Technological developments and changing consumer preferences are shifting vehicle demand and supplier business models, according to the Automotive & Aftermarket Insider – The Deal Engine, an industry report released by Brown Gibbons Lang & Company (BGL). Investors are seeking attractive niches in the evolving automotive landscape to participate in market growth.

Key topics covered in this report:

  • Companies are making the transition to electric vehicles (EV) and hybrids, driven by government policy mandating compliance with tightening emissions standards and bans on the sale of new petroleum burning vehicles. Major automakers have committed billions, announcing major investments in electrified models and autonomous vehicle technology to accelerate EV adoption.
  • Significant capital is being deployed in autonomous vehicles and new active safety technology, with the landscape attracting funding to speed market access. More than $100 billion has been invested in new mobility over the last four years.
  • Consumers are foregoing passenger cars for trucks and SUVs with lower gas prices, improved vehicle design, and a stronger economy among the major drivers of the shift. For original equipment manufacturers (OEMs), this move is giving way to wider margins and encouraging healthy aftermarket sales as the higher-content, higher-priced vehicles are more favorably disposed to customization.

In a flight toward stability, private equity funds are aggressively seeking automotive aftermarket assets, with consolidation a key strategy to grow market share. Industry fragmentation is conducive to acquisitive growth, with sponsors pursuing buy-and-build strategies to create more scalable platforms for these businesses.

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