How M&A activity is impacting the automotive industry.
Within the automotive industry, OEMs and suppliers alike are actively considering a range of joint ventures, partnerships, and alliances in order to stay competitive as the automotive landscape evolves. Industry leaders have recognized that their existing capabilities are not evolving quickly enough to compete effectively with new market entrants from the technology sector.
Through strategic alliances, industry incumbents are able to shoulder the upfront costs of new technologies, including the data analytics, artificial intelligence, and advanced telematics necessary for self-driving cars.
A few notable partnerships include:
While the proposed merger between FCA and Renault has been called off, it further illustrates the high value being placed on collaboration as a mechanism to compete in the future. However, it also demonstrates the complexities that come along with creating partnerships among established industry players – and historical competitors.
To maximize the probability of success, it is critical to clearly define the strategic direction for an alliance, joint venture, or partnership at inception. The following steps can help establish a framework for the JV journey:
By following this blueprint, alliance partners can define shared goals, establish a common understanding of what the collaboration is intended to achieve, and develop an organizational structure that will lay a strong foundation for success.
KPMG Corporate Finance LLC’s investment bankers have extensive Industrial Markets transaction and industry experience, which enables them to understand the industry- specific issues and challenges facing our clients.
