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Auto Industry's Road to Recovery

After emergency government intervention, auto manufacturers are shifting strategies to push the sector forward.

November 2010
(page 3 of 3)
The Road Ahead
As the industry rebounds, will location continue to play as important a role in its recovery?

"The automotive industry will rebound, but it will present a business platform and product strategy that is much more flexible, agile, and even more focused on global markets like China and emerging markets where the U.S. industry can export in R&D prowess," says Robert Hess, managing director of Newmark Knight Frank.

Agility and flexibility will be buzzwords as companies adapt to the economic climate.

"Going forward, successful automotive OEMs will be those that can flex their manufacturing capacity to respond to changing consumer demands, whether related to changes in consumer tastes or, more likely, changes in vehicle size driven by volatility in gasoline prices," says Dan Cheng, partner and head of A.T. Kearney's automotive and transportation practice. "To achieve this, auto OEMs must make future location decisions based upon the ability to flex their existing manufacturing footprint, including their trusted Tier 1 suppliers and their assessment of how quickly they can adjust their output so as to minimize lost sales."

Most analysts are optimistic about the road ahead, although it may be long and winding. "Our projections have the U.S. market achieving the pre-recession sales of approximately 16 million cars and light trucks as soon as 2013, or as late as 2015," says Stephen Spivey, program leader of Frost & Sullivan's automotive and transportation group. "We forecast U.S. vehicle sales to increase by 5 percent to 7 percent annually over the next five years."

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