Signs of growth on the horizon in the next few years
DETROIT, 2 April 2013 ― Automotive mergers and acquisitions (M&A) activity in the first half of 2012 has given way to macroeconomic pressures, resulting in passive M&A activity in 2012 overall, PwC reports in Driving Value: Automotive M&A Insights 2012. The automotive industry's overall M&A deal volume declined 18 percent and deal value declined by 33 percent, compared to 2011. In comparison, in 2012, global cross-sector M&A activity declined less than the automotive sector, with deal volumes declining by seven percent and deal value declining by 17 percent compared to 2011.
While some regions continue to show signs of stabilization and profitability after the recession in 2008-2009, the economic crisis in Europe is still an ongoing issue of concern. Europe’s share of global automotive deal volumes is down for the second straight year, while Asia continues to grow its presence, becoming the largest acquirer region in 2012.
With Europe’s debt crisis weighing heavily on the European automotive sector, automotive M&A activity declined in terms of deal volume and value when compared to 2011, when a total of 594 deals were completed for a disclosed value of $44.9 billion. The automotive sector transacted 98 deals during Q4 2012, marking the third straight quarter of decreasing deal volume.
"Uncertainty is hurting the deal value more than the actual recession,” said Paul Elie, U.S. automotive transaction services leader. "There is increased speculation resulting from the looming economic challenges in Europe and many unknowns in the regulatory environment. As soon as the macroeconomic environment improves, we likely will see a wave of pent-up demand resulting in increased deal activity.”
The PwC report shows:
Automotive vehicle manufacturers, suppliers and others
Financial and trade buyers
Additionally, the report found that Asia topped Europe in 2012 as the largest global acquirer. Europe was the largest beneficiary of cross border investments with 47 inbound deals transacted in the region during 2012, 43 percent of which were investments by U.S. companies.
"With domestic sales slowing in both China and India, buyers from these markets may look for opportunities to augment domestic sales,” continued Elie. “These buyers are likely to pursue technology deals to compete globally, as well as to effectively compete with foreign companies in domestic markets and more inclined to close deals in more stable economic climates such as the U.S.”
Looking ahead, PwC’s positive outlook for M&A stems from the forecasted 30 million units estimated to be added to the industry between 2012 and 2019. Key factors predicted to spark automotive M&A growth are:
For more information on PwC automotive deal capabilities and to download PwC's publication Driving Value: Automotive M&A Insights 2012, visit: www.pwc.com/auto.
About PwC's Automotive Practice
PwC's global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality. One of PwC's global automotive practice's key competitive advantages is Autofacts®, a team of automotive industry specialists dedicated to ongoing analysis of sector trends. Autofacts provides our team of more than 4,800 automotive professionals and our clients with data and analysis to assess implications, make recommendations, and support decisions to compete in the global marketplace.
PwC firms help organizations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
© 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.