Global auto supplier M&A activity remains high despite Europe debt woes, PwC says

  • Global automotive production seen rising another 40% by 2017
  • Global automotive industry poised for growth in 2012
  • Global automotive production to reach new highs each year through 2017
  • Powertrain systems suppliers at core of current M&A wave

Bangkok, 3 October 2012 – Merger and acquisition (M&A) activities among global automotive suppliers are expected to remain high for at least five years, with European suppliers among the most tempting targets as the continent struggles with a debt crisis, according to a new PwC study.

Sira Intarakumthornchai, CEO of PwC Thailand, revealed in the report ‘Consolidation in the Global Automotive Supply Industry 2012’ that M&A activity among global automotive suppliers is anticipated to remain near a record high in 2012, with about 270 deals globally, because of undervalued automotive supply assets and growing production in all markets except Western Europe.

“The study also reveals that European automotive suppliers are the key targets of automotive supplier M&A activity for the second consecutive year,” he said.

The fifth annual study of the global state of the automotive supplier market, conducted by PwC’s global automotive management consulting practice, includes 700 automotive suppliers with aggregate revenues of $2.8 trillion in 2011 from Brazil, China, Europe, India, North America, Japan, and South Korea.

Dietmar Ostermann, PwC’s global automotive advisory leader and an author of the study, said that during the last 12 months, global auto suppliers, particularly from North America and China, have been targeting European competitors, predominately in powertrain subsystems.

“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,” he said.

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. Ten of those top 25 consolidators are powertrain suppliers. PwC evaluated each of the most likely consolidators on their “buyer score,” a measure of their financial and operational ability to acquire other suppliers, as well as on their “buyer attitude,” a measure of their willingness to make acquisitions.

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% for the top Global 100 suppliers in 2008, dipped to an all-time low of 3.6% in 2010, and only recovered to 4.1% in 2011. Chinese suppliers have increased their capex spending to 10.5% from 7.1% in the same timeframe.

According to PwC’s Ostermann, “When working with our OEM clients on supply chain issues, we hear that supplier capacity in many markets outside of Europe is tight, particularly in North America. North American automotive suppliers are not investing in more capacity in the home market, but rather in emerging markets like China. This continuous North American capacity shortage represents a potential opportunity for a number of suppliers prepared to selectively invest in the U.S. market.”

For a copy of the Consolidation in the Global Automotive Supply Industry 2012 study, visit

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