Autotech M&A deal value falls to five-year low in second half of 2018

Merger and acquisition value in the automotive technology sector hit a five year low in the second half of 2018 as car manufacturers struggled with dwindling demand in China and a global crackdown on emissions.

A total of 100 M&A deals were completed in the second half of last year, including Renault, Ford and Volkswagen’s autotech acquisitions, hitting a total value of $3.9bn (£2.98bn), according to research by Hampleton Partners.

Read more: Ford opens itself up to investors on driverless car tech

However, short-term market turbulence is not expected to have an impact on spending in the sector over the next two years, the M&A advisory firm said.

“We believe 2019 and 2020 will remain very strong for both acquisitions and funding in the autotech sector, despite the storm clouds on the horizon which may provoke a reduction in vehicle sales’ volume overall,” Hampleton Partners managing director Jo Goodson said.

“Our rationale is that spending in the sector will not be impacted by short-term market turbulence.

“Autotech is a truly transformational sector and we’re only at the beginning of a very long journey. In summary, we foresee a strong autotech M&A market over the next 24 months, with stable Enterprise Value multiples and a sharply growing capital raise market with increasing valuations.”

Deals in connected car technology, which is expected to speed up the introduction of autonomous vehicles, included Volkswagen’s purchase of Wirelesscar, Aptiv’s acquisition of interconnect specialist KUM for $500m, and Zurich Insurance’s acquisition of connected car platform Bright Box.

Read more: Peugeot has unveiled its new Instinct concept – and it's driverless

Hampleton Partners managing director Jo Goodson said: “Although we are currently seeing more venture capital investment than M&A transaction value in autotech, all players in the sector continue to push to be the market leader within the new world of electrification, connectivity, autonomy and mobility.

“Startups with innovative ideas are pursuing funding, and global giants from all sectors, including financial, are continuing to invest, fund and acquire.