Some 30 percent of the 100 senior auto executives interviewed by KPMG LLP said they expected lean times industry-wide until 2005 at the earliest.
In KPMG's survey last year, 36 percent predicted better profits in 2003, while 24 percent forecast better profit levels in 2004.
KPMG conducted its fourth annual survey from the end of September through early November. The executives work for global auto manufacturers and suppliers.
"It's obvious the executives no longer see profitability rebounding anytime soon, both as a result of the economic downturn and consumers' expectations for rebates, special pricing and other financial arrangements," said Brian Ambrose, director of KPMG's automotive practice.
Incentives have been a trademark of the industry since the Sept. 11, 2001, attacks, particularly among the Big Three automakers — General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group.
The deals to lure buyers have been a severe burden on profits, though the KPMG survey indicates many executives see less emphasis placed on incentives in the coming years.
Forty-eight percent of those surveyed said they expected an increase in incentives in the next five years, down from 63 percent in 2001.
Ambrose said North American manufacturers are counting on dozens of new models with the latest styling and technology to relieve some of the pricing pressure. At the North American International Auto Show opening in Detroit next week, 45 automakers will introduce some 60-plus vehicles, a record for the event.
"They're banking that these new vehicles will recapture the eye of the consumer, returning them to profitability and making zero-percent financing a thing of the past," Ambrose said.
Analysts aren't so sure, though, and have said consumers have grown so used to financing deals and other bargains that it will be difficult for automakers to back off.
Slightly more than half of the survey's respondents said they expected global market share for U.S. automakers to decrease over the next five years. Just 11 percent expected market share for U.S. makers to grow.
Asian brands were seen as growing fastest among the foreigners.
Aside from the survey, the numbers speak for themselves. Six years ago, GM, Ford and Chrysler controlled 72 percent of the U.S. market. But that number has fallen by nearly a dozen percentage points as Japanese and other foreign transplants have expanded.
Toyota, Honda, Nissan and Hyundai are adding manufacturing capacity in North America, and some analysts predict foreign brands will have 50 percent of the U.S. market in the next five years.
"Asian and European brands have been successful at bringing the right product to the market quickly while being flexible in their manufacturing processes to respond to changes in demand," Ambrose said.
The survey also suggests that automakers are seeking new ways to cut costs. Significantly more respondents see assembly innovations and outsourcing as opportunities for reducing expenses than in last year's survey.
Automakers cited controlling production costs as the biggest challenge in 2003 and beyond.
As for consumer tastes, executives said quality, affordability and safety are the three most important factors customers consider when buying a vehicle.
By John Porretto