The automotive industry is currently experiencing a period of significant turbulence. The sector is attempting to transform itself in an increasingly uncertain economic environment, while dealing with standards and regulations that are subject to variation depending on the region of the world. AURIS Finance, a mergers and acquisitions consultancy, provides expert analysis on this subject.
The decline is real; following strong growth in 2023, light vehicle production fell by 1.6% in 2024, reaching 88.3 million units, compared with 90 million a year earlier, according to data from S&P Global Mobility. This decline can be explained by several combined factors: high inventory levels following the pandemic years and difficulties encountered in the supply chain. In addition, sales prices have been negatively impacted by inflation. Nonetheless, the rating agency anticipates a recovery during 2025, with sales expected to return to their 2024 level of 89.6 million units produced.
Electrification and digitalisation
Two key trends are emerging in the automotive industry. Firstly, there is an ongoing decline in the production of combustion vehicles, whilst at the same time, the production of electric vehicles is growing. S&P forecasts an average annual growth of 19% in the production of electric vehicles by 2030, whilst the production of combustion vehicles is expected to fall by 12% per year over the same period. As a result, electric vehicles are projected to account for over 40% of total car production by 2030. This industry relies on the production of electronic chips, with an electric vehicle containing three times more semiconductors than a combustion vehicle. According to S&P, the total automotive semiconductor market is expected to grow at an annual rate of 9% between 2024 and 2030, increasing from US$82 billion in 2024 to US$149 billion in 2030.
Driver assistance and cabin equipment
Semiconductors are a critical component in the production of electric vehicles. According to a report by the US Partnership for Analytics Research in Traffic Safety (PARTS), the adoption of advanced driver assistance systems (ADAS) is rapidly increasing in new vehicles. Cabin technology is another key factor. According to S&P’s forecasts, the average value of semiconductors for in-car functions is expected to reach US$550 per vehicle in 2030, compared with US$350 at present. These include the integration of smartphones via Apple CarPlay and Android Auto, wired charging solutions, customisable interior lighting and dashboard aesthetics. These are all technologies that consumers now expect. In the future, it is estimated that electronic components will account for between 20 and 30% of the total cost of a car.
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In the years following the covid health crisis, the automotive industry experienced a shortage of electronic components, primarily due to suboptimal anticipation of future demand. To mitigate these challenges, it is essential for production to be aligned with demand. While the automotive semiconductor industry is currently experiencing robust growth, only those semiconductor companies that can leverage the most in-demand technologies will gain a substantial competitive advantage. Prominent players in this field include NXP Semiconductors, which has introduced a new series of audio processors integrating AI, and ams OSRAM, which has developed innovative laser modules for autonomous driving applications. In the pursuit of innovation, many mergers and acquisitions are a possibility in the near future. The experts at AURIS Finance specialise by sector and will be at your side throughout your acquisition or disposal operation.
