The automobile industry in India chooses the inorganic route to balance investments with the current growth cycle and prepare for future global collapses, the report said.
The number of transactions on domestic vehicle space remained unchanged, with 18 transactions on the annual basis in 2018, for an amount of $500 Million, according to the Grant Thornton ACMA report.
The average reported deal size is $45 Million. The volume of transactions has risen to the main transactions in the context of the repayment of financial investors and foreign acquisitions of major airlines in the Indian auto sector.
The volume of deal related to market players was limited, but more attention is paid to the study of inorganic opportunities for this segment, with an increase in cash reserves and reasonable estimates in foreign markets, according to the report.
“While strategic investors remain the main driver for the deal in the industry akin to the established markets around the world, an industrial landscape due to the arrival of more advanced players and has the ability to attract large financial investors to participate in the growth of the industry,” said Vishesh Chandiok, CEO of Grant Thornton India LLP.
All Indian auto companies in medium and large scale are expected to have an active inorganic growth strategy, comprising the plan to collaborate with these companies in India and outside the industry to reach a target of $200 billion by 2026, he added.
In addition to traditional considerations, the report also emphasizes that the inorganic method is projected to grow the reputation in the Indian auto sector due to continuous interruptions of the sector in the form of changes in customer preferences and the increasing influence on the emission control system and adoption of EV.
It is expected that in addition to domestic factors, the need to remain relevant in the global market will be another important factor where Indian automakers can invest in accelerating the introduction of technologies in their businesses.
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