Powertrain, Chassis, and Exterior System Auto Suppliers such as Cummins, Eaton, and Guangzhou Auto Group Among Likely Consolidators; Private Equity Activity Is also Increasing
DETROIT, Monday, October 18th 2010 [ME NewsWire]:
(BUSINESS WIRE)-- PRTM, a global management consulting firm, is releasing findings from “Bankruptcy and Consolidation in the Global Automotive Supply Industry 2010,” their third annual study of the winning and losing auto suppliers worldwide. The expanded 2010 study includes 560 suppliers with aggregate revenues of US$2.14 trillion in 2009 from Europe, North America, Japan, and South Korea, as well as from fast-growing auto markets including Brazil, China, and India.
With the worst of the global auto industry crisis over, auto supplier bankruptcies continue to slow while acquisitions are approaching record levels, according to the PRTM study. Far fewer U.S. suppliers will declare bankruptcy in 2010 than in 2009, while European supplier failures will continue into 2011. Merger and acquisition (M&A) activity is accelerating in traditional markets like Europe and the U.S., and suppliers in China and India are becoming strong enough to actively participate. The study reveals that for the first time in the industry’s history, competition for underpriced assets and divestitures is truly global.
“Over the next 10 years, the rapid rise of China’s auto sectors will force today’s industry leaders to rethink their definitions of ‘global’ and to understand the importance of localization as part of the new global view,” says Dietmar Ostermann, PRTM partner and one of the authors of the study. He continues, “Auto executives must take a harder look at how the industry will change, and the winning suppliers must be able to support global OEM platforms. Additionally, now that liquidity is returning for some suppliers, strong suppliers have an unprecedented opportunity to optimize their product portfolios and geographically expand their customer base.”
Private equity activity is also increasing, according to PRTM. A few new private equity players, together with several established firms, are snapping up undervalued assets and evaluating suppliers in still-fragmented areas of the industry. PRTM’s study also predicts which suppliers are likely to accelerate out of the postrecession era by making acquisitions or divesting noncore assets and which suppliers may still require financial assistance or restructuring.
PRTM’s 2010 list of top 25 potential buyers within the global 100 suppliers comprises an equal number of European, Japanese and U.S. companies. More than half of the companies on this year’s list are diversified, such as DuPont, while the rest are pure-play automotive and commercial vehicle suppliers, such as Cummins and Michelin. Each potential buyer has also been evaluated on their “buyer attitude,” a measure of their willingness to make acquisitions.
Visteon, TRW, and Delphi in the U.S., Continental and Faurecia in Europe, and Calsonic in Japan, are likely to divest certain businesses or change owners. Powertrain, chassis, and exterior systems face the greatest consolidation pressures of the six main vehicle systems.
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Since 1976, PRTM has created a competitive advantage for its clients by changing the way companies operate. PRTM management consultants work with senior executives to develop and implement innovative operational strategies that deliver breakthrough results. The firm is a leader in operational strategy, supply chain, product development, customer value management, and enterprise co-creation. PRTM has offices worldwide and serves major industry and global public sectors. For more information, visit www.prtm.com.
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