Safety innovation (71% in 2010) and vehicle styling (61% in 2010) were among the factors seeing the most significant increases in perceived importance compared to last year’s survey results. Consumer preferences for ergonomics and comfort, and telematics/personal assistance services also rose significantly, according to executive perceptions captured by the KPMG survey.

When asked which vehicle categories will see global sales increases over the next five years, hybrid fuel vehicles (84%) were most frequently named by the respondents, followed by electric vehicles (77%), which was a new category option in the survey this year, cars (69%), other alternative fuel vehicles (63%), basic or introduction cars (60%), cross-overs (56%), SUVs (51%), luxury vehicles (46%), small pick-up trucks (45%), minivans (41%), and large pick-up trucks (27%).

The vehicle categories seeing the most significant response increases in the 2011 survey compared with 2010 were SUVs, luxury vehicles, large pick-up trucks, and cross-overs.

Executives believe that these categories are here to stay, that consumers are drawn to them, and that success lies in competitively producing the best vehicle within each category. What we are also seeing is more optimism across the board for vehicle sales following the economic downturn.

—Betsy Meter, national audit leader for KPMG’s automotive practice

Conversely, responses for hybrid vehicles dropped in 2011, and basic/introduction cars fell more than 20 percentage points from last year. In fact, Hans Flick, national tax leader for KPMG’s automotive practice noted that executives appear to indicate that the idea of entry level cars may not have met expectations.

Investments. The 2011 KPMG survey also finds the auto industry heavily investing in future technology, new products and safety improvements. When asked where manufacturers would increase investment over the next two years, new products (97%), new powertrain technology (93%), and improvements to safety performance (87%) were the top selections.

In addition to these production-related investments, auto executives also say they will be increasing their focus on alternative fuel technologies, specifically hybrid fuel systems, battery electric power and fuel cell electric power.

Despite the apparent focus on electric power, seven in ten respondents to the KPMG survey say that the auto industry won’t be able to offer an electric vehicle that is as affordable as traditional fuel vehicles for mainstream buyers for at least four years.

When asked what the most effective ways of making electric vehicles affordable for mainstream buyers are, the most popular responses were government subsidies (38%), automakers partnering with energy providers to generate after-sales revenues on e-components (20%), and consolidation among e-car technology partners (13%).

With regard to what would happen to government subsidies for the automotive industry in their respective countries, executive were mixed. Twenty-four percent expect subsidies to increase, 34% say they will remain the same, and 43% predict a decline.

With regard to investment in global growth markets, respondents predict increased investment in China (58%), India (50%), Brazil (41%) and Russia (33%).

US automaker gains in market share. The survey also found that global execs expect US auto brands to increase market share over the next five years, spurred by product innovation, restructuring activities and continued improvement in product quality. The outlook marks a significant turnaround in their expectations from a year ago.

When asked to predict global market share winners over the next five years, Ford jumped to 43% seeing market share gains compared with 29% in 2010 and 13% in 2009.

General Motors saw the most significant climb among the respondents in this year’s survey, as 40% of executives expect its market share to increase over the next five years, up considerably from 13% in 2010 and 15% in 2009.

Chrysler also saw a double-digit increase in the number of executives predicting improvement—finishing at 24% this year versus just 7.5% in 2010.

Although US automakers saw the most significant improvement compared with 2010 survey data, executives identified Chinese brands, as well as existing global players Volkswagen (#4 in 2010), Hyundai/Kia (#2 in 2010), Indian brands (#3 in 2010) and BMW (#9 in 2010) as the top five market share winners this year. Honda ranked seventh, ahead of Ford, and Toyota ranked ninth just ahead of General Motors.

Forecast for Mergers and Acquisitions. Nearly two-thirds (64%) of the KPMG survey respondents believe the number of alliances, mergers and acquisitions during the next five years will increase for vehicle manufacturers. According to executives, the specific global drivers of the M&A activity include access to new technologies and products (88%), access to new markets and customers (88%), product portfolio diversification (79%) and potential for product synergies (77%).

Sixty-two percent also think M&A will increase for tier-one suppliers versus 71% in 2010, tier-two suppliers (47%) and dealers (46%).

KPMG interviewed 200 global executives, representing vehicle manufacturers and suppliers, from October through November. KPMG has released an annual survey of automotive executives expressing their views on the state of the industry since 1999.

KPMG LLP, the audit, tax and advisory firm, is the US member firm of KPMG International Cooperative (KPMG International). KPMG International’s member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.