INDUSTRIES SERVED

Automotive

Industry Overview

The Canadian automotive industry includes all vehicle and automobile equipment manufacturers and wholesalers as well as car dealerships and retailers of light vehicles, automobiles, trucks, buses and motorhomes. The industry is comprised of a few major auto manufacturers like Chrysler, General Motors and Ford which control the pace of the industry. Key suppliers for this industry include steel, aluminum and other raw material manufacturers along with original equipment manufacturers who design and build individual parts like engines, batteries and electronic parts for larger auto manufacturers.

Most major manufacturers have a B2B model with typical customers being dealerships, wholesale retailers, and rental companies, which in turn have B2C models. The industry is currently in its mature stage and is characterized by consolidation and heightened M&A activity. The Canadian auto industry is moderately regulated and manufacturers must comply with safety standards. Being a highly globalized industry, trade regulations play an influential role. The industry is primarily driven by consumer discretionary income which generates demand for vehicles.

The industry thrives in a low-interest rate and low commodity price environment which allows higher profit margins for manufacturers and retailers as well as cheaper financing for retailers. A weaker currency also generates tailwinds by Canadian goods more competitive. In the recent decade, auto manufacturers have moved operations overseas, to Asian and South American countries, due to an abundance of cheap labour and non-unionized.

Industry Drivers

Economic Outlook

Macroeconomic background can influence consumers’ decisions to purchase vehicles. When economic conditions are favorable, people are more likely to purchase new vehicles giving momentum to the industry. The slowdown in economic output leads to reduced consumer and business confidence and levels of vehicle consumption go down.

Changing Demands and Expectations

Vehicle buyers nowadays look for additional values in their vehicles, including environmental friendliness, safety, and user-friendly designs.

Technological Innovation

Automotive companies seek to take advantage of sophisticated technology to gain competitive advantages and to meet consumer demands on quality and costs. In addition, technology also helps them meet the demands of environmental legislation.

Selling an Automotive Company

Automotive companies are often subject to consolidation and M&A activities. Over the last two decades better internet infrastructure has led to greater visibility and a boom in business services that support IoT infrastructure. The pandemic further accelerated a shift to online business, acting as a catalyst for the industry. As Canada’s leading private market M&A Advisory firm Beacon understands that selling a business is an important decision. A dedicated business owner not only seeks to extract maximum value from the sale of a business but also seeks to sell the business to a competent buyer who can continue the company’s legacy. Beacon has worked on over 100 valuation and M&A advisory mandates in the business services industry, bringing extensive experience in deal negotiation to the table. Our experienced advisory team will assist your business in navigating the entire sell-side M&A process.

As an entrepreneur or business owner who is exploring a potential sale, it is important to understand some key factors specific to the business services industry that might impact the likelihood of a potential sale. These are factors that determine business attractiveness for potential buyers and investors.

Sales – Strong sales is an indication of an automotive company’s value. They represent a strong brand reputation, as well as high quality products and innovative designs. Major industry players typically exhibit strong sales and are able to keep it up with the ongoing technological innovations.

Mature Supply Chains – An automotive company relies on many other industry players in order to bring one product to customers. A well-established supply chain ensures production efficiency and low costs, and subsequently increases margins.

With 40 years of combined experience serving businesses within Toronto, Ontario, and abroad, the Beacon transaction team has extensive knowledge and experience successfully working for several automotive companies from a variety of industries. Whether it be a valuation or sale, our team can provide expertise and resources found only at larger corporations, paired with the personalized touch of our M&A Advisory team. Contact us today to get in touch with one of our advisors.