The slowdown in the automotive sector has had an impact on deals in the sector as well. The deal volumes in the Indian automotive sector have witnessed a significant decline from 51 deals in 2011 to an aggregate of 22 transactions in 2014.
According to Grant Thornton’s Automotive Sector Dealtracker, the private equity (PE) deals in the automotive sector moved from 14 deals in 2011 to four deals in 2014. However, the average PE deal value for disclosed deals moved from $18 million in 2011 to $23 million in 2014.
Among the vehicle manufacturers, two-wheelers were the most attractive among all having at least one transaction every year with maximum transactions being observed during 2012, the report stated.
It added that major risk factors affecting the growth of the automotive industry include market risks such as fluctuations in foreign currency, increase in interest rates, high inflation, higher raw material and other input costs and regulatory risks such as increase in excise duty rates, political uncertainty, and complete decontrol of fuel pricing.
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