains in North America today. More than one-third of those responding estimated U.S. overcapacity was in the 11 to 20 per cent range and a further one-third said it was in the 21 to 30 per cent range.
More than 10 per cent of survey respondents said the North American industry is overbuilt by at least 40 per cent.
The sector was in virtual freefall in North America last year, forcing governments in Canada and the United States to step in with funding to back the key automakers in exchange for promises to change they way they do business.
General Motors received $52 billion US in government aid from Washington, and has already begun repaying $6.7 billion of that. GM chair Ed Whitacre surprised watchers on Friday by announcing the company plans to return to profitability this year.
A profitable year at GM would be the automaker's first since 2004, when it made $2.7 billion US. It has posted more than $88 billion in losses since then.
North America is perceived to have the greatest overcapacity, but a majority of survey respondents said it also exists in Western Europe, Japan and emerging markets.
Of the 200 respondents, 30 per cent were based in the Americas, including the United States, Canada, Mexico and Brazil.
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