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Auto supplier M&A activity will likely drop by 25 percent to 180 deals globally in 2013

North American suppliers expected to again be the most aggressive global consolidators

Despite the growth most global automotive production markets are experiencing and automotive supply assets that remain undervalued, merger and acquisition (M&A) activityis anticipated to decline by about 25 percent in 2013, with approximately 180 automotive supplier deals globally, according to PwC’s sixth annual Consolidation in the Global Automotive Supply Industry study. At the same time, the average deal size is likely to increase, driving the overall global deal value up to about $14 billion this year, substantially higher than in the previous two years. The study reveals that for the third consecutive year, European automotive suppliers are the key target of global automotive supplier M&A activity, and the top buyers are large North American suppliers.

 

“Over the past 12 months, global automotive supplier M&A activity has slowed and that trend is expected to continue as European suppliers continue to be impacted by the debt crisis and the related low vehicle sales in Europe,” said Ionut Simion, Tax Partner, Automotive Industry Leader, PwC Romania.

 

PwC’s study also reveals that the strongest growing suppliers in 2012 were South Korean companies, with a combined average growth rate of almost 20 percent in the past year for the 46 largest South Korean suppliers, while Japanese suppliers declined at a rate of about five percent in the same period. Chinese suppliers’ profitability declined by 19 percent, as they likely underestimated the slowing of the growth curve in China automobile production.

 

PwC’s 2013 list of the top 10 potential consolidators within PwC’s Global 100 suppliers showcases six North America companies and only three European and one Chinese. The top 10 consolidators executed on average 11 acquisitions each in the past five years. Each of the most likely consolidators has been evaluated on their “buyer score,” a measure of their financial and operational ability to acquire other suppliers, as well as on their “buyer attitude,” a measure of their willingness to make acquisitions.

 

For more details about the Consolidation in the Global Automotive Supply Industry Study, download the publication at: www.pwc.com/auto.

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