In Q1 2024, medium-sized automotive suppliers continued to face a number of challenges, including a shortage of skilled labour, refinancing costs and price increases.
Ongoing margin pressure on OEMs continues to lead to cost-cutting measures in procurement, affecting suppliers throughout the entire supply chain. Simultaneously, the transformation to electromobility remains an ongoing topic in the automotive industry.
The automotive M&A deal count significantly decreased from Q1 2023 to Q1 2024 with 116 and 86 transactions, respectively. The cumulative deal value decreased in Q1 2024 (€6.7bn) compared to Q1 2023 (€14.4bn). M&A activity in Q1 2024 was mainly driven by transactions in the areas of EV, interior & exterior and electrification solutions as well as by non-core divestments of large Tier-1s such as the sale of Webasto’s charging solution business and the divestment of voestalpine's metal stamping plant in Nagold, Germany.
The challenge and main task of the automotive industry continues to be to further mitigate the rise in costs by optimising the entire value chain.
Across Europe, an increase in valuation multiples from Q1 2024 compared to Q4 2023 was observed as EV/Sales, EV/EBITDA, and EV/EBIT multiples increased by 2.9%, 5.1% and 5.5% respectively. The North American market
demonstrated a strong positive performance, with EV/Sales, EV/EBITDA, and EV/EBIT multiples increasing by 10.4%, 7.7%, and 8.6% in Q1 2024, respectively. In Asia, a similar trend was observed with EV/Sales, EV/EBITDA, and EV/EBIT multiples increasing by 14.8%, 12.8%, and 8.8%, respectively, compared to Q4 2023.
The challenge and main task of the automotive industry continues to be to further mitigate the rise in costs by optimising the entire value chain. Suppliers will have to allocate resources efficiently to compensate rising costs while simultaneously investing in research and development to adapt the product portfolio to the ongoing transition to alternative powertrain technologies. Existing development areas are expected to remain in place and may be addressed through strategic alliances and M&A.
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