Need for speed in innovation is driving deals in automotive

09 December 2016

 

 

Research and Development (R&D) has long been the lifeblood of innovation in the automotive industry – but today the sector is moving away from its historical focus on hardware and towards connectivity, software and electronics. This was highlighted  in our recent Innovation 1000 study, where Automotive companies, in order to stay competitive and agile, are investing  increasingly in technology. Driving this development is a whole array of technologies from in-car connectivity to telematics to autonomous vehicle capabilities.

These trends are having a knock-on impact on the automotive deals landscape.  Across the sector, 71% of companies that are amid acquisitions in the past five years did so to gain software capability advantage[1]. OEMS and supply chain companies are seeking access to new technologies and relevant talent.  Various approaches are emerging, with some automotive companies choosing to make strategic investments in innovative technology firms, while others decide to buy tech start-ups outright – including some in Silicon Valley,  whilst others opt to form strategic partnerships and joint ventures.

Such tie-ups are vital in enabling automotive firms to respond to the rapid acceleration in industry innovation and upgrade cycles. A recent example of the deals being triggered by the convergence tech and automotive was Samsung Electronics’ acquisition of the US car infotainment and audio company Harman. This is a trend that is set to continue.

1. Source:  Strategy& Innovation 1000 Study

 

Cara Haffey |  Partner, Industrial Manufacturing and Automotive Leader
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