GCG’s Q3 2020 Automotive Industry Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples and the state of the middle-market M&A environment.

Key findings include the following:

• • The U.S. equity market exhibited overall positive performance in Q3 2020. The overall market as measured by the S&P 500 and Dow Jones Industrial Average restarted record-selling, positive trends in Q3 after some of the worst quarters in recent history. At the same time, Automotive Manufacturers saw a strong run up in value from their lows in March 2020. However, Automotive Suppliers, both foreign and domestic saw a relatively minor recovery from the significant drop during March 2020.

• • In Q3 2020, middle-market M&A activity within the Automotive sector experienced a substantial increase in deal value and volume from the previous quarter. The third quarter of 2020 recorded the highest total deal value of any quarter over the past year. Strategic buyers drove overall deal activity, gaining significantly more share in Q3 than they did in Q1 and Q2.

• • Automotive Retail was by far the most active sector accounting for 52.6% of total automotive transaction volume. This can be attributed to the ongoing consolidation among dealership groups. Auto Parts and Equipment exhibited continued strength as well at 25.8% of automotive transaction volume in Q3.

• • Select publicly traded companies representing the key sectors across the Automotive industry traded at an average multiple of 14.1x EBITDA and 1.7x revenue. Trading multiples varied significantly across and within the four categories with the strongest multiples observed in the Auto Manufacturing segment, a trend that has continued for the past few quarters. Part of this increase is attributable to the reduction in EBITDA due to COVID-19. It has skewed the multiples higher during the last quarter.

Click here for the full update.

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