DETROIT, April 29, 2014 ― Automotive mergers and acquisitions (M&A) activity continued to decline for the second straight year to 465 total deals in 2013, PwC reports in Driving Value: 2013 Automotive M&A Insights. Though at a much slower pace compared to 2012, the industry experienced overall automotive M&A deal volume, down five percent to 465 total transactions in 2013, compared to the significant drop of 18 percent experienced in 2012, when volume declined from the 594 deals transacted in 2011 to 490 deals. In addition, the total aggregate disclosed deal value in the sector was approximately $22 billion in 2013, a decline of 28 percent compared to the total disclosed deal value of approximately $30 billion in 2012.
The slow activity in Europe has been attributed to much of the decrease in automotive M&A activity. After several years of decline resulting from the financial crisis, Europe has started to show signs of growth as well as improved consumer and business confidence.
"Global automotive M&A has experienced a similar decline in activity to that of cross-sector M&A, primarily driven by macro-economic trends," explained Paul Elie, PwC’s U.S. automotive transaction services leader. "The slowing growth in developing markets, most notably China and Brazil, coupled with uncertainty around the European recovery, has caused market participants over the last couple years to think twice before investing in these markets. That said, the performance of the sector over the past five years has been strong. Automotive companies with strong balance sheets will continue to look for strategic investments that provide them with the opportunity to improve or expand their technological, customer or geographic presence.”However, PwC anticipates a positive outlook for an increase in M&A activity with 2013 having demonstrated signs of a marked recovery in Europe. Also, North America and the developing Asia-Pacific regions are expected to continue to expand. Longer-term, PwC’s Autofacts expects the industry to add 25 million units of production between 2013 and 2020, for a compounded annual growth rate of 3.9 percent.
The PwC report key findings:
Automotive vehicle manufacturers, suppliers and others
Financial and trade buyers
“Automotive executives need to build their growth strategies around the global megatrends,” continued Elie. “From the growth of the E7 to new technologies on the horizon, those automotive companies that exploit the opportunities presented by the megatrends will be the leading automotive companies a decade from now.”
Looking ahead, PwC’s anticipates a positive outlook for automotive M&A activity. 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: 2014 Automotive M&A Insights, 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.
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