Notable transactions occurred across all market segments this year, including enthusiast parts, replacement parts, distribution and services
Detroit—While M&A activity in the automotive aftermarket has significantly slowed since its peak in 2021, there is cautious optimism for 2025 with an expected rebound for M&A activity and valuations, according to global consultancy Roland Berger.
“M&A In The Automotive Aftermarket 2024,” produced in conjunction with Houlihan Lokey, a global investment bank, says that while the total value of announced deals has decreased, dropping to less than half of 2022 levels in 2023, a slight increase in deal value is projected for 2024. This, despite the overall number of transactions expected to remain relatively low, largely due to high capital costs, supply chain challenges, reduced valuations vs. 2021 peaks and a short-term shift toward operational stability of current platforms.
Roland Berger states that while there was a decline in both deal volume and value, notable transactions occurred across all market segments this year: enthusiast parts, replacement parts, distribution and services. While enthusiast parts companies saw the highest valuation multiples, their stock prices underperformed by 40% compared to replacement parts companies.
The report notes that the automotive aftermarket is experiencing a shift towards online channels, despite increasing consumer dissatisfaction with poor service level in this channel. Companies that invest in seamless online customer journey and robust post-sale support will be better positioned to capitalize on this trend.
Additionally, although the adoption of electric vehicles (EVs) is expected to persist, the pace is now projected to be slower than initially anticipated. This necessitates gradual portfolio adjustments (suppliers, distributors and retailers) and upskilling (service providers) to meet the evolving needs of the market.
Nearshoring to Mexico also remains a strategic trend, driven by the need for operational flexibility and competitiveness. As the share of imports in the U.S. is rising, U.S. aftermarket suppliers must adapt to this new competitive landscape by sharpening their positioning and offerings.
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