ford volkswagen honda toyota a business case analysis: automobile industry
TRANSCRIPT
FORDVOLKSWAGENHONDATOYOTA
A BUSINESS CASE ANALYSIS:AUTOMOBILE INDUSTRY
COMPANIES
COMPANY BACKGROUND
FORD
Henry Ford Founder of Ford Motor Company
Ford is the 2nd largest family owned company in the world. William Clay Ford, Jr. (great grandson of Henry Ford) is the current CEO.
Ford has manufacturing operations worldwide, including in the United States, Canada, Mexico, China, the United Kingdom, Germany, Turkey, Brazil, Argentina, Australia and South Africa. Ford also has a cooperative agreement with Russian automaker GAZ.
Type: Publicly Traded CompanyIndustry: AutomotiveFounded: June 16, 1903 (111 years ago)Headquarters: Dearborn, Michigan, U.S.Employees: 181,000 (2013)Divisions: Ford ,Lincoln and Motorcraft
Products (Automobiles)• Luxury Vehicles• Commercial Vehicles• Automotive parts
Services• Automotive finance• Vehicle leasing• Vehicle service
Background
Global Line-Up
Operations Worldwide
Source: http://corporate.ford.com/our-company/operations-worldwide
VOLKSWAGEN
The Past May 28 1937
Dec 1945 – Series Production
The Beetle
“People’s Car”
Designed by Ferdinand Porsche
1938 - 2003
The Present
12 Brands – 7 Countries
39,350 vehicles/day
9.73 M vehicles sold in 2013 =12.8 % world passenger car market share
310 Models
Wolfsburg, Germany
Brands
Key Markets
Source: http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2014/05/Factbook2014.bin.html/binarystorageitem/file/Factbook_2014_Englisch.pdf
TOYOTA
Vision Statement: To be the most successful and respected car company in America
Timeline
1926• Founder: Kiichiro Toyoda• Started as Toyoda Automatic Loom Works
1937
• Toyota Motor Co was established• Becomes a major supplier of trucks for Imperial Army during
WWII• Plants were to be destroyed by the Allies if Japan did not
conclude the war
1947 • Started Passenger Car Production
1958 • Sold their first cars to U.S
1959
• Introduce their first plan outside Japan in Brazil• Follows philosophy to develop and to produce
car in the country to be sold.
Timeline (cont.)
1989 •Introduce their luxury line Lexus after several years of development
1997 •First Hybrid car- Prius was launched in Japan•Rest of the world in 2000
2004 •Introduced parallel Scion passenger-car line
2014 •Sold its 10-Millionth Vehicle in a year cycle, beating GM, VW to claim a top position
Toyota-Today
Largest Automaker in the World. Brands: Toyota, Lexus (Premier),
Scion (Parallel) Automotive Business: 95%
Other Businesses: Real Estates, Marine, Biotech, IT, Telecommunication: 5%
Produces about 7 Million cars every year (1 car every 5 seconds)
58 Manufacture plants across 26 countries-6 continents, 220,000+ employers.
Rely on technology and cost-cut
HONDA
Based in Tokyo, Japan
President - Takanobu Ito
Stock Price Ticker: HMC
Market Cap – 57.20B
# of Employees – 198,561 (unconsolidated basis)
http://world.honda.com/profile/overview/index.html
Company Overview
Fun Facts Manufacturer of automobiles,
motorcycles, and power equipment World’s largest motorcycle
manufacturer since 1959 Became second-largest Japanese
automobile manufacturer in 2001 Eighth largest manufacturer in the
world Became involved with artificial
intelligence/robotics research in 1986
Ventured into aerospace industryhttp://en.wikipedia.org/wiki/Honda
1963• Start of Honda’s
automobile business
1969• First overseas production
of Honda automobiles
1972 • Honda Civic is released
1976 • Honda Accord is released http://world.honda.com/timeline/auto/
Timeline
1982
• Becomes first Japanese automobile manufacturer to produce in the US
1986
• First luxury Japanese automobile brand (Acura) is released in US
1989• Accord becomes best
selling car brand in the US
1995 •Worldwide automobile production reaches 30 million
http://world.honda.com/timeline/auto/
Timeline
1999 • Insight hybrid is released
2003 •Worldwide automobile production reaches 50 million
2005 •Worldwide sales of Honda hybrids reach 100K
2012 •Sales millionth hybrid automobile
http://world.honda.com/timeline/auto/
Timeline
BUSINESS ANALYSIS
Net Income Analysis YEAR
FORD NET INCOME
VOLKSWAGEN NET INCOME
HONDA NET INCOME
TOYOTA NET INCOME
2004 $3,500 $867 $4,538 $10,911
2005 $2,000 $1,394 $5,099 $11,744
2006 $12,600 $2,455 $4,981 $13,797
2007 $2,700 $5,650 $5,827 $16,731
2008 $14,700 $6,896 $1,385 -$4,417
2009 $2,170 $1,271 $2,872 $2,241
2010 $6,560 $9,580 $6,421 $4,907
2011 $2,020 $21,992 $2,603 $3,490
2012 $5,660 $28,130 $3,756 $9,842
2013 $7,150 $12,146 $5,603 $17,794
Net Income (Descriptive Statistics)
Based on the last 10 years of reported Ford Net Income , sample mean for the net income is $5,906 M. The standard deviation for the sample is ±4,528 M.
With a 95% confidence level, we can conclude that the net income for Ford for the year end or early 2015 will be $5,906± $3,239 M.
Based on the last 10 years of reported Volkswagen Net Income , sample mean for the net income is $9,038 M. The standard deviation for the sample is ±9,352 M.
With a 95% confidence level, we can conclude that the net income for Volkswagen for the year end or early 2015 will be $9,038± $6,690 M.
FORD NET INCOME ANALYSIS VOLKSWAGEN NET INCOME ANALYSIS HONDA NET INCOME ANALYSIS TOYOTA NET INCOME ANALYSISMean 5906 Mean 9037.945165 Mean 4308.5 Mean 8704
Standard Error 1432.025139 Standard Error 2957.472288 Standard Error 509.8846983 Standard Error 2220.963
Median 4580 Median 6272.98336 Median 4759.5 Median 10376.5
Mode #N/A Mode #N/A Mode #N/A Mode #N/A
Standard Deviation 4528.461107 Standard Deviation 9352.348547 Standard Deviation 1612.396991 Standard Deviation 7023.302
Sample Variance 20506960 Sample Variance 87466423.35 Sample Variance 2599824.056 Sample Variance 49326776
Kurtosis 0.220507049 Kurtosis 0.643594086 Kurtosis -0.642066117 Kurtosis -0.38405
Skewness 1.144018376 Skewness 1.251047781 Skewness -0.568956402 Skewness -0.51503
Range 12700 Range 27263.7032 Range 5036 Range 22211
Minimum 2000 Minimum 866.5104 Minimum 1385 Minimum -4417
Maximum 14700 Maximum 28130.2136 Maximum 6421 Maximum 17794
Sum 59060 Sum 90379.45165 Sum 43085 Sum 87040
Count 10 Count 10 Count 10 Count 10
Confidence Level(95.0%) 3239.46592 Confidence Level(95.0%) 6690.26712 Confidence Level(95.0%) 1153.43932 Confidence Level(95.0%) 5024.168
Based on the last 10 years of reported Honda Net Income , sample mean for the net income is $4,309 M. The standard deviation for the sample is ±1,612 M.
With a 95% confidence level, we can conclude that the net income for Honda for the year end or early 2015 will be $4,309 ± $1,153 M.
Based on the last 10 years of reported Toyota Net Income , sample mean for the net income is $8,704 M. The standard deviation for the sample is ±7,023 M.
With a 95% confidence level, we can conclude that the net income for Toyota for the year end or early 2015 will be $8,704 ± $5,024 M.
Net Income (Box Plot) – Ford
0 5000 10000 15000 20000 25000
Ford Net Income / BoxPlot
Ford Net income
Stem and Leaf plotstem unit = 1000leaf unit = 100
Frequency Stem Leaf4 2 0 0 1 71 3 50 4 1 5 61 6 51 7 10 8 0 9 0 10 0 11 1 12 60 13 1 14 7
10
1st quartile 2,302.50median 4,580.003rd quartile 7,002.50interquartile range 4,700.00mode #N/A
low extremes 0low outliers 0high outliers 1high extremes 0
High outlier took place in 2009 due to the financial crisis having a great impact on Ford Net Income.
Net Income (Normal Distribution) - Ford
-10000 -5000 0 5000 10000 15000 20000 25000
Mean: $5,906Std Dev: $4,528
99.7% of Ford’s Net Income3µ = $ 5,906 ± 3($ 4,528)
-7.678 ($B) ≤ 3µ ≤ 19.490 ($B)
Net Income (Histogram) - Volkswagen
866.5104 9954.411467 19042.31253 More0
5
10
Frequency
Net Income
Fre
qu
en
cy
Bin Frequency866.5104 1
9954.411467 619042.31253 1
More 2
Frequency of reported net income is between $1,271 and $9,580.
µ = $9,038
µ = $150 σ ± $87
Revenues – Reported Data
YEAR FORD REVENUES VOLKSWAGEN REVENUES HONDA REVENUES TOYOTA REVENUES
2004 $171,600.00 $110,598.80 $80,734.00 $172,812.00
2005 $177,100.00 $118,589.61 $84,623.00 $180,050.00
2006 $160,100.00 $131,688.39 $93,228.00 $200,968.00
2007 $172,500.00 $149,258.58 $116,559.00 $256,036.00
2008 $14,498.00 $167,414.98 $101,205.00 $207,537.00
2009 $3,026.00 $146,716.93 $91,802.00 $202,786.00
2010 $7,149.00 $168,200.73 $107,444.00 $228,353.00
2011 $8,681.00 $221,790.73 $97,820.00 $228,716.00
2012 $133,599.00 $247,704.27 $101,045.00 $225,702.00
2013 $146,917.00 $261,652.88 $115,583.00 $250,756.00
µ = $150 σ ± $87
Revenues - Ford
2002 2004 2006 2008 2010 2012 2014 $-
$20,000 $40,000 $60,000 $80,000
$100,000 $120,000 $140,000 $160,000 $180,000 $200,000
f(x) = − 10856.2060606061 x + 21904206.8727273
Ford Revenues ($ Millions)
Fiscal Year
Revenues (
$ M
US
D)
Ford had conducted a restructuring initiative to achieve and maintain profitability by reducing the cost structure which began to pay off 2010.
The rise was mainly caused by the return of commercial customers that had all but stopped buying in 2009 during the recession.
Sales gains in the U.S. were led by the Ford Fusion sedan, the Ford Taurus and Ford edge, with sales up 51 percent compared to 2009.
In 2010 Ford discontinued production of the Mercury brand, in order to fully devote their financial, product development, production and marketing, sales and service resources toward further growing the core Ford brand while enhancing Lincoln.
µ = $150 σ ± $87
Revenues - Volkswagen
2003 2005 2007 2009 2011 2013 2015$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
f(x) = 16666.238551697 x − 33301778.5415824R² = 0.892130621063339
Volkswagen Revenues ($ Mil-lions)
Fiscal YearR
evenues (
$ M
USD
)
In 2009, the Volkswagen Group also suffered a decline in revenues due to the global financial crisis with a rebound in 2010 that resulted in earnings that outperformed expectations.
µ = $150 σ ± $87
Revenues - Honda
2002 2004 2006 2008 2010 2012 20140
20,00040,00060,00080,000
100,000120,000140,000
f(x) = 2513.98181818182 x − 4950328.18181818
Honda Revenue ($ Millions)
Fiscal Year
Revenues (
$ M
US
D)
Chart depicts Honda’s revenue from FY 2004 to 2013.
The decrease in automobile sales from 2007 – 2009 was a result of the global financial crisis.
Revenue – Toyota Motors
2002 2004 2006 2008 2010 2012 20140
50000
100000
150000
200000
250000
300000
f(x) = 6496.9696969697 x − 12833792.0363636
Toyota Motors Revenue ($ Million)
Fiscal YearR
even
ues (
$ M
US
D) 2004-2007: Steady positive
growth 2007-2009: Negative
Growth 2009-2013- Slow positive
growth
GROWTH IN THE INDUSTRY
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
50,000
100,000
150,000
200,000
250,000
300,000
Revenue in $ Millions
Honda Toyota VW Ford
2008-Recession
Stock Price (Normal Distribution) - Volkswagen
-200 -100 0 100 200 300 400 500
Stock Price
$210
VOLKSWAGEN STOCK PRICEMean 150.4478
Standard Error 27.37286
Median 129.6051
Mode #N/A
Standard Deviation 86.56059
75.43% probability that the stock price will be less than or equal to $210.00.
µ = $150 σ ± $87
99.7% of Volkswagen’s Stock Price3µ = $ 150 ± 3($87) $-111 ≤ 3µ ≤ $411
Stock Price / Revenue (Correlation) - Volkswagen
µ = $150 σ ± $87
There is a 57% moderate positive correlation of the stock price of Volkswagen to rise as revenue rises.
SUMMARY OUTPUT
Regression StatisticsMultiple R 0.569527R Square 0.324361Adjusted R Square 0.239906Standard Error 46576.07
$50,000.00 $100,000.00 $150,000.00 $200,000.00 $250,000.000
50
100
150
200
250
300
350
Stock Price
Stock Price / Revenue (Correlation) - Ford
µ = $150 σ ± $87
Ford Stock price = - 0.007 ( Ford Sales & Revenues) + 20.008
Since R value is -.34 we can conclude there is negative correlation between Ford Revenues and Ford stock prices, however it is a weak negative relationship.
Sales & Revenues Stock Prices
Sales & Revenues 1Stock Prices -0.335056774 1
$1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $0.00$2.00$4.00$6.00$8.00
$10.00$12.00$14.00$16.00$18.00
f(x) = − 0.00686446421008047 x + 20.0077806014401R² = 0.108253189766983
Ford Stock Price/Revenue
Stock Price / Revenue (Correlation) - Honda
RevenueStock Price
Revenue 1.000 Stock Price .461 1.000
10 sample size
Correlation Matrix Scatterplot
R is greater than 0 but less than .75 at . 46 ; therefore we can say there is a moderate positive correlation between Honda’s revenue and stock price.
70,000 80,000 90,000 100,000 110,000 120,0000
20
40
60
f(x) = 0.000249141489690357 x + 8.46292121224899R² = 0.212314099062197
Honda Stock Price / Revenue
Stock Price Linear (Stock Price)
RevenueS
tock
Pri
ce
Stock Price / Revenue (Correlation) - Toyota
µ = $150 σ ± $87
RESULTS
y = 258.4x + 191575
R² = 0.0424
R = 0.2059 or 20.59%
There is a weak positive relationship
between Toyota stock prices and Revenue. It
is below 75%, therefore we can conclude that the
stock price of Toyota is not dependent of Revenue and vice
versa.
0 50,000 100,000 150,000 200,000 250,000 300,0000
20
40
60
80
100
120
140
Toyota Stock Price /Revenues
Revenues ($M)
Sto
ck P
rice
($)
Hypothesis – Toyota vs. Honda
Null: Average stock price for Toyota will be less than the average stock price for Honda.
H0 : Toyota(Stock Price) ≤ Honda (Stock Price)
Alternative: Average stock price for Toyota will be greater than the average stock price for Honda.
H1 : Toyota (Stock Price) > Honda (Stock Price)
Hypothesis- Results Toyota Honda
Mean 86.647 33.129
Variance 437.8835344 41.9215
Observations 10 10
Pearson Correlation 0.055193698
Hypothesized Mean Difference 0
df 9
t Stat 7.849535125
P(T<=t) one-tail 1.28762E-05
t Critical one-tail 1.833112923
P(T<=t) two-tail 2.57523E-05
t Critical two-tail 2.262157158
Average stock price for Toyota is $86 and the average price for Honda is $33.
Compared to Honda, Toyota has a greater stock price.
T-stat is 7.84 which is greater that the T-critical value of 1.83 (95% CI), therefore, we will reject the null hypothesis or accept the alternative hypothesis.
-3 -2 -1 0 1 2 3X 7.84
Hypothesis – Ford vs. Volkswagen
Null: There is no difference between the average stock price for Ford and Volkswagen.
H0 : Ford (Stock Price) = Volkswagen (Stock Price)
Alternative: Ford and Volkswagen average stock price are not the same.
H1 : Ford (Stock Price) ≠ Volkswagen (Stock Price)
Hypothesis – Results
t Stat > t Critical two-tail
As 5 > 2.1 we can reject the null hypothesis that the average stock prices for Ford and Volkswagen are the same or accept the alternate hypothesis that the two average stock prices differ.
t-Test: Two-Sample Assuming Equal Variances
Volkswagen Ford Mean 113.592 9.766Variance 4290.385418 18.2703156Observations 10 10Pooled Variance 2154.327867Hypothesized Mean Difference 0df 18 t Stat 5.001902538P(T<=t) one-tail 4.623E-05t Critical one-tail 1.734063607P(T<=t) two-tail 9.24599E-05 t Critical two-tail 2.10092204
P(T<=t) two-tail < α-4 -3 -2 -1 0 1 2 3 4
X 5
Stock Price – Past 10 yrs
2002 2004 2006 2008 2010 2012 2014$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
Ford Linear (Ford) Volkswagen Linear (Volkswagen)Toyota Linear (Toyota) Honda Linear (Honda)
Most valuable company in the world by market value on October 28, 2008.
Porsche, Volkswagen's largest shareholder, stated it bought options to increase its stake to 75 % from 25%.
Other reason for surge was due to hedge funds betting share price would fall as part of financial collapse.
Mean stock price varies from company to company; Volkswagen has the highest mean stock price and greater deviation within the sample set compared to the other companies. We can conclude that stock prices for these four car companies are different at a 95% confidence level based on 10 samples (Last 10 years)
The p-value of 0 means there is 0 % probability of accepting the null or 100% probability of accepting the alternative hypothesis (.
Alpha significance value of 0.05 is greater than p value of 0 therefore we reject the null and accept the alternative hypothesis.
F critical value is 2.578 at 95% and the F value is 7840 which falls far outside the bell curve, supporting the rejection of the null hypothesis.
SUMMARY Groups Count Sum Average Variance Std. Dev
Stock Price 10 20085 2008.5 9.166667 6.4747 Honda 10 331.29 33.129 41.9215 6.47 Toyota 10 920.92 92.092 483.1354 21.98 Volkswagen 10 1135.92 113.592 4290.385 65.50 Ford 10 97.66 9.766 18.27032 4.27
ANOVA Source of
Variation SS df MS F P-value F crit Between Groups 30377681 4 7594420 7840.811 2.42E-63 2.578739 Within Groups 43585.91 45 968.5759
Total 30421267 49
Null Hypothesis H0 : There is no difference in Stock Price by company. Alt Hypothesis: There is a difference in Stock Price by company.
Stock Price (ANOVA – One Factor)
Mean sales vary from company to company; Toyota has the highest mean sales and smaller deviation compared to VW and Ford. We can conclude that sales for these four car companies are different at a 95% confidence level based on 10 samples.
Honda and Ford have the same mean sales at $99 B; however Ford has a larger deviation compare to Honda
F critical value for revenue year to year is 2.25 at 95% CI and the F value is 1.15 which falls within bell curve, supporting the acceptance of null hypothesis; However, the probability to accept the null hypothesis that revenue for four companies from year to year is the same is about 35%
F critical value for revenue from company to company is 2.96 at 95% CI and the F value is 13.57 which falls outside the bell curve, supporting the rejection of null hypothesis.
Year Count Sum Average Variance Standard Deviation FY 2004 4 535744.8 133936.2 2101665968 45,843.93
FY 2005 4 560362.6 140090.65 2168465571 46,566.79
FY 2006 4 585984.4 146496.1 2069670900 45,493.64
FY 2007 4 694353.6 173588.4 3547694589 59,562.53
FY 2008 4 490655 122663.75 7122149592 84,392.83
FY 2009 4 444330.9 111082.73 7242429827 85,102.47
FY 2010 4 511146.7 127786.68 8904718072 94,364.81
FY 2011 4 557007.7 139251.93 11193948666 105,801.46
FY 2012 4 708050.3 177012.57 5007928724 70,766.72
FY 2013 4 774908.9 193727.22 5387964147 73,402.75
Honda 10 990043 99004.3 143391538.2 11,974.62
Toyota 10 2153716 215371.6 760570340.9 27,578.44
VW 10 1723616 172361.59 2854027678 53,423.10
Ford 10 995170 99517 6326890160 79,541.75
Source of Variation df MS F P-value F crit FY Year 9 2.81E+09 1.1579867 0.359441582 2.250131477 Company 3 3.29E+10 13.571988 1.37289E-05 2.960351318 Error 27 2.43E+09
Total 39
Null Hypothesis H0 : There is no difference in Revenue by company and from year to yearAlt Hypothesis H1 : There is a difference in Revenue by company and from year to year
Revenue (ANOVA – Two Factored)
Ford (Correlation Analysis)
Ford Stock Price Ford Net Income Ford Stock Price Ford Revenue
Ford Stock Price 1.000 Ford Stock Price 1.000
Ford Net Income -.346 1.000 Ford Revenue .010 1.000
Ford Stock Price Honda Net Income Ford Stock Price Honda Revenue
Ford Stock Price 1.000 Ford Stock Price 1.000 Honda Net
Income .511 1.000 Honda Revenue .152 1.000
Ford Stock Price Toyota Net Income Ford Stock Price Toyota Revenue
Ford Stock Price 1.000 Ford Stock Price 1.000 Toyota Net
Income .319 1.000 Toyota Revenue .218 1.000
Ford Stock Price VW Net Income Ford Stock Price VW Revenue
Ford Stock Price 1.000 Ford Stock Price 1.000
VW Net Income .331 1.000 VW Revenue .421 1.000
Ford (Multiple Regression)Dependency of Toyota Stock Price on Revenue of VW, Ford and Net Income of Toyota and
Honda
Ford Stock Price = -3.638 + 0.0020(Honda Net Income) – 0.000057(Toyota Net Income) + 0.0000374 (VW Revenue) -- 0.000012 (Ford Revenue)
Based on the trend in Revenue and Net Income of 2012-2013, let’s assume:
Net Income for Honda in 2014-2015 = 9400M Toyota = 28500M
Revenue VW = 280000M & Ford = 161600M
Ford Stock Price = --3.638 + 0.0020(9400) -- 0.000057(28500) + 0.0000374 (280000) -- 0.000012(161600)
= $21.11 (2014-2015 prediction based on the revenue assumption of VW, & Ford and Net Inc for Honda an Toyota)
($15.73 = Current stock price of Ford as of Nov 28, 2014)
Coefficients Standard Error t Stat P-value Regression Statistics Intercept -3.638897315 9.042060 -0.40244 0.703988 Multiple R 0.743466 Honda Net Income 0.002009264 0.001551 1.295525 0.251723 R Square 0.552742 Toyota Net Income -5.70322E-05 0.000654 -0.08722 0.933879 Adj R Square 0.194936 VW Revenue 3.74948E-05 0.000031 1.190788 0.287181 Standard Error 3.835201 Ford Revenue -1.22418E-05 0.000043 -0.28296 0.788549 Observations 10
Volkswagen (Correlation Analysis)
VW Stock Price VW Net Income VW Stock Price VW Revenue
VW Stock Price 1.000 VW Stock Price 1.000
VW Net Income .428 1.000 VW Revenue .645 1.000
VW Stock Price Honda Net Income VW Stock Price Honda Revenue
VW Stock Price 1.000 VW Stock Price 1.000
Honda Net Income -.273 1.000 Honda Revenue .735 1.000
VW Stock Price Toyota Net Income VW Stock Price Toyota Revenue
VW Stock Price 1.000 VW Stock Price 1.000
Toyota Net Income -.167 1.000 Toyota Revenue .641 1.000
VW Stock Price Ford Net Income VW Stock Price Ford Revenue
VW Stock Price 1.000 VW Stock Price 1.000
Ford Net Income .551 1.000 Ford Revenue -.205 1.000
Volkswagen (Multiple Regression) Dependency of VW Stock Price on Revenue of Toyota/Honda/VW and Net Income of Ford
VW Stock Price = --235.18 + 0.0068 (Honda Revenue) – 0.0021(Toyota Revenue) + 0.0006 (VW Revenue) + 0.0045 (Ford Income)
Based on the trend in revenue and net income of 2012-2013, let’s assume:
Honda Revenue = 126000, Toyota = 275000, VW = 280000 & Ford Net Income = 9000
VW Stock Price = -235 + 0.0068 (126000) – 0.0021 (275000) + 0.0006 (280000) - 0.0045 (9000)
= $253.3 dollars (2014-2015 prediction based on the revenue assumption of Toyota, VW, Honda & Ford)
($185.20 = Current stock price of Volkswagen as of Nov 28, 2014)
Coefficients Standard Error t Stat P-value Regression Statistics Intercept -235.1862 103.082 -2.28155 0.0714 Multiple R 0.912977 Honda Revenue 0.0068 0.005 1.290052 0.253472 R Square 0.833527 Toyota Revenue -0.0021 0.002 -0.8543 0.431955 Adj R Square 0.700348 VW Revenue 0.0006 0.000 1.75859 0.138976 Standard Error 35.85555 Ford Net Income 0.0045 0.004 1.208078 0.281034 Observations 10
Honda (Correlation Analysis)
Honda Stock Price Honda Net Income Honda Stock Price Honda Revenue
Honda Stock Price 1.000 Honda Stock Price 1.000
Honda Net Income .630 1.000 Honda Revenue .461 1.000
Honda Stock Price Toyota Net Income Honda Stock Price Toyota Revenue
Honda Stock Price 1.000 Honda Stock Price 1.000
Toyota Net Income .544 1.000 Toyota Revenue .508 1.000
Honda Stock Price Ford Net Income Honda Stock Price Ford Revenue
Honda Stock Price 1.000 Honda Stock Price 1.000
Ford Net Income -.026 1.000 Ford Revenue .140 1.000
Honda Stock Price VW Net Income Honda Stock Price VW Revenue
Honda Stock Price 1.000 Honda Stock Price 1.000
VW Net Income .248 1.000 VW Revenue .419 1.000
Honda (Multiple Regression)Dependency of Honda Stock Price on Revenue of VW/Ford and Net Income of
Toyota/Honda
Honda Stock Price = 21.25 + 0.0013(Honda Net Income) + 0.00094 (Toyota Net Income) + 0.000028 (VW Revenue) - 0.0000716 (Ford Revenue)
Based on the trend in Revenue and Net Income of 2012-2013, let’s assume:
Net Income for Honda in 2014-2015 = 9400M Toyota = 28500M
Revenue VW = 280000M & Ford = 161600M
Toyota Stock Price = 21.25+ 0.0013(9400) + 0.00094(28500) + 0.000028 (280000) -- 0.000072(161600)
= $55.21 (2014-2015 prediction based on the revenue assumption of VW, & Ford and Net Inc for Honda an Toyota)
($31.20 = Current stock price of Honda as of Nov 28, 2014)
Coefficients Standard Error t Stat P-value Regression Statistics Intercept 21.25171288 10.3048 2.062318 0.094155 Multiple R 0.864194 Honda Net Income 0.001371725 0.0018 0.776077 0.472797 R Square 0.746832 Toyota Net Income 0.000945184 0.0007 1.2684 0.260499 Adj R Square 0.544298 VW Revenue 2.82718E-05 0.0000 0.787855 0.466472 Standard Error 4.370781 Ford Revenue -7.16726E-05 0.0000 -1.45365 0.205785 Observations 10
Toyota (Correlation Analysis)
Toyota Stock Price Toyota Net Income Toyota Stock Price Toyota Revenue
Toyota Stock Price 1.000 Toyota Stock Price 1.000
Toyota Net Income .824 1.000 Toyota Revenue .206 1.000
Toyota Stock Price Honda Net Income Toyota Stock Price Honda Revenue
Toyota Stock Price 1.000 Toyota Stock Price 1.000
Honda Net Income .599 1.000 Honda Revenue .232 1.000
Toyota Stock Price Ford Net Income Toyota Stock Price Ford Revenue
Toyota Stock Price 1.000 Toyota Stock Price 1.000
Ford Net Income .148 1.000 Ford Revenue .691 1.000
Toyota Stock Price VW Net Income Toyota Stock Price VW Revenue
Toyota Stock Price 1.000 Toyota Stock Price 1.000
VW Net Income -.185 1.000 VW Revenue .047 1.000
Toyota (Multiple Regression) Dependency of Toyota Stock Price on Revenue of VW/Ford and Net Income of
Toyota/Honda
Toyota Stock Price = 83.07 - 0.0025(Honda Net Income) + 0.0036 (Toyota Net Income) – 0.000034 (VW Revenue) -- 0.000063 (Ford Revenue)
Based on the trend in Revenue and Net Income of 2012-2013, let’s assume:
Net Income for Honda in 2014-2015 = 9400m, Toyota = 28500m
Revenue VW = 280000m & Ford = 161600m
Toyota Stock Price = 83.07 –0.0025(9400) + 0.0036 (28500) + 0.000034 (280000) + 0.000063 (161600)
= $142.47 (2014-2015 prediction based on the revenue assumption of VW, & Ford and Net Inc for Honda an Toyota)
($123.50 = Current stock price of Toyota as of Nov 28, 2014)
Coefficients Standard Error t Stat P-value Regression Statistics Intercept 83.07000839 38.76789 2.142753 0.085021 Multiple R 0.83011 Honda Net Income -0.002454579 0.00665 -0.36913 0.727146 R Square 0.689083 Toyota Net Income 0.003634785 0.00280 1.296547 0.251397 Adjusted R Square 0.44035 VW Revenue -3.37558E-05 0.00014 -0.25004 0.812506 Standard Error 16.44345 Ford Revenue -6.25162E-05 0.00019 -0.33703 0.749783 Observations 10
CONCLUSION
SUMMARY – BUSINESS STRATEGY/FORECASTING
Stock PriceFord/HondaRisk Adverse Investors – Honda Stock Price: $33 ± $6 ( Ford Stock Price : $10 ±$4)
Toyota/VolkswagenOpportunistic Investors – Volkswagen Stock Price $114 ± $47 (Toyota $92 ± $16)
Most Revenue Growth Potential Though Toyota shows the highest reported earnings in 2013, pattern of increased growth with a more positive trend line based on Volkswagen’s historical results shows a potential for a better probability it will outperform Toyota in the upcoming year.
Most Profitable Company• Volkswagen Net Income : $9,038 ± $6,690 M (Toyota Net Income: $8,704 ± $5,024 M) (Q1-3
2014 Reported Results indicate a 30% increase over 2013 with Toyota reporting 10% increase over their FY results.)
• The decline in Net Income for Volkswagen’s 2013 reported results was largely due to the measurement effects in connection with the integration of Porsche that occurred in 2012 and a book gain resulting from the revaluation of share options when the integration was delayed in 2011.
SUMMARY – BUSINESS STRATEGY/FORECASTINGVolkswagen
Strategy 2018 Becoming a global and environmental leader by 2018
• Leading in customer satisfaction and quality • Volkswagen Group profit before tax margin > 8% • Top Employer • Volumes > 10 million units p.a.²
Opportunities• Significant growth potential in BRIC markets (Brazil, Russia, India and China) as
well as the US.• Focus on local production with expansion of production network to meet
regional customer demand and minimize currency riskSource: http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2014/05/Factbook2014.bin.html/binarystorageitem/file/Factbook_2014_Englisch.pdf