1. Bolster supply chains: Target acquisitions that enhance resiliency to reduce vulnerabilities and ensure continuity.

2. Focus on collaboration: Pursue partnerships with technology providers to accelerate innovation in hybrid and software systems.

3. Strengthen cybersecurity: Prioritize due diligence around cybersecurity to safeguard data and mitigate operational risks.

Data from our 2024 M&A Outlook Survey provides a clear perspective on the state of automotive dealmaking. Fifty-five percent of respondents anticipated a stronger M&A market in 2025, with another 30% expecting stability. While this optimism reflects continued investor interest, factors such as fluctuating consumer demand, high interest rates, and a new administration remain key variables in shaping the deal landscape.

The survey—launched last November—highlights an apparent frontrunner driving activity: the automotive industry’s shift toward hybrid vehicles, cited by 57% of respondents as a primary deal catalyst. This trend reflects a strategic pivot, with hybrids seen as a bridge between traditional internal combustion engines and fully electric vehicles. Alongside this, the need to strengthen supply chain resiliency (43%) and deepen collaborations with technology providers (43%) are equally prominent, underscoring the importance of addressing critical vulnerabilities and accelerating innovation.

Electric vehicles and autonomous technologies, dominant M&A drivers in recent years, are now ranked lower (33% each). Despite this, investments in EV technologies and infrastructure remain integral, particularly as stakeholders focus on improving adoption rates and addressing infrastructure challenges.

Cybersecurity also continues shaping the M&A landscape as companies prioritize evaluating data protection measures during due diligence. In an era of connected vehicles and data-driven operations, cybersecurity risks can significantly influence deal valuations and long-term success.

The rise of hybrid vehicles is emerging as a key driver of M&A activity. As 57% of survey respondents noted, hybrids are gaining traction as an appealing alternative for consumers who may not yet be ready to go all-in on electric. This trend presents a unique opportunity for automotive industry companies and investors to align with shifting market preferences while navigating the challenges of scaling electrification.

This trend may also reflect a broader recalibration in corporate strategy. Automakers and suppliers are actively evaluating partnerships, joint ventures, and acquisitions that provide access to hybrid technology, secure component sourcing, and enhance production capacity. As competition intensifies, dealmakers who identify the right opportunities—whether in powertrain innovation, battery technology, or manufacturing efficiency—will be well-positioned to capture value in an evolving market.