PRTM Global Study Finds Stunning Recovery for European and North American Auto Suppliers

To paraphrase an old adage, it appears that sometimes, whatever goes down must eventually come up.

Recently released results from PRTM's annual auto supply study show that after experiencing the largest downturn in history worldwide automobile sales will likely hit a new record in 2011, driven by China's relentless growth and the US recovery.

Sure, most auto suppliers endured a bumpy road during the past two years. But the study suggests that European and North American auto suppliers are rebounding with what PRTM calls a "stunning, high-speed recovery." European and North American auto suppliers increased EBITDA from 2009 to 2010 by 76 percent and 68 percent, respectively, while at the same time, North American suppliers emerged as the most likely global consolidators in 2011.

According to the PRTM study:


North American suppliers, in particular, have been significantly increasing acquisitions. Accounting for 36 percent of all deals so far in 2011, North American suppliers now comprise 11 of the 19 most likely global consolidators. These include ITW, Cummins, Magna, PPG, Lear, DuPont, JCI, Eaton, Timken, Dow and Tyco.



US bankruptcies have slowed significantly. PRTM reports only two Chapter 11 cases in 2011.


The most distressed companies have been smaller European suppliers. As of May, 44 percent of all auto supplier acquisition targets have been European. Seven of the top 10 acquisition targets in the last 12 months have been German.



Three of the Global 100 suppliers are now Chinese. Chinese Supplier's EBITDA grew 40 percent CAGR during the past five years. Since 2008, China's auto industry has almost doubled and should continue to grow 12 percent to 15 percent yearly.


Sales in Western Europe remain depressed. The 2011 earthquake and tsunami in Japan not only impacted Japanese automakers Japanese OEM output fell 20 percent to 40 percent over the past six months but also Japanese suppliers.

"There's no room anymore for a $100 million supplier. You must be able to supply a Toyota Camry or Ford Focus platform that spans five continents," said Dietmar Ostermann, PRTM partner and one of the study's authors. "As vehicle demand and production rise rapidly in China, Brazil, India, and Russia, auto suppliers will have to adaptby modifying product offerings to meet customers' needs, right-sizing capacity in high cost countries, and expanding product development capabilities and production in these future markets."

PRTM's annual auto supply study, titled Consolidation in the Global Automotive Supply Industry 2011, analyzes 565 suppliers, including the top 100 global players, with combined revenues of $2.24 trillion from Europe, North America, Japan, South Korea, China, Brazil, and India.