M&A Activities in the Automotive Sector Continue to Decline

The companies in the automotive industry had been on an extended shopping trip during the last decade. But in 2011, M&A activities in the sector collapsed. The worldwide number of acquisitions, mergers, and participations decreased by 42 per cent compared to the previous year. Within the same period, the aggregated transaction volume even dropped by 68 per cent from 16.7 billion euros to 5.4 billion euros, which is the lowest value since 2004. This is the result of an analysis by the Centre for European Economic Research (ZEW) in Mannheim, Germany, based on the Zephyr database of Bureau van Dijk (BvD). The database contains information on worldwide acquisitions and mergers, initial public offerings, and private equity transactions.

The most striking decrease of M&A activities in the automotive industry is related to the European target companies. Here, the transaction volume dropped by 91 per cent in 2011, from 9.5 billion to less than one billion euros. The by far lowest value in this millennium has thus been reached. "n a European car market with huge overcapacities, buyers are hard to find, especially during an economic crisis. Even with mergers, joint ventures, and strategic alliances, the expensive reduction of enormous overcapacities would only be possible to a limited extent, especially since the sales expectations are decreasing on the long term, too. However, a market consolidation in Europe is to be expected," says Sven Heim, the ZEW researcher responsible for the analysis.

The decrease of acquisitions and participations from the 27 EU member states, as well as from Eastern and Central Asia, was especially strong during the previous year. In these regions, the worldwide transaction volume dropped by 3.8 billion euros (71 per cent, EU), or respectively 3.9 billion euros (67 per cent, Eastern and Central Asia). Following record investments in 2008 and 2009, a significant decrease of worldwide M&A activities within the automotive sector was already registered in 2010. All in all, the transaction volume in the second half of the last decade was at a historical peak and had increased constantly since 2003. The highest level had been reached in 2009 with a transaction volume of 28.6 billion euros.

For further questions please contact

Sven Heim, Phone +49 621/1235-183, E-mail heim@zew.de