PricewaterhouseCoopers Spots Factor Likely to Shape Future Industry Changes
NEW YORK — Recent analysis from PricewaterhouseCoopers pinpointed what the firm believes will be the fundamental changes necessary for the near-term restructuring and long-term sustainability of the automotive industry.
Firm analysts contend that greater automotive merger and acquisition activity will be the driving force. That was the crux of the report titled, "Drive Value — Automotive M&A Insights 2009," a recap of last year and an outlook on 2010 and beyond.
"The current deal environment is showing positive signs and presents a number of opportunities for both strategic and financial buyers who have access to financing," noted Paul Elie, U.S. automotive transaction services leader at PricewaterhouseCoopers.
"Companies with stronger operating models and cash positions will likely leverage M&A to develop a competitive advantage through the consolidation of scale and expertise," emphasized Paul McCarthy, U.S. automotive strategy leader at the firm.
PricewaterhouseCoopers went on to recap that automotive M&A deal value soared to $121.9 billion in 2009. That total was up 286 percent from $31.6 billion in 2008.
Analysts noted the increase in deal value was influenced heavily by the U.S. Treasury investment in the vehicle manufacturing sector, which they assert was in response to a near collapse of the industry. They think players across the industry value chain reacted as they sought capital infusions, shed noncore assets, renegotiated debt obligations and pursued mergers of necessity.
Despite the record high deal value in 2009, PricewaterhouseCoopers found the total deal volume fell to 532 transactions, representing a 3-percent decline from an already weak 2008 level. The firm also said it was lowest point since 2004.
"As we look forward, companies are likely to increase their focus on growth and the traditional drivers of M&A — driving economies of scale, acquiring technology and expanding their geographic and customer base," Elie concluded.