M&A deals key to fundamental changes in automotive space: PWC

NEW DELHI: Merger and acquisition activity is expected to drive fundamental changes necessary for long-term sustainability of the Indian automotive industry, a report by PriceWaterhouseCoopers said.

According to the 'Automotive M&A insights for 2009' report by the global consultancy firm, the deal market will play a critical role as market participants pursue transactions with a focus on synergies, including cost savings and adding revenue to their business.

"Automotive companies with stronger operating models and cash positions are likely to leverage M&A to develop a competitive advantage through the consolidation of scale and expertise," the report stated.

Automotive companies seeking long-term success would drive the deal market in 2010 by developing and executing strategies for sustainable growth and value creation.

"The current deal environment is showing positive signs and presents a number of opportunities for both strategic and financial buyers who have access to financing. Some of the Indian OEMs (Original Equipment Manufacturers) as well as component suppliers, in their quest to become global players, are on the lookout for opportunities in the global market," PWC India Leader for Automotive Practice Abdul Majeed said.

"Similarly, OEMs from other emerging markets will look for growth in the Indian market through more and more alliances," Majeed added.

The value of global automotive M&A deals soared to USD 121.9 billion in 2009, up over three-fold from USD 31.6 billion in 2008, driven mainly by an increase in activity in the US.