Transportation & Logistics Industry Update
What We’re Reading
In 2018, over 8 million vehicles in the U.S. were recalled due to software-based defects. As cars become more like “computers on wheels,” the frequency of such issues is likely to increase – and this challenge needs to be addressed. The automotive world is on the cusp of a revolution, with software and connectivity becoming an integral part of conducting business.
"Prior to the COVID-19 pandemic, the automotive aftermarket appeared to be poised for another strong year, buoyed by a convergence of tailwinds – low unemployment, falling gas prices, and a growing and aging vehicle parc ... On the one hand, U.S. new-vehicle registrations are sure to decline from 2019 levels. On the other hand, there are immediate opportunities for the aftermarket to support businesses that remain open, such as healthcare providers and food suppliers."
"On top of falling sales due to coronavirus lockdowns across most developed markets between January and March, Nissan and many other global automakers have seen first-quarter profits hit by increased risk provisioning at their captive finance arms. The fincos, which are responsible for hundreds of billions of dollars' worth of vehicle leases and loans to consumers, companies and dealerships around the world, are preparing for significant credit losses and lower resale values for formerly leased cars as the pandemic shakes the global economy."
The recovery toward pre-COVID-19 levels continues, albeit at a slightly slower pace this past week. The Memorial Day holiday caused some disruption in travel trends – increasing the amount of personal travel late in week 10 and decreasing the amount of long-haul and local fleet travel in week 11. Nationally, when compared to typical travel, personal travel was down 16% and long-haul truck travel was down 13.5%.
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The COVID-19 pandemic has disrupted virtually every corner of the world, and has brought much economic activity to a virtual standstill. Yet many industries with historically strong and stable fundamentals are good candidates to bounce back quickly once recovery begins, and the leading players in those industries remain attractive investment opportunities. The automotive aftermarket is a great example.
Harris Williams is a leading advisor to the transportation and logistics M&A market. Our Transportation & Logistics Group serves companies in a broad range of attractive niches, including third-party logistics (3PL), truck, rail, marine and air transportation, transportation equipment, and the automotive and heavy duty vehicle market.
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