Global auto industry executives are becoming less apprehensive and ``profitability expectations are starting to grow,'' a KPMG survey indicates.

Concerns around insolvencies and overcapacity are diminishing after three to five years of gloom in developed markets, the international accounting and business services firm said in the report released Wednesday.

``These positive changes have occurred against a background of a difficult economic climate, including high oil prices and contracted credit,'' observed Uwe Achterholt, the German-based global head of KPMG's automotive practice.

``As such, the importance of the turnaround in mood cannot be underestimated.''

The report suggests that the industry leaving the first phase of its restructuring process _ deep cost-cutting and a shift of manufacturing to developing countries _ and is entering a new phase, which includes ``a renewed focus on sustainability and the environment, an increase in growth-orientated investment, rising popularity of passenger cars and fuel-efficient vehicles, and higher projected sales of hybrids.''

Fifty-eight per cent of the 113 executives polled by KPMG said the difficulties which have engulfed North American automakers in recent years will ultimately lead to a positive outcome, making them more efficient and competitive.''

``This change in mindset appears to indicate that the industry has seen the bottom of the market and is regrouping with new technology,'' the report says.

Although 37 per cent of respondents expect volatility over the next five years, 26 per cent predict rising profits _ up 10 percentage points from previous years.

New markets, new plants, low-cost suppliers and cheaper vehicles all are seen arising from the vitality of Asia, where 80 per cent of respondents expect sales in China to top 12 million by 2011, compared with 16.1 million in the United States last year.

Seventy-four per cent of those polled expect low-priced Chinese vehicles to be sold in significant numbers in America within a decade.

The biggest increases in global market share are seen going to automakers from China, South Korea and India.