Adapt or Die: How Tyre Manufacturers are Responding to Autotech

Businesses have always needed to adapt in order to stay relevant, but never has this necessity been in such sharp focus as it is today. Even legacy tyre manufacturers are investing in new technology companies and talent in an M&A push to future-proof their businesses in the coming age of the electric and autonomous vehicle.

Additionally, connected car technology and the rise of the sharing economy, as well as environmental concerns, are all driving change at lightning speed in the automotive sector.

To mark the publication of our 2H 2019 M&A market report on autotech, we explore how legacy brands are re-positioning themselves to adapt to, and thrive in this digital, tech-driven future.

We are witnessing a move from car ownership towards sharing economy transportation. Disruptive tech transport companies, Uber and Lyft, have become household names and work on autonomous “mobility as a service (MaaS)” projects and the development of so-called “robo taxis” continues at pace.

According to figures from Accenture, profits from car sales will shrink from last year’s €126 billion to €122 billion by 2030. In the same period, MaaS revenues are projected to reach €1.2 trillion, with profits expected to be as high as €220 billion.

Car manufacturers have been adapting to this new reality for some time, and brands including Chevy, Ford, Honda, Toyota and Volkswagen have been working on autonomous vehicles for at least the last few years.

At the same time, companies that have made their name supplying the industry are taking their expertise and applying it to different business models that are better suited to the automotive industry of the future - that includes tyre manufacturers.

One trend identified in our 1H 2019 autotech M&A report highlights how two of the industry’s biggest tyre manufacturers have entered the M&A race with the same vision by acquiring market-leading, data-rich telematics assets.

Michelin, already an active player in the fleet management and monitoring market, acquired Masternaut. Bridgestone kickstarted its expansion into this area by buying the telematics arm of TomTom, and renaming it WebFleet, for $1 billion – the second largest disclosed autotech deal of 1H 2019.

As Florent Menegaux, Michelin’s Managing General Partner put it: “Michelin is consolidating its expertise in telematics, enabling us to optimise customer mobility and respond to the needs of a changing market.”

The company, which has previously acquired American telematics companies Sascar and NexTraq, said the increase in available data would allow it to “offer customers the best solutions, improve product performance and develop data science deployments, such as predictive maintenance”.

Data gained from Masternaut’s onboard platform, which manages more than 220,000 mostly light utility vehicles in France and the UK, will also inform the development of projects such as “smart tyres”.

It’s a similar story over at Bridgestone, which said the WebFleet acquisition was a response to new social, economic and technological “megatrends pushing the pace of change in the automotive industry”.

“The future of vehicles is connected, autonomous, shared and electric,” the company said.

“Bridgestone has identified digital mobility solutions and fleet solutions as a strategic priority. This is reinforced by the growing importance of fleets over individually owned vehicles for the transportation of people and goods.”

Paolo Ferrari, CEO and President of Bridgestone EMEA and Executive Vice President of Bridgestone Group, explained the vision, saying that the two companies had “complementary assets and capabilities” that would create a “fleet solutions powerhouse”.

These transactions, which demonstrate a recognition of the changing winds, are a perfect example of how legacy brands can augment their heavy manufacturing expertise with cutting-edge tech and data analytics platforms.

Of course, autotech isn’t the only area in which big names are combining legacy expertise with newly emerging technologies to adapt to changing landscapes.

Healthtech, a sub-sector which is arguably going through as rapid change as its automotive-based cousin, is seeing a similar trend. Long-established electronics giant, Philips, for example, has become one of the top acquirers of med tech, snapping up seven companies in the 30 months up to April this year.

It shows that, contrary to popular opinion just a few short years ago, the game is in no way up for legacy brands.

Instead, they are scouting for innovative technology start-ups and scale-ups to combine industry experience with the technical expertise of artificial intelligence, machine learning and data analytics to build the industries of tomorrow.
 

If you are interested in organising a confidential conversation with one of our diretors regarding Autotech M&A or M&A in any other one of our technology sectors, please write to us using our contact form or phone +44 (0)20 3728 6910. 

Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.

With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Technology, IoT, AI, Fintech, Hi-Tech Industrials & Industry 4.0, Cybersecurity, VR/AR, Healthtech, Digital Marketing, Enterprise Software, SaaS & Cloud and eCommerce.

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