Nataly Kambur
Investment news, USA. All world automobile giants proudly claim that they have overcome the crisis and are looking forward “with optimism”. Is it really true? Who is the leader, and who is the outsider in the growth of the company’s profit, which means a solid foundation for steady growth of shares of their enterprises? Analysis of the reports on the results of the second quarter of 2011 provides interesting material for traders and investors, which is very far from the company’s advertising leaflets and press-releases.
What is the“Fortune”rating of the most profitable automobile companies worldwide?
According to the yearly rating of “Fortune” magazine, the top hundred of the world’s business giants included ten car manufacturers:
1. Toyota Motor;
2. Volkswagen;
3. General Motors;
4. Daimler;
5. Ford Motor;
6. Honda Motor;
7. Nissan Motor;
8. Hyundai Motor;
9. BMW;
10. Peugeot.
The rating of automobile corporations of “Fortune” magazine:
Ratingofprofitabilityoftheworldautomobile giants prepared by : where are the analyticsof“Fortune” wrong?
According to the experts of Forex Academy and Masterforex-V Stock Exchange Trade, investors that are interested in shares and bonds of car industry shall in the first rate be interested not in the volume of sales (Toyota leads), but in the norm of the company’s profit (general profit/ company’s earnings).
As soon as this criterion is applied, the TOP-10 of automobile giants from “Fortune” drastically changes for investors: the leader becomes not Toyota Motor, but Daimler corporation (Daimler, owns 85% of Mitsubishi Fuso, 19.9% of Chrysler LLC, 11.0 % of KAMAZ, etc.), Honda Motor occupies the second position according to the effectiveness of management, and only the ninth position is occupied by Toyota Motor, whose norm of income is almost 10 times lower than the one of Daimler corporation (2.15% against 20.21%):
For investors: norm of profit characterizes the effective management of means invested into the company during a certain period. Thus, from every 100 dollars Toyota Motor and Peugeot leaves only about 2 dollars to its share-holders. At the same time the share-holders of Daimler receive 20.2 dollars from every 100 dollars that the company receives from selling cars. Thus, shall the shares of Daimler and Toyota Motor companies be more attractive to investors?
Shares of the world’s leadingautomobile corporationsat the world stock exchanges
According to the rating of Masterforex-V, the following conclusions can be drawn:
1. Daimler company is the leader of the rating. For investors this means that at the smallest expense, both financial and manufacturing, the company’s norm of profit in the segment is higher than the average value – 20.21%; consequently, investor’s profit is higher.
Concerning the situation at the market: the company’s shares are in a wide flat, which speaks about the country’s stability in both: held economic policy and financial figures.
2. Honda Motor company. Japanese car industry has undergone a considerable influence of events that happened at the beginning of the year. In a sense, the company has quit its positions; however, judging from the prices of stocks, Japanese car industry is regaining its lost positions. The company occupies the 2nd position in the list, and its norm of profit is higher than average.
3. Volkswagen AG. The country has a very high potential at the market of automotive industry. For the last year the company’s stocks have risen by 100%, which is an excellent mark for investors, and the company’s 3rd position in the list according to the norm of profit is the testimony of this.
Countries – leadersofcarindustryin 2011
According to the results of the first six months of the current year, the market of car sales has undergone certain changes, but the top-10 remained the same:
1. China (7 million 220 thousand items, +5.8%).
2. USA(6 million 311 thousand items, +12.7%).
3. Japan(1 million 799 thousand items, -27.6%).
4. Brazil(1 million 640 thousand items, +10%).
5. Germany(1 million 623 thousand items, +10.5%).
6. France(1 million 225 thousand items, +1%).
7. Russia(1 million 182 thousand items, +56.3%).
8. India(1 million 32 thousand items, +16.1%).
9. Great Britain(1 million 30 thousand items, -7.1%).
10. Italy(1 million 13 thousand items, -13.1%).
What arethe most topical issues of the largest car manufacturers?
According to the experts of Western Europe community of and Masterforex-V Stock Exchange Trade, one of the main issues is a considerable decline of sales in Europe. Thus, the profit of European department of Ford group of companies has lowered by almost $146 million, which is twice less than last year:
• weakening of other markets. Lowered income, which is gained by the largest automobile companies in South America and Asian-Pacific region;
• consequencesofthenaturaldisasterthatfellonJapaninMarch. Due to the earthquake, not only Japanese, but also many foreign automobile companies have strongly felt the deficit of constituents. During about three months after the earthquake the work of Japanese automobile giants has been almost paralyzed;
• fluctuationsofcurrencyrates. This factor is of great importance for this export-oriented industry. Fluctuations of dollar, Euro, Yuan, and yen have spoilt much nerves of car manufacturers as well as of the numerous investors that are connected with this type of business;
• growthofrawmaterialprices. This factor has a direct influence on sales markets, stipulating their shortage.
What shall investors be aware of, and are there reasons to be optimistic?
According to the experts of , such reasons are more than enough:
1. Panicforecastshavenotjustified. They claimed that natural disasters in Japanwouldcause the decline of the general level of world car production by about a third. Luckily, nothing similar happened. For the four months that passed after the earthquake Japanese companies have almost totally recovered the volumes of car production. This autumn they are already planning to employ the total of about 7 thousand employees. Toyota will provide employment for 3-4 thousand of new workers, Nissan and Honda staff will be increased by 2 thousand work places, whereas Mitsubishi Motors, Mazda, and Subaru will be able to employ several hundred workers each.
2. Dependencefromtherateofyen. In order not to be so much dependent on non-favourable rate of yen, Japanese largest car manufacturers plan to broaden the network of foreign branches.
3. Automobilecompaniesmakeveryambitiousplansforthefuture:
- by 2017 Nissan is going to occupy 8% of the world car market (it currently owns only 5.8%); its plans also include a release of 66 new models and presence in all segments of the market;
- Volkswagen has claimed its aim to be outdoing Japanese Toyota according to the volume of production; in this reference by 2015 it is going to invest about 51.6 billion Euro into own development;
- Toyota, in its turn, is going to make up for the lost time in the current financial year already. In order to compensate for the decline of sales in March-June 2011, the corporation has set an aim to additionally release 350 thousand cars. Moreover, Toyota is going to increase its presence at the markets of developing countries (China, India, Russia, and Brazil);
- BMW forecasts the growth of sales according to the results of the year by 10%;
- Renault expects to sell 2.6 million cars worldwide by the end of current year;
- According to preliminary forecasts, during 2011 about 75.9 million cars (including off-road cars and pickups) will be assembled worldwide.
4. Considerable increase of demand for premium cars. German Daimler plans to sell 1.35 million cars by the end of the year. German manufacturer of premium cars Porsche plans to increase sales twice by 2018. During the first half of 2011 the group of companies managed to sell 60,650 cars, which is 36% more than during the equal period last year.
5. Considerable growth of the market in the USA. This fact or first of all inspires American manufacturers: General Motors and Ford Motor. However, it is also not bad for Mercedes-Benz (has increased its profit by 10.7%) and Audi (growth also by about 10%).
6. Broadestperspectivesatthemarketsof“dynamicallydevelopingeconomies”. Atpresent,Chinese, Indian, and Russian markets are real “titbits” for all car manufacturers, with no exception. They currently undergo a thorough examination and development at a very high rate.
World tendency shows that car sales in developing countries will outdo the sales in the countries with advanced economy already in 2013: As observed from the chart, the demand for cars in developing countries is constantly growing; consequently, according to the experts of , the sales of cars in developing countries will outdo the sales in the countries with advanced economy already in 2013.
The Editorial Board of “Market Leader” magazine, jointly with experts of Forex Academy and Masterforex-V Stock Exchange Trade, holds a questionnaire in the traders’ forum: in your opinion, what is the further trend of development of the world car industry?
• growing, as automobile giants keep expanding their production;
• stable, all volumes of production will be kept;
• production of cars with internal combustion engines is declining, and they will be displaced by cars of the future.
Nataly Kambur
