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Automotive Deals Stall In 2012 Compared To 2011, According To PwC

Automotive vehicle manufacturers, suppliers and others

  • Vehicle manufacturers experienced their strongest year in the past five years, in terms of volume and disclosed value, while seeking cost synergies such as technology and platform sharing through strategic alliances.
  • Component suppliers saw steady transaction volumes in the first half of 2012, but declined significantly in the second half.
  • The most active region for vehicle manufacturers was Asia, where 41 of the 97 deals in 2012 were transacted.
  • The "others" category, including retail, aftermarket, rental/leasing and wholesale, etc., experienced a significant slowdown in 2012.

Financial and trade buyers

  • Financial buyers' share of M&A volume declined to 24 percent, which represented the lowest levels witnessed since the depths of the recession.
  • Financial buyers continued to shift their focus away from Europe and toward U.S. and Asian assets.
  • Trade buyers increased their focus on vehicle manufacturers in 2012 and also shifted their focus away from Europe toward Asian assets. 

Regional snapshot

  • New car demand in the Europe Union and European Free Trade Association (EU+EFTA) declined by 7.8 percent to 12.5 million units in 2012, while new car sales in Europe stalled at 3.5 units below its 2007 peak.
  • North American acquirers' share of global M&A increased from 20 percent in 2010 to 27 percent in 2012, while North American entities achieved 34 out of 102 cross border deals.
  • Asia made up more than one third of the global automotive M&A volume during 2012, with most of the activity transacted within its own region. Emerging countries like China and India are likely to capitalize on the opportunity to acquire technology or market access at favorable valuations in Europe.

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:

  • High levels of liquidity on corporate balance sheets
  • Strategic initiatives to expand market share and grow customer, technological and product portfolios
  • Resolution of Europe's sovereign debt issues of its member states
  • Strong economic recovery and pent-up demand in developed countries
  • Resumption of trend line economic growth in China and India

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.

About the PwC Network   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.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. 

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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