Automotive transactions and trends 2016

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M&A plays a key, strategic role in the reinvention of the automotive industry

The global automotive industry is in a rapid state of change: an evolution of products and processes, people and places, software and services. The industry is likely to experience more change in the next decade than it has in the previous 50 years. Digitalization and innovation will drive this change.

So too will relationships, whether they be with consumers or strategic partners. Success in this new age of automotive will rely heavily on the ability to adapt and adjust, quickly. To access the products, services and skillsets of tomorrow’s automotive industry today.

While organic growth remains important, automotive companies continue to utilize M&A as a strategic tool to access the critical talent, intellectual property and innovation necessary to prosper in the reshaping automotive landscape. Smaller, smarter deals are likely to drive transaction activities.

Traditional deal challenges remain, but many others have emerged in this new environment. As sector convergence increases, the integration of assets outside a company’s traditional core is far less straightforward, requiring customer-centric solutions. Additionally, the rise of nationalist politics adds a new layer of complexity to cross-border investment strategies and deal assessments.

Despite the challenges, automotive companies fully understand that improving their competitive edge requires a sharp focus on acquiring innovative assets that best position them for success in the new automotive ecosystem.

Executive summary

Disruptive trends continued to drive M&A in the automotive sector during 2016. With the industry transformation in mind, automotive companies took a cautious approach toward dealmaking the past 12 months, focusing on smaller and smart targets.

EY - Executive summary