Deals activity picks up in automotive sector, says GlobalData

There has been an uptick in the number of deals announced in the automotive sector globally in the quarter ended June 30 (422 versus 370 in the previous quarter), says GlobalData, a leading data and analytics company.

David Leggett, Automotive Editor at GlobalData, comments: “This uptick may have coincided with the worst of the COVID-19 crisis and associated economic downturns in many parts of the world, but it suggests industrial restructuring is taking the form of more M&A activity, as well as joint ventures and corporate finance changes.

“Although the huge pending PSA-FCA merger (with the new merged entity to be called Stellantis) is dominating mergers and acquisitons (M&A) discussion in the sector, there is much activity in the component parts supplier area and also involving software and development companies involved in key advanced technologies.

“The immediate consequences of the COVID-19 crisis are also becoming increasingly evident, with new restructuring opportunities being created against a background of company cashflow difficulties, bankruptcies and volatile financial markets.

“Rising financial pressures coming to bear on suppliers as a result of the COVID-19 crisis are creating the conditions for an upsurge to M&A activity as the industry recovers.

“More industrial consolidation will also result from vehicle manufacturers and major suppliers looking for greater supply chain security, especially after recent experiences of supply chain ‘breaks’.”

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