GCG’s Q1 2021 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 overall market as measured by the S&P 500 and Dow Jones Industrial Average continued climbing to record highs from the lows one year ago. At the same time, automotive companies saw divergent results depending on specific parts of the Automotive sector. Automotive Manufacturers saw a strong run-up in value from their lows in March 2020, reaching a peak in Q1. However, domestic, and foreign Automotive Suppliers continue to underperform the broader market and other Automotive sectors. Dealers and Service Providers continue to post strong gains outperforming both the S&P 500 and the Dow Jones Industrial Average.
- Automotive M&A activity experienced a moderate decrease in the 1st quarter in deal volume and a large decrease in deal value from the previous quarter. Q1 2021 deal volume is down 18.4% from the 4th quarter of 2020. Deal value was off significantly from the 4th quarter suggesting that the deals that were getting done were much smaller deals overall.
- At the end of the first quarter of 2021, publicly traded automotive multiples were at a high point relative to the prior 12 months. Prices have escalated while trailing 12-month earnings have not reflected anticipated future sales.
- Automotive Retail is the biggest driver of M&A activity in the middle-market Automotive segment. This segment made up 61.2% of all deals completed in the 1st quarter.
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