M&A Spotlight: Global Automotive Deal Activity

July 27, 2017

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By Jeff Zaleski, PwC

Global Automotive M&A activity, across component suppliers, vehicle manufacturers, retail, dealership, aftermarket, etc., was strong in the first half of 2017. There were 276 deals valued at $24.4 billion, a 14% increase in value and 7% increase in volume when compared to the same time period in 2016. Average deal size also increased 7.9% to $274.1 million.

The increases in deal value and average deal size is even more notable thanks to fewer megadeals (deals valued at more than $1 billion) for the first six months of the year. That said, megadeals accounted for $17.1 billion of deal value in the first half of 2017, up 47.2%.

Among the most active and interesting subsectors for Automotive are component suppliers, thanks to the increasing demand for auto-tech. In fact, there were 15 auto-tech deals through June 2017, compared with only three during the same time period in 2016. These tech-centric transactions included sensors, electronics, cameras, LiDAR, software, Bluetooth, lithium battery manufacturers and alternative powertrains, among others. And while PwC expects auto-tech transactions to continue to make headlines for the remainder of 2017 and beyond, companies must not lose sight of more pressing, “current” issues around regulation, costs and profitability that need to be addressed in the near-term.

We continue to see a trend of consolidation within the aftermarket and dealership space. Dealerships accounted for 25.4% of the total automotive activity; 13.4% of all transactions were in the aftermarket area.

Local deals continued to dominate the M&A landscape, representing nearly 87% of deal volume and nearly 57% (or $13.8 billion) of deal value. Overall, the U.S. proved to be attractive to dealmakers in the first half of 2017 with the share of deal volume by U.S. acquirers increasing from 30% to 33%. Despite the significant local deal activity, the number of inbound transactions were down, possibly reflecting the economic and political uncertainties still facing the U.S.

Trends to watch in the second half of the year include activity in Asia, investments in connected and autonomous car technology, and further aftermarket and dealerships consolidation.

For more details about the M&A landscape for the Automotive M&A Deals Insights please see full report.

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