New Delhi: As the Indian automotive industry continues its path to sustained recovery against the backdrop of global macroeconomic challenges and a broader market slowdown, the sector has witnessed a trend of selective investments, characterised by sustained deal volumes.
During Q1 2024 (January- March), 24 deals valued at USD 357 million were signed. However, the quarter witnessed a 49% decline in values over Q4 2023 (October- December), owing to a broader market slowdown and global inflationary trends, according to the data sourced from Grant Thornton Bharat.
Of the 24 deals, 6 were M&A (mergers and acquisitions) activities valuing USD 172 mn and 18 were PE (private equity) and VC (venture capitalists) activities valuing USD 185 mn.
According to Saket Mehra, Partner, Grant Thornton Bharat, “The industry’s engagements with both M&A and PE investments point to a strategic recalibration, aiming to leverage global partnerships, technological advancements, and market opportunities to navigate the evolving automotive landscape.”
Top M&A deals during Q1 2024
| S. No | Acquirer | Target | Sub-sector | USD Million | Deal Type | % stake | Domestic/ International |
| 1 | Mitsui & Co and VDL Group | Pinnacle Mobility Solution- Eka Mobility | EVs | 100 | Controlling stake | NA | Inbound |
| 2 | Mitsubishi Corp | TVS Mobility | Automobiles | 36 | Strategic stake | 32% | Inbound |
| 3 | Magna International | Yulu Bikes | MaaS | 14 | Minority stake | NA | Inbound |
| 4 | Mahanagar Gas Limited | 3ev Industries | EVs | 12 | Minority stake | NA | Domestic |
| 5 | Bajaj Auto | Yulu Bikes | MaaS | 6 | Increasing stake to 18.8% | 1% | Domestic |
Source: Grant Thornton Bharat
However, Mehra noted that in the January-March quarter, there was a 30% decrease in values compared to Q4 2023, mainly owing to a general market slowdown and global inflation trends. While there were a few high-value deals exceeding USD 50 million, the market was largely characterized by numerous smaller, bolt-on transactions. This indicates a strategic shift towards more frequent but smaller acquisitions or investments, rather than a few large-scale transactions.
Significant private equity investment in Hero Motors by GEF Capital Partners and angel investors in the previous quarter boosted total deal values. The decline this quarter was due to the higher base impact. Additionally, the broader market slowdown in February 2024 also contributed to lower deal values. This aligns with about 20% decrease in global deal activity in Q1 2024, reflecting the challenging and uncertain global market conditions witnessed in 2023.
In terms of the sub sectors, MaaS (mobility-as-a-service) and EVs (electric vehicles) led the deal volumes and values with 19 deals valuing USD 259 million, with a focus on R&D and the development of sustainable mobility.
Top PE deals during Q1 2024
| Investor | Investee | Sub sector | USD million | % stake |
| Creador | Hinduja Tech Limited | Automobiles | 50 | NA |
| National Infrastructure and Investment Fund- India-Japan Fund | Mahindra last Mile Mobility | EVs | 48 | NA |
| Yamaha Motor Co, AI Futtam Automotive, Lowercarbon capital, Toyota ventures and Maniv mobility | World of River- River | EVs | 40 | NA |
| 3one4 Capital, Saison Capital, Zephyr Peacock India, Force Ventures, Alteria Capital and angel investor | Vidyuttech Services- Vidyut | Auto tech | 10 | NA |
| Bennett Coleman and Co. Ltd, Hindustan Times Media Ventures, Ushodaya Enterprises and angel investors | PuR Energy- Pure EV | EVs | 8 | NA |
Source: Grant Thornton Bharat
“Except for two deals with values over USD 50 million, the market is dominated by a larger number of smaller value transactions. The smaller deal size indicates a strategic shift in more, but smaller bolt on acquisitions in early stage investments, as opposed to few large scale transactions. Additionally, the broader market slowdown in February 2024 contributed to lower deal values. Traditional auto component companies are expected to engage in acquisitions to enhance their EV capabilities,” the accounting and advisory firm said.
Road ahead
The ADB (Asian Development Bank) forecasts India’s growth rate at 7% for FY25 and 7.2% for FY26.
Mehra believes that the automotive industry is poised for significant deal activity owing to global growth projections at 3.1% in 2024 and 3.2% in 2025. This will be bolstered by the resilience of emerging markets like India.
“Particularly, the auto and EV sector is expected to be a primary driver of this growth,” Mehra said.
“As the EV market matures and consolidates for synergies, the automotive industry is poised to witness increased deal momentum in 2025 and beyond. This trend reflects a strategic response to evolving consumer demands, technological innovations, and regulatory shifts, paving the way for safer, smarter, and more sustainable mobility solutions,” he added.
