Optimism amid uncertainty: automotive executives remain positive despite complex unrest
Our latest Global Capital Confidence Barometer indicates automotive executives are solidly optimistic, both about the global economy and the transactions environment within the automotive sector. Ninety-seven percent of our respondents say the global economy is improving or stable and nearly two-thirds see corporate earnings improving. Automotive deal intentions remain high, with 63% of survey respondents expecting to pursue acquisitions in the next 12 months and 81% expecting their pipelines to increase or remain stable.
Living with uncertainty
There is little doubt that geopolitical and policy uncertainty are significant risks to growth. Concerns about rising nationalism have transformed into uncertainty about policy. Previous fears about a slowdown in global trade have translated into uncertainties about the emergence of new barriers.
Government intervention and policies — from trade to the movement of labor — top the macroeconomic concerns of global executives. Automotive companies are more carefully accessing geopolitical risks and seeking expert advice to navigate these issues.
Key automotive M&A drivers
Automotive M&A strategies revolve around acquiring innovative capabilities offered by start-ups. The rise of the collaborative economy, where mobility providers offer services without owning vehicles, is leading to partnerships between traditional automotive vehicle manufacturers and new entrants.
The sector is moving toward total connectivity between vehicles, traffic and municipal services through sensor-embedded roads and infrastructure. The move toward fully autonomous vehicles will impact automotive M&A strategies with an increasing convergence with the technology sector.
Reassessing and reinventing portfolios to address technological disruption
While geopolitical uncertainty garners most of the media’s attention, boardroom agendas are dominated by disruptive forces such as digital innovation and the search for growth.
As technology disrupts business models and customer behaviors, automotive executives are more focused than ever on their collective assets. Seventy-nine percent of our respondents tell us they have increased the frequency of their portfolio review processes, which will enable them to take advantage of emerging growth opportunities.
Despite the traditional and emerging deal challenges, the automotive sector maintains an optimistic and resilient perspective toward the M&A market. Automotive companies fully understand that improving their competitive edge requires a sharp focus on acquiring innovative assets that best position them for success in the evolving automotive landscape.