The scale of restructuring is different in each industry. What about Automotive?

Coronavirus will have long-term effects on the economy. The results of the annual balance sheet may result in some companies not starting restructuring until next year. This applies, among others, to the automotive industry, which was severely affected by the global economic slowdown, and the pandemic, which had a negative impact on car sales and temporarily blocked imports, exacerbated this crisis.
Tesla’s relatively good results in the wake of coronavirus, and in Europe – the tightening of environmental regulations, should accelerate the transformation towards electric automotion. It may entail both the conversion of the production lines to serve new technologies, as well as new investments.
According to Guardian, in Europe, sales of electric cars in April this year more than doubled compared to April 2019, despite the restrictions that caused the historical drop in total car sales in the old continent in the same period by as much as 78%.Car companies, technology producers, as well as investors may, in the near future, become entities in a greater number of consolidation and restructuring processes of a broader scope.

According to EY, as many as 96% of decision-makers employed in the automotive industry who participated in the Global Capital Confidence Barometer (CCB) survey organized by the company admitted that they are planning or are in the process of conducting restructuring processes. In turn, 40% of the respondents to this survey replied that they intend to adapt the digital transformation of their companies to the new conditions. FORDATA responds to these needs. In the Virtual Data Room system what is possible is, among others:

• Professional organization of the sale of the entire enterprise or its organized part
• Fast transfer of information to make work on the restructuring plan more effective
• Developing a restructuring plan in a shorter time
• Easy management of a large number of transaction documents
• Reaching banks and investors to attract financing
• Improvement of business communication while maintaining confidentiality
• Monitoring the course of the process
• No need for business trips while conveniently conducting the process online

VDR can be used in the restructuring process already at the stage of creating a recovery plan, as well as in negotiations with investors (banks, private equity funds) and in the management of personal data. The system allows access to documents only for authorized persons and has a Q&A module that ensures centralized and effective communication. On the other hand, reports on the activity of Virtual Data Room users allow us to better define the course of the process.

In 2019, the automotive industry witnessed several mega-transactions, including the merger of PSA and FCA, as well as Daimler and Geely. In the following years, however, we should observe increased transaction and restructuring activity of small entities. In this way, they will try to ensure access to a larger technological base, the absence of which could obstruct or prevent the introduction of modern eco technologies.
Small producers may soon have a problem not only with ensuring financial liquidity, but – due to the lack of capital comparable to car giants – also with the implementation of investments, which will also result in a greater number of credit proceedings and related processes, such as audits or Due Diligence.
In the FORDATA system, all such processes can be carried out faster, more conveniently and cheaper, while ensuring security of information. You can learn more about the benefits of Virtual Data Room in the restructuring processes in the article “Restructuring and the pandemic – accelerated digtalization”.