PwC: Auto supplier M&A activity remains high

By Rob Starr, Content Manager, Big4.com

The expanded “Consolidation in the Global Automotive Supply Industry 2012” from PwC includes 700 automotive suppliers with aggregate revenues of $2.8 trillion in 2011 from Brazil, China, Europe, India, North America, Japan, and South Korea. It  reveals that European automotive suppliers are the key targets of automotive supplier M&A activity for the second consecutive year.

PwC’s study also discusses which suppliers are likely to accelerate in the current market by making acquisitions or divesting non core assets, and which suppliers may still require financial assistance or restructuring. PwC’s 2012 list of top 25 potential consolidators within the top Global 100 suppliers showcases 14 North American companies and only five European suppliers

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 global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality.  As accounting and business advisors to many of the world’s leading vehicle manufacturers and automotive suppliers, PwC has an insider’s view of trends and developments driving the industry.

Dietmar Ostermann, PwC’s global automotive advisory leader and an author of the study commented:

“During the last 12 months, global auto suppliers, particularly from North America and China, have been targeting European competitors, predominately in powertrain subsystems,”he said. “Auto executives should take a harder look at how the industry will continue to change, as leading suppliers will be expected to support global OEM platforms and participate in China’s large and continuously growing auto market, by serving both global JV OEMs and domestic Chinese automakers.”