Automotive mergers and acquisitions (M&A) continued to decline for the second straight year to 465 total deals in 2013, PwC reported in its report 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 5% to 465 transactions in 2013, compared to the significant drop of 18% experienced in 2012, when volume declined from the 594 deals transacted in 2011 to 490 deals, PwC said.
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Total disclosed deal value in the sector was about US$22bn in 2013, a decline of 28% compared to the total disclosed deal value of approximately $30bn 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,” PwC said.
“Global automotive M&A has experienced a similar decline in activity to that of cross-sector M&A, primarily driven by macro-economic trends,” said Paul Elie, PwC’s US automotive transaction services head.
“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.
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By GlobalData“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.”
PwC expects an increase in M&A activity after signs of a marked recovery in Europe in 2013. North America and the developing Asia-Pacific regions are also expected to continue to expand.
Longer-term, it expects the auto industry to add 25m units of production between 2013 and 2020, for a compounded annual growth rate of 3.9%.
