BDO: Automotive Sector Update Shows Increased M&A Activity in Q2 2024
BDO's Q2 2024 automotive sector review highlights a significant rise in merger and acquisition activity among auto parts suppliers, with increased deal volume and value year-over-year.
BDO AG Wirtschaftsprüfungsgesellschaft released its Q2 2024 update on the automotive sector in August 2024. The report indicates a notable increase in merger and acquisition (M&A) activity within the auto parts supplier segment, both in terms of deal count and transaction value.
Globally, the number of deals in Q2 2024 rose to 106, compared to 92 in the same period last year. The total transaction volume saw a substantial jump, increasing from €4.5 billion to €9.7 billion. Trading multiples also reflected higher valuations, with the EV/EBITDA ratio at 6.4x for the last twelve months ending June 2024.
The situation for European auto suppliers is presented as navigating towards potentially better times, influenced by the growing presence of Chinese Original Equipment Manufacturers (OEMs). European suppliers may offer localized scale, quality, and safety essential for Chinese OEMs expanding into Europe. A key question is whether European suppliers possess the necessary cost structure to secure a place in the supply chains of Chinese OEMs as they localize in Europe.
The report highlights two significant transactions: the formation of joint venture HORSE Powertrain Limited by Renault Group and Geely, focusing on ICE, Hybrid, and Electric Vehicle powertrain solutions, and Aurelius Private Equity's acquisition of Dayco's propulsion solutions business, with a focus on North America. These deals underscore the sector's ongoing transformation and the active role of various industry players.