A majority of automotive and industrial manufacturing chief executives globally remain confident about sector growth, even as they grapple with geopolitical uncertainty, cost pressures, and the accelerating pace of technological change, according to KPMG International's 2025 Automotive and Industrial Manufacturing CEO Outlook.
The report, which draws on responses from 230 CEOs across 110 automotive companies and 120 industrial manufacturers worldwide, finds that 87 percent of automotive CEOs and 81 percent of industrial manufacturing CEOs expressed confidence in their sector's near-term growth prospects. Confidence in their own organisations' ability to execute transformation at the required speed and scale was somewhat lower — around three-quarters for both sectors — pointing to a persistent execution gap between strategic ambition and operational readiness.
Artificial intelligence has emerged as the dominant investment theme. Around 81 percent of automotive CEOs and 68 percent of industrial manufacturing CEOs identified AI as a top investment priority. Approximately 70 percent of leaders across both sectors said they plan to direct 10 to 20 percent of their budgets toward AI, automation, and digital technologies over the coming year. Key applications include demand forecasting, quality control, predictive maintenance, and end-to-end supply chain visibility.
Supply chain resilience ranked as the leading operational concern — cited by 47 percent of automotive CEOs and 63 percent of industrial manufacturing CEOs — reflecting ongoing anxiety over trade fragmentation, geopolitical disruption, and resource constraints.
Regulatory navigation remains a significant challenge. Around two-thirds of CEOs in both sectors said they are still learning to manage regulatory and political differences across markets, underscoring the complexity of operating in an increasingly fragmented global trade environment.
For India specifically, KPMG's analysis points to an inflection point. Indian manufacturers are moving beyond AI pilot programmes toward enterprise-wide deployment, supported by strong domestic demand, infrastructure investment, and policy-driven localisation momentum. At the same time, expectations around decarbonisation, cybersecurity, and workforce development are intensifying.
Jeffry Jacob, Partner and National Sector Leader for Automotive at KPMG in India, said the findings highlight that the ability to execute AI and digitalisation strategies at scale — while embedding sustainability into core operations — will determine long-term competitiveness for Indian automotive companies.
S Sathish, Partner and National Sector Leader for Industrial Manufacturing at KPMG in India, noted that workforce skilling and decarbonisation are receiving increasing attention, adding that embracing these priorities may no longer be optional for companies seeking sustained growth.
On deal activity, 49 percent of industrial manufacturing CEOs and 44 percent of automotive CEOs anticipated high-impact merger and acquisition activity in the period ahead. Meanwhile, talent acquisition remains a bottleneck, with the most commonly cited challenge being the gap between existing workforce skills and the capabilities required to deploy and manage AI systems effectively.