PwC: Global Automotive Industry M&A activity declines

By Rob Starr, Content Manager, Big4.com

Reflecting a sizeable decline compared to H1 2011, which totaled 303 completed deals with a disclosed valued at $18.8 billion, global automotive industry merger and acquisition (M&A) activity slowed during the first half (H1) of 2012, according to PwC.

Asia was the most active region with more than a third of the global automotive M&A activity during the H1 of 2012. However, most activity was intra-regional, with 86 out of 98 transactions between Asian entities. The current crisis and ensuing austerity measures significantly impacted the automotive industry, with new car registrations declining by 6.3 percent through H1 of the year. PwC’s Autofacts expects 2012 annual sales for Europe to decline by 7.3 percent to 12.6 million units, nearly 3.4 million units below the 2007 peak.

While deal activity slowed across all categories, component suppliers were the most resilient, registering only a five percent decline in deal volume compared to 19 percent and 21 percent declines in vehicle manufacturers and other categories respectively. A recent PwC supplier consolidation study predicts sustained component supplier M&A activity, with sub-categories such as chassis and powertrain systems as the focal points.

Similar to the overall M&A trends, financial buyer activity focused on component suppliers, with nearly 55 percent of their deals in this space. This is a significant change from last year, when financial buyers increased their focus on the others category, comprised of aftermarket, retail, repair, financial services, etc