Automotive Newsletter Q3 2023
Overview of M&A Activity
M&A deal count significantly increased from Q3 2022 to Q3 2023 with 52 and 74 transactions, respectively
Throughout Q3 2023, European OEMs and suppliers have continued to grapple with the persistent burden of cost pressures and substantial investments, impacting profit margins and liquidity. It remains challenging to pass on increased manufacturing costs, including those related to materials and personnel, to OEMs through price increases. Simultaneously, the shift towards electromobility requires a significant level of operational liquidity.
The automotive M&A deal count significantly increased from Q3 2022 to Q3 2023 with 52 and 74 transactions, respectively. The cumulative deal value strongly increased in Q3 2023 (€26.7bn) compared to Q3 2022 (€3.3bn), largely driven by the business combination of VinFast, in the course of the Nasdaq listing (€21.7bn). M&A activity in Q3 2023 was heavily influenced by deals in new energy vehicles and related components, sensor, connectivity, and electrification solutions, as well as the disposal of non-core business units of large Tier-1s.
Across Europe, a decrease in valuation multiples from Q3 2023 compared to Q2 2023 was observed as EV/Sales, EV/EBITDA, and EV/EBIT multiples dropping by 5.1%, 3.1%, and 5.4%, respectively. The North American market demonstrated an even stronger, negative performance with EV/Sales, EV/EBITDA, and EV/EBIT multiples decreasing by 8.4%, 7.1%, and 5.7% in Q3 2023, respectively. In Asia, a similar trend was observed with EV/Sales, EV/EBITDA, and EV/EBIT multiples decreasing by 3.5%, 2.4%, and 0.8%, respectively, compared to Q2 2023.
The challenge and main task of the automotive industry will continue to be restraining cost hikes through optimisation of the entire value chain. This can be accomplished through strong collaboration between manufacturers and suppliers, with each party making their own contributions. For instance, enhanced co-operation in component development can lead to cost reductions and streamlined specifications.
M&A Activity: Quarterly Comparison Q3 2022 – Q3 2023
Top M&A Deals Q3 2023
- MAHLE, the leading international development partner and supplier to the automotive industry, sold its thermostat business to Admetos GmbH, an owner-led industrial and investment holding company for SMEs. As MAHLE is focusing on electrification and thermal management systems, as well as cost leadership in components for highly efficient, green combustion engines, the company decided to sell its thermostat product area, as this will not be a strategic business segment in the future.
- SAS Autosystemtechnik, a Germany-based provider of assembly and logistics services for the automotive industry, was acquired by Samvardhana Motherson Automotive Systems Group, a 100% subsidiary of India-based automotive supplier Samvardhana Motherson, from Faurecia. This acquisition will enhance Samvardhana Motherson’s integration in the global automotive supply chain and increase its customer proximity, while SAS will be well-positioned to benefit from the secular trend of outsourcing module assembly by OEMs to trusted suppliers.
- Envisics, a UK-based developer of dynamic holography technologies for augmented reality and automotive sensor systems, secured Series C funding of €94.7m with M&G Investments, joining long-term investors Hyundai Mobis, GM Ventures, Tarsadia Investments, Van Tuyl Companies, and new strategic investors InMotion Ventures (Jaguar Land Rover) and Stellantis Ventures.
- VinFast Auto, a Vietnam-based automotive manufacturer committed to creating a green future, and Black Spade Acquisition Co (NYSE: BSAQ), completed its business combination. The listed company, following the business combination, is VinFast Auto Ltd and its shares commenced trading on Nasdaq under the ticker symbol “VFS”, on 15th August 2023. The consideration of the transaction was €21.2bn.
- Xtrac, a UK-based supplier of professional motorsport and specialised automotive transmission systems, was acquired by MiddleGround Capital for a total of €233m.
Selected Recent Global Automotive Bond Issuances Q3 2023
|Company||Date of Issuance||Amount (in €m)||Coupon (in %)||Yield (Latest)||Price (Latest)||Maturity Date|
|Toyo Tire Corporation||06.09.2023||32||1.21%||1.36%||98.6||06.09.2033|