In the Driver’s Seat: Is Australia’s Automotive Sector Revving Up for M&A?

The Consumer sector can be a scary place to play. Interest rate cycles, cost of living pressures, and shifting brand preferences can all wreak havoc on investor appetite. But not all subsectors are created equal. One part of the market that has stood the test of time in terms of customer spending and therefore investor appetite has been Automotive.

Why Automotive is a candidate for M&A?

It’s easy to see why the Automotive sector has garnered attention from both trade buyers and financial sponsors.

• Despite recent consolidation, the sector remains fragmented. Whether it’s new vehicle sales, spare parts, accessories or services, the market is characterised by a few large players, then a large number of smaller operators, making it ripe for consolidation;
• Recurring revenue. As my 18 year-old daughter is finding out, buying a vehicle is just the beginning. Annual running costs, consumables (oil, tyres, brakes) spare parts, accessories and upgrades, and smash repairs all offer investors the holy grail of recurring revenue. This is particularly true in times of rising cost of living – if people can’t afford a new vehicle, they switch spending to ongoing maintenance and / or accessories to upgrade their existing vehicle.
• Lifestyle choices. Building on the last point, for many people a vehicle is more than a necessary evil – it’s a source of dopamine release. You only have to attend a local 4WD show to witness people forking over their hard earned cash for performance enhancing upgrades and bling, meaning that spend is less discretionary than other parts of Consumer-land.
• Brand loyalty. Given this linkage of functionality and emotional attachment, there’s significant potential for brand owners to build loyalty. Authenticity is key, and brands that offer high quality at an affordable or premium price point will often win out over cheap imports.
• Market growth. Australia’s population continues to grow, and with it comes a growing (and ageing) vehicle fleet, including cars, trucks, buses, and dare I say it, e-bikes / scooters … At least until Elon designs a Jetsons style flying saucer, the Automotive market will maintain its position as a mandatory outlet for consumer dollars.

What are investors looking for?

Not surprisingly, this points towards a consistent checklist for both trade and financial investors:

• A recognised brand with genuine category leadership;
• A clear growth runway — new markets, product categories, or geographic white space;
• A quality management team that can run the business independently of the founder;
• Secure and diversified supply channels, particularly important given recent global supply chain disruption;
• A meaningful base of recurring revenue — really understanding who the target customer is, and why they won’t be disrupted by an increase in their mortgage payment or the latest new brand;
• Resilience through the cycle — demonstrated performance across both good and tough market conditions.

Where have buyers been shopping?

The last few years have been consistently busy for the automotive market, across private equity, trade buyers and offshore entrants. Some of the more prominent transactions include:

• 2nd Summit Capital, Kindred and GFC Investments’ acquisition of MPI Automotive, Australia’s largest manufacturer of automotive exhaust systems and components;
• Aussie Traveller acquired the Camec RV Solutions business from Fleetwood;
• Alvia invested in The Automotive Group, which distributes consumables and aftermarket parts;
• Japan’s Kyokuto Kaihatsu Kogyo acquired STG Global, which manufactures specialised work vehicles;
• Bain Capital’s unsolicited $1.8b bid for Bapcor, although this was rejected by the Bapcor Board;
• AMA Group raised $125m in 2024 and has used this to make several acquisitions in smash repairs;
• Autosports Group, Eagers Automotive and Automotive Holdings have all been acquiring vehicle dealerships;
• Gresham acquired Alltruck Bodies, the manufacturer of truck bodies, trays and trailers.

This trend has certainly played out at InterFinancial. In the last 12 months, we’ve represented clients engaged in vehicle conversions, parts manufacturing, aftermarket brands, and truck servicing. One of these opportunities attracted interest from over 30 potential buyers, so it’s clearly a market that those with chequebooks are paying attention to.

How is the sector performing?

The current reporting season provides insight into how the sector is performing. Results have been generally positive, though very much favouring the highlighted trends of stronger performance by service / parts / accessories, against flat new vehicle sales.

• Super Retail Group posted record group sales of $4.2b, with Supercheap Auto sales up 3.9% (including like-for-like growth of 2.7%). Management linked the growth to customers maintaining rather than replacing vehicles, and indicated like-for-like sales are up 4% in the first seven weeks of FY27;
• ARB revenue fell 3.8%, and NPAT was down 5.2%, with management citing lower new vehicles sales and constrained consumer discretionary spending;
• AMA Group revenue grew by 2.5%, and EBITDA by 8.6%. Management pointed to the benefits of integration across collision, calibration, servicing and parts;
• Autosports’ revenue was up 11.9%, and EBITDA grew by 11.2%, fuelled by acquisitions and a pivot toward electric vehicles;
• Peter Warren Automotive Holdings told a tougher story: FY26 revenue held stable at $2.5b, but underlying profit before tax fell 35% to $14.5 million as new-car margins were squeezed by oversupply and rising competition;
• PWR Holdings reported record revenue up 31%, and EBITDA up 59.6%, driven by a 45% jump in Motorsports revenue and continued expansion into Aerospace and Defence.

The road ahead

Fragmented ownership, recurring revenue, a defensive demand profile, and genuinely active buyers across private equity, trade and offshore capital. Australia’s automotive sector is ticking a lot of boxes for dealmakers right now, even as individual results this reporting season show the cycle isn’t uniformly kind to everyone. If you’re weighing up your options in this space — buying, selling, or just want a second opinion — we’d be glad to help you kick the tyres!!

If you’d like to discuss further, reach out to our Director – Consumer, Goods and Retail, Mark Steinhardt for a confidential conversation.