Flat growth in western markets and rising investment in software and electrification are reshaping deal activity, with global automotive M&A reaching $35 billion in 2025.
M&A automotive 2025, consolidation as a strategic response
Automakers and suppliers are navigating a transition phase marked by stagnant economic growth and mounting pressure on profit margins. Against this backdrop, the mobility sector recorded a significant reshuffling, with global merger and acquisition activity totaling $35 billion in 2025. The average deal value reached $1.2 billion, more than doubling compared with the previous year, according to Bain & Company’s Global M&A Report 2026.
“The stagnation of North American and European markets, combined with the acceleration of technological change, has brought the automotive industry back to active deal-making,” said Gianluca Di Loreto, Partner and Head of automotive in Italy at Bain & Company. “Companies are facing an unprecedented period of evolution, characterized by rising costs and strong margin pressure, while still needing to invest heavily in new capabilities.” The transactions recorded in M&A automotive 2025 reflect a strategic lever to sustain research and development spending and to streamline cost structures.
Italy’s role in automotive M&A 2025
Since the Covid years, Italy has responded to structural limits within its automotive sector, historically fragmented and less equipped to compete at regional and global scale. The renewed focus has centered on mechanical engineering, long considered a pillar of Italian industrial strength, as well as on distribution networks, from car dealerships to spare parts distributors.
Western stagnation and India’s growth momentum
European and North American markets remain structurally stagnant, with modest growth rates. In contrast, India stands out as the only global market, alongside China, to post significant expansion. That dynamic is fueling greater interest in partnerships and joint ventures. For global OEMs and suppliers, a presence in India is increasingly viewed as strategic to secure market access and long-term growth opportunities.
Software and AI drive deal activity
Software and artificial intelligence are already embedded in vehicles, and deal flow reflects that shift. Approximately half of M&A automotive 2025 transactions involved semiconductors, electronics, sensors and software engineering capabilities.
Automakers and suppliers are seeking to strengthen the electronic and digital backbone of next-generation vehicle architectures. “Traditional hardware companies are increasingly integrating digital capabilities to manage software stacks that will define the functionality of future vehicles,” Di Loreto added.
Automotive and defense convergence
Another emerging trend is the closer alignment between automotive and defense industries. Some defense companies are leveraging automotive expertise to enhance or develop complex systems. At the same time, certain automotive OEMs are evaluating opportunities in the defense sector as a response to sluggish global vehicle sales.
Outlook for 2026
As 2026 begins, the automotive industry is expected to be shaped by geopolitical developments, supply chain realignment and rapid technological evolution.
“In the coming months, M&A will be an essential tool to maintain competitiveness, and we expect cautious optimism,” Di Loreto said.
