PwC: Auto supplier M&A activity remains high

By Rob Starr, Content Manager, Big4.com

An  expanded PwC 2012 study includes 700 automotive suppliers with aggregate revenues of $2.8 trillion in 2011 from Brazil, China, Europe, India, North America, Japan, and South Korea. PwC’s global automotive management consulting practice recently released “Consolidation in the Global Automotive Supply Industry 2012” the firm’s fifth annual study of the global state of the automotive supplier market.

With global automotive production markets growing (except for Western Europe) and undervalued automotive supply assets, merger and acquisition (M&A) activity is anticipated to remain at a near record high in 2012, with about 270 automotive supplier deals globally. The study reveals that European automotive suppliers are the key targets of automotive supplier M&A activity for the second consecutive year.

Another key finding of the 2012 study is that European, North American, Japanese and South Korean automotive suppliers have not returned to pre-crises capital investment (capex) levels. Capex as a percent of sales was 5.1 percent for the top Global 100 suppliers in 2008, dipped to an all-time low of 3.6 percent in 2010, and only recovered to 4.1 percent in 2011. Chinese suppliers have increased their capex spending from 7.1 percent to 10.5 percent in the same timeframe.

PwC’s automotive management consulting practice is creating a competitive advantage for its clients by changing the way companies operate. PwC’s management consultants work with senior automotive executives to help develop and implement innovative operational strategies that deliver breakthrough results. The practice is a leader in operational strategy, supply chain, product development, strategic sourcing, and manufacturing. PwC has automotive resources in every automotive market around the world. For more information, visit www.pwc.com.