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Global automotive and industrial manufacturing leaders are signalling renewed confidence in growth even as geopolitical tensions, cost pressures and the energy transition reshape the operating landscape, according to a 2025 outlook by KPMG International.
The survey, which captures responses from 230 chief executives—including 110 from automotive and 120 from industrial manufacturing—suggests companies are leaning on artificial intelligence (AI), supply chain resilience and productivity gains to navigate a period of deep structural change.
Despite volatile demand and rising sustainability expectations, 87% of automotive CEOs and 81% of industrial manufacturing CEOs expressed confidence in sectoral growth prospects. However, fewer—around three-quarters—said they were confident in their own organisations’ ability to execute transformation at scale, highlighting what the report describes as a widening execution gap.
AI has emerged as a central investment theme, with 81% of automotive CEOs and 68% of industrial manufacturing leaders identifying it as a top priority. Around 70% of respondents said they plan to allocate 10–20% of budgets towards AI, automation and digital technologies over the next year, as companies seek efficiency gains and margin protection.
Supply chain resilience remains the top operational concern, cited by 47% of automotive CEOs and 63% of their industrial manufacturing peers, reflecting ongoing disruptions from geopolitical fragmentation and resource constraints.
The findings hold particular relevance for India, where strong domestic demand, infrastructure spending and localisation efforts are supporting growth, even as companies face mounting pressure to decarbonise and digitally transform.
“Indian automotive companies are well positioned to move from AI pilots to enterprise-wide deployment,” said Jeffry Jacob, noting that scaling execution alongside sustainability and digitalisation would determine long-term competitiveness.
Echoing similar concerns, S Sathish said global manufacturers are prioritising cost efficiency, operational resilience and technology adoption to sustain performance in a volatile environment.
The report also flags talent gaps as a key constraint, with about one-third of CEOs citing challenges in bridging the divide between existing workforce skills and AI-driven capabilities. At the same time, collaboration is gaining traction, with over half of automotive CEOs and 43% of industrial manufacturing leaders turning to partnerships to drive innovation while meeting regulatory demands.
With deal activity expected to remain robust—nearly half of CEOs anticipating high-impact transactions—the sector appears poised at an inflection point, where execution discipline and technology-led transformation will define the next phase of growth.
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