Auto sector saw M&A deals worth $29.4 bn in 2010: PwC

The automotive sector witnessed mergers and acquisitions worth $29.4 billion last year, with the Asia-Pacific region accounting for $11 billion of the total value, says global consultancy firm PricewaterhouseCoopers (PwC).

The overall transaction value is much less than the $39.4 billion witnessed in 2009 and the count of deals also fell to 521 last year from 532 in 2009.

The report said the automotive industry across the globe will see a high level of deal activity in the year 2011.

Automotive merger and acquisition (M&A) activity in 2010 was driven by strategic buyers focused on strengthening business units following the global financial crisis.

"Automotive companies are investing in strategic deals aimed at broadening their geographic footprint and/or strengthening their technology portfolio, enhancing their ability to compete globally," PwC US Automotive Transaction Services Leader Paul Elie said.

Compared to overall global trends, both Asia and Europe observed significant increases in deal activity and the value.

In 2010, Asia's disclosed deal value more than quadrupled from 2009 levels to $11 billion due to a few large vehicle manufacturer transactions.

The report did not provide any specific data on India.

The European automotive industry was also very active in the deal market, accounting for 46% of global automotive M&A activity by volume and 41% by value.

"Auto-makers and suppliers are focused on localising and expanding operations, particularly in the BRIC (Brazil, Russia, China and India) markets, to establish a global footprint and increase local content."

"At the same time, well-managed suppliers are actively screening M&A opportunities to drive segment consolidation or increase their technology portfolio and capabilities," PwC's European Automotive Leader, Felix Kuhnert, said.

Going forward, the report said the trend appears to show that M&A activity will continue to increase not just for 2011, but at least for the next few years.