TRAVERSE CITY, Mich.–An estimated $44 billion in auto supplier mergers and acquisitions will close in 2019, continuing a trend of strong deal-making activity, according to PwC’s latest Global Automotive Supplier Consolidation Study, presented at the Center for Auto Research’s annual Management Briefing Seminars.
That level of deal making is down a bit from 2018, which saw $51 billion and 198 deals. The firm is expecting 176 deals to be done this year. The industry closed 159 deals worth $57 billion in 2017.
The firm says that Japanese companies among the Global 100 Suppliers are best positioned to undertake strategic acquisitions this year. Those suppliers are rated the highest by PwC’s Buyer Score, which measures financial and operational wherewithal. Chinese and South Korean companies, said the firm, are in the most distressed situations, owing in part to economic stress at home, and the wall Chinese companies have hit in making acquisitions in the U.S. because of the current trade war between China and the Trump Administration.
In the past two years, Chinese companies have only closed about $1 billion worth of deals. Chinese companies had been making around ten deals a year in previous years with an average total value of $5 billion. China has turned its attentions toward domestic consolidations–closing about 50 deals inside China in the last 18 months.
Private Equity is driving interest in auto suppliers. PE has driven three of this year’s mega deals. There is also a spike in interest in minority investments. These tend to be in the area of new and developing tech around autonomous vehicles and electric propulsion, as well as emerging mobility solutions. Companies are wanting to access technology and emerging business models without committing to full ownership or integration.
Companies who want to drill down in greater detail can contact Dietmar Ostermann at PwC, who gave the presentation and is Principal at PwC US at [email protected]