Car Industry: Mergers at Lowest Level in Ten Years

With the start of the IAA Mobility Show, the most important German industrial sector and its problems are once again moving into the spotlight. Climate policy and the consequences of the pandemic pose major challenges for all manufacturers. This is reflected not least in the plans for mergers in this sector.

The number of mergers announced by German buyers has reached its lowest level since 2010. Before the coronavirus pandemic, the long-term average was 40 announcements per year. In the past year, this figure decreased to merely twenty. The situation is quite different for competitors from China and the USA. There, the car industry seems to recover faster and announcements for M&A deals are apparently back to pre-pandemic levels.

“The structural change towards electronic drives and digitalisation continues to dominate the automotive industry. The uncertainties resulting from COVID-19 seem to have been largely dispelled in many countries such as the USA or China, and companies now have sufficient planning certainty again. They are back to focusing on their strategic transformation and are actively looking for suitable mergers. In Germany, on the other hand, M&A activities are apparently recovering only slowly, also due to a lack of clarity about the effects that climate policy will have on the industry,” says Dr. Georg Licht, head of the ZEW Research Department ”Economics of Innovation and Industrial Dynamics”.