Driving Disruption in Auto Dealmaking

The auto industry is driving toward sustainable, long-term change. In this rapidly evolving landscape, OEMs and their suppliers must adapt or perish. With tech innovation and regulatory reform, the pace of evolution has only accelerated.

Technology is the linchpin of the evolving automotive universe. Capital requirements surge as automakers invest in key areas of innovation.

 

Summary

  • Lincoln International's automotive and truck team compile insights and market trends across various sub-sectors and transaction types.

Connected Cars Autonomous vehicles Ridesharing Electrification
With Internet of Things connectivity, car software can be updated remotely, maintenance needs can be detected before a problem arises and passengers will always be able to find a parking spot. Tech players and automakers alike have pooled resources to invest in ADAS and self-driving vehicles to improve passenger safety and reduce transportation costs. By 2030, some estimate 1 in 10 vehicles on the road will be autonomous. Ridesharing models like Lyft and Uber have changed the way consumers and companies think about vehicle ownership. With sharable, autonomous vehicles, we’ll see the rise of robotaxis. Legislation has accelerated the road to electrification. But success requires not only the change from combustion to battery powered vehicles, but also widespread infrastructure investment in charging stations.

Insights for OEMs, Suppliers, Private Equity and Corporate Investors

As capital requirements for tech investments have surged, auto companies and suppliers need to position their companies for tomorrow. M&A consolidation and unexpected alliances have become the norm —as have divestments and carve-outs to streamline offerings:

  • Venture funds drive deal activity
  • Private equity-backed Tier 1 suppliers pursue carveouts and divestitures to adapt business models away from combustion engines—and to deploy capital into EV and tech
  • Joint ventures and partnerships between—and among—auto and tech industries allow for investment in and access to technology innovations
  • When feasible despite high multiples, auto tech or EV acquisitions to future-proof supplier business models
  • Distress is accelerating in automotive space following COVID-19, bringing about additional deals

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