BGL Automotive & Aftermarket Insider

A Recap of M&A Themes Influencing the Automotive Aftermarket from SEMA/AAPEX

M&A activity in the automotive aftermarket is accelerating, with secular trends expected to sustain deal activity for the foreseeable future, according to numerous discussions held at the 2021 AAPEX / SEMA show and summarized in a whitepaper released by the Automotive Aftermarket investment banking team at Brown Gibbons Lang & Company (BGL).

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Managing Director

Managing Director

This whitepaper recaps the 2021 SEMA and AAPEX conferences, with discussion centered on key themes and their impact on the automotive aftermarket M&A environment. Major M&A themes include:   

  • Availability and lead times have become challenges amid supply chain disruption, leading aftermarket companies to rethink where products are sourced and produced. M&A can be used to create more diversified business models by shifting away from asset-light models to more blended foreign-sourced and domestically produced (or sourced) product.
  • Chip shortages have resulted in a dearth of new vehicle inventory, forcing consumers to keep and maintain vehicles longer. The aging car parc and rebound in vehicle miles traveled are boosting demand for maintenance and replacement parts, a boon for the aftermarket. Further, enthusiast products to customize older models give fresh features and appearance to vehicles that simply cannot be replaced in the current market. This remains a fragmented sector of the aftermarket.
  • Evolving consumer shopping preferences, including rapidly growing direct-to-consumer (DTC) and digitally driven channels to market, have placed a greater focus on omni-channel platforms as attractive investment opportunities.
  • It is becoming widely accepted that electric vehicles (EVs) will eventually become a major part of the production fleet over the coming decades. M&A activity involving companies that are EV-focused or EV-independent are becoming highly sought after.
  • Return of miles traveled and aged product have created a wealth of opportunities for general maintenance and refocused interest in the collision space. More people are taking to the roads and generally drove longer distances on aggregate over 2020.

We expect industry dynamics will keep the automotive aftermarket M&A market active for the foreseeable future, fueled by low interest rates, credit availability, growth in private equity dry powder, and cash-flush strategics that have benefited from robust sales over the past 18 months.

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