PARIS - Automotive suppliers can look forward to a wave of consolidation as businesses hit hard by the crisis seek to restructure, boost economies of scale and gain access to new technologies, industry executives said at the Reuters Auto Summit.
Suppliers are the part of industry that is the most at risk, and the one where we will see the most concentration and consolidation in the next few months, said IHS Global Insight analyst Carlos da Silva, speaking at the summit, which is taking place from Nov 2-5 at Reuters' offices in Paris and Detroit.
French parts suppliers emphatically underlined the trend on Monday, when Faurecia (EPED.PA: Quote, Profile, Research, Stock Buzz) agreed to buy U.S. clean emissions specialist EMCON Technologies and Valeo (VLOF.PA: Quote, Profile, Research, Stock Buzz) boosted its stake in its Chinese compressors joint venture to 100 percent from 60 percent.
I really expect that we'll see a significant volume in M&A again in 2010, both on a manufacturing side and even more so on the supplier side, Klaus Pflum, Nomura's head of European automotive M&A had said at the summit on Monday.
Valeo's CEO Jacques Aschenbroich told the summit he would be on the look-out for opportunities, focusing on three main business areas -- comfort & safety, energy consumption and vision.
The French automotive supplier is also reviewing all its Chinese joint ventures, with a view to increasing its participation in each, he said.
Dura Automotive Systems Inc chief executive Tim Leuliette said the auto suppliers sector is severely distressed, with around 200 U.S. suppliers slowly selling assets to other rivals or private equity companies.
French auto parts maker Plastic Omnium does not plan to be a consolidator itself, but chief executive Laurent Burelle told the summit he saw consolidation taking place next year.
I think 2010 is not going not to be an easy year at all and that consolidation will go on in 2010, he said.
(Additional Reporting by Gilles Guillaume, Christiaan Hetzner, Matthias Blamont, Marcel Michelson, Leila Abboud, Marie Mawad, Lionel Laurent and Michel Rose; Editing by Jon Loades-Carter)