The Success of M&A: a Case Study of Automotive Industry

In the automotive industry, unprecedented changes are taking place in many areas: from social and political pressures associated with low carbon emissions to radical product innovations due to breakthroughs in technologies that are increasingly being developed not by in-house, but by new market participants, third-party companies specializing in its competence. And all this is happening against the background of the fact that, as one of the largest industries in the world, the automotive industry can influence many other markets and macroeconomic indicators. Under these conditions, mergers and acquisitions become the most important means of protecting and winning positions in the market. Despite a certain amount of research, the overall success of most transactions is still the subject of empirical research. This question is raised in this paper. In the first part of the study, the basic concepts of mergers and acquisitions were considered and the most appropriate classification was highlighted. In addition, the most popular and frequently occurring motives for such transactions were considered. Further, the knowledge was superimposed on the automotive industry, in parallel with the consideration of the main issues relating to the surveyed industry, and substantiated the main motives pushing automakers to mergers and acquisitions. In the practical part, 4 hypotheses were put forward concerning the effectiveness of M & A transactions: about the overall efficiency, the efficiency of separate car manufacturers and auto components manufacturers, and a comparison of local and cross-border transactions. A sample of 86 deals is used, with the focus on absorbing companies. The main methodology is event study, based on the results of which the main conclusion is made: M&A transactions in the automotive industry are effective, but with some reservations.