The auto world is shaking up fast, with big deals happening left and right as companies try to stay afloat amid tough times. A fresh report from PwC, the financial consulting giant, points out that rising costs, shrinking profits, worries over tariffs, shifts in the electric vehicle scene, and even AI stepping in are pushing more mergers and acquisitions in the industry. This isn't just some blip—it's picking up speed, and it's set to reshape how cars get made, sold, and fixed.
Looking at the numbers from the third quarter this year, the value of these deals jumped a whopping 150 percent, going from $9.3 billion in the second quarter to $23.4 billion. Interestingly, the actual number of deals didn't budge much—it stayed pretty even. What that tells you is that the big players are making massive moves, not just a bunch of small ones. A lot of this action is happening among car dealerships, where smaller outfits are getting swallowed up by larger groups because selling cars these days means dealing with sky-high prices but razor-thin margins, plus a heap of other headaches.
Take groups like Penske Group, Hudson Automotive, Sewell Automotive, and US Auto Trust—they're the ones driving a lot of these consolidations. Michael Fiore, who leads the industrial products sector for mergers and acquisitions at PwC, explained it this way in an interview: “You see like Penske Group, Hudson Automotive, Sewell Automotive, US Auto Trust-- there's a lot of like, dealers behind the dealers, or groups behind the dealers that were pushing for those transactions.” He figures that after a rough 2025, many dealers didn't want to drag through another tough year-end financial review just to end up with a weaker business to sell. Instead, they're cashing in now, especially if they've been eyeing a sale for a while as a way to get some liquidity.
It's not just dealers feeling the pinch. Carmakers and parts suppliers are wrestling with similar issues, like unpredictable tariffs on imports and what the report calls the "EV reset." That reset kicked in after the federal tax credit for electric vehicles wrapped up at the end of September. For the big automakers, the drop in pure EV sales—once those incentives vanished—has them rethinking their whole lineup. Add in the Trump administration's push to ease up on strict fuel economy rules from before, and suddenly there's a shift back toward traditional gas engines, or ICE as they're called, along with hybrids.
Fiore put it plainly when talking about what 2026 might bring for these companies: “What does ‘26 look like? You start to see things are more venture investments, more like opportunistic things that they're kind of like picking into like, incubate a business, or incubate something EV related, or a battery technology.” In other words, instead of going all-in on one big EV strategy, they're dipping toes into smaller, smarter bets on tech that could pay off down the road, like new battery ideas or ways to make EVs more appealing without relying on government handouts.
Suppliers—the folks who make the nuts, bolts, and high-tech bits for cars—are in their own bind. The PwC report lays it out: they “face ongoing tariff and geopolitical risks, while inflation in labor, energy, and raw materials continues to disrupt margins, cash flow, and operations.” It's a messy mix that's hitting their bottom lines hard. Fiore expects suppliers to start swapping assets around, spinning off parts of their business, or even selling them outright to grab good valuations while they can or to streamline what they do based on what market watchers are saying.
He added: “I expect that within the supplier realm, you'll see them trade assets, spin or divest assets in order to capitalize on the valuations that are there, or to just kind of simplify their portfolio based upon feedback they get from analysts that look at the market.” This kind of shuffling could mean fewer but stronger suppliers, focused on what they do best, whether that's gearing up for more traditional engines or hedging bets on electric stuff.
Then there's the money side of things, with private equity firms sniffing around the auto sector. These investors see folks like you and me sticking with what we know—gas-powered cars that need regular tune-ups and parts—over jumping into unproven EV territory. So, they're pouring cash into suppliers, the aftermarket world of repairs and accessories, and even vehicle care services. Fiore nailed it: “They're getting into both the supplier base as well as the aftermarket and the care sectors of vehicles, because they see ICE as being a long term thing that you and me and others are going to get our car serviced somewhere.” It's a bet on the long haul, figuring that internal combustion engines aren't going anywhere soon, and there's steady money in keeping them running.
One wildcard boosting all these deals is artificial intelligence. Companies are leaning on AI more than ever to size up the market, spot good takeover targets, and even pick partners. The PwC report highlights how AI crunches huge piles of data to figure out where the best opportunities are, like which regions might crave certain types of vehicles. Fiore pointed out that it's changing how decisions get made: “So they're actually getting strategic advice that will impact maybe M&A or growth decisions that they have to make, and they're using AI to help them through that, versus, you know, months and months of a long, drawn out process with maybe a firm or their internal strategy.”
This tech edge means faster, sharper choices—no more waiting around for consultants to sift through reports. It's especially handy for pinning down hot markets for specific cars or tech, giving buyers and sellers a leg up in negotiations.
Peering into 2026, the report from PwC suggests the next half-year will be all about dodging more government meddling, riding tech waves, and relying heavier on AI for insights into engineering, customer perks, valuations, and more. They predict overall deal values could climb as companies keep consolidating and repositioning themselves to handle whatever comes next. “In 2026, speed, scale, and technology will define automotive M&A to combat nagging margin pressures, with valuations increasingly driven by AI insights and supplier consolidation becoming imperative,” the report stated.
But what about the regular guy out there trying to buy a truck or sedan? With average vehicle prices hovering around $50,000—a record high—and everyday stuff like groceries costing more too, it's a rough ride. Fiore's take is cautious but not all doom and gloom: “Consumers are going to be facing price challenges going forward, and you know, hopefully that maybe there's some consolidations or things that happen in the future that kind of benefit them. But for right now, yeah, there's, they're in a tough spot.”
In the end, these mergers might lead to more efficient operations, maybe even better deals at the lot or cheaper parts at the shop someday. For now, though, it's about survival in a world where tariffs flip-flop, EVs hit a wall, and everyone from dealers to suppliers is scrambling to adapt. As the industry bulks up through these big combinations, it could mean fewer choices in some spots but stronger players overall, ready to tackle whatever 2026 throws their way.
This shift isn't happening in a vacuum—it's driven by real-world pressures that hit close to home, like deciding whether to stick with your reliable old pickup or gamble on something electric. With private equity betting big on the tried-and-true, and AI helping call the shots, the auto landscape might look a lot different by year's end. Keep an eye on those dealership groups expanding; they could be where you end up getting your next oil change or negotiating a trade-in.
Ed Garsten, the mind behind TTAC and host of the podcast "Tales from the Beat," has seen it all in the auto and media game. With stints at CNN, The Associated Press, The Detroit News, Chrysler's PR team, and Franco Public Relations, he's now dishing insights as a senior contributor for Forbes. His take on these trends comes from years on the front lines, watching how the rubber meets the road in this ever-changing industry.
