Global Automotive
Presenter: n n Industry----Frank GM----Raymond Toyota----Angela Volvo---Lillian
Global Auto Sales
The growing importance of Emerging Market
Surprise! n QUICK EXPANSION n n n The production for the next 20 years will be more than what’s been made for the entire 110 years of auto industry history BRIC, especially China has been, and will be the major driving force of global Auto industry Expected to replace Japan as the second largest market
Continuous Growth in Global Automobile Industry n Global Vehicle Ownership Estimation: Over 1 billion units in 2010
Major Countries Click here
Major Manufactures
Major Manufacturer operating Margin
Excess production capacity-NA
Industry Characteristics ---Major Cost n Labour & Pension plans**** n n n Material n n n N. A companies face a large amount of pension cost----approx. $1500 per vehicle Jap companies have none pension cost Hundreds of pieces purchased from suppliers Automakers absorb only part of the increase in material cost Advertising
Cost Breakdown ---Typical American
Cost Breakdown ---Typical American
Industry Characteristics ---Sales cycle n n n Highly sensitive to aggregate economic performance U. S economy will slow down from 3. 2% GDP growth to about 2% The effect of democratic victory in congress? ?
Industry characteristics ---M/A, Alliance n Technology, R/D n Market penetration n Global cooperation
Industry characteristics ---M/A, Alliance n n GM: ---200 Garage Car makers in early days ---SAAB, Daewoo ---Isuzu, Subaru, Suzuki Ford---Jaguar, Land Rover, Volvo, ----Mazda n n Benz---Chrysler Renault---Nissan
Porter’s Five Forces
Threat of New entrants n n Emergence of foreign competitors with Capital, technology and management skills Chinese & India brands within their own countries
Suppliers n n n Had little power before Been hit hard in Major Automaker cost cutting Globalization n n merger and acquisition Increased tension b/w suppliers and Automakers
Supply Chain (traditional) Tier 3 Tier 2 Tier 1 OEM Raw Material Small parts components Design& assemble
Supply Chain (emerging) Raw Material Supplier Component specialist Global Standardized– Systems Manufacturer Systems Integrator
Merger of suppliers
Outsourcing production ---to more suppliers Percent of Car Value outsourced
Suppliers --Cost cutting requirement of Automakers
Suppler (cont) n n n A major suppler Collins & Aikman halted delivery to Ford on Oct 19 th Caused temporary shut down of one of the biggest assembly line of Ford Foreseeable---
One of the largest supplier Dana has been added to the list (April 2006)
Substitutes n Public transportation on the rise
Rivalry n Fierce competition n n High competition cost Low return n Historically avoid price competition n More and More price competition
Buyers n n Historically, the automaker power went unchallenged As the market saturate, more options made available, buyers have significant amount of power
Increasing Models and Decreasing Scale, US Market
Regulation n Regulations n n Emission standard*** Safety standard
n n n n European Union: “ACEA agreement” seeks 25% reduction in vehicle CO 2 emissions levels by 2008 (from 1995 levels). Agreement may be extended an additional 10% by 2012. Japan: requires 23% reduction in vehicle CO 2 emissions by 2010 (from 1995 levels). Australia: voluntary commitment to improve fuel economy by 18% by 2010. Canada: has proposed a 25% improvement in fuel economy by 2010. China: Introduced new fuel economy standards in 2004; weight-based standards to be introduced in 2 phases (2005 and 2008). California: CARB approved GHG emissions reductions for automobiles, currently under legislative review. New York: Clean Cars Bill proposing to follow California standards is currently in committee. Several other NE states have indicated they will follow CA’s lead.
Comparison of Fuel Economy and GHG Emission Standards An and Sauer, 2004 for the Pew Center on Global Climate Change
Aggregate Value Exposure Estimated cost per vehicle to meet “most likely” carbon constraint scenarios in US, EU and Japan 25 x difference in Value Exposure across the industry 8
Management Capacity for Low -Carbon Technologies 9 Measure of OEMs’ capacity to develop and commercialize main lowcarbon technologies: hybrids, diesels & fuel cells
In addition n Political issues n n n Energy crisis n n n Trade barrier tariff OPEC Political & Natural reasons Technology development n n Hybrid, Fuel cells, Hydrogen, Electronic, ethanol. Etc System feature & design
Key success factors n n n Pension fund management How well the company digest what’s been eaten Supplier relationship management Risk management (i. e. exchange exposure risk, commodity price risk) design, marketing of new models New technology development
General Motors Symbol: GM Exchange(s): NYSE Industry: Consumer Products (Automotive)
As of Nov 7, 2006 Dividends Per Share : 1. 00 Number of Shares: 565, 610, 000
1 Year Chart
30% increase within 1 year
5 Year Chart
20% decrease within 5 years
Company Profile ¡ ¡ ¡ The world's largest automaker has been the global industry sales leader for 75 years employs about 327, 000 people around the world manufactures its cars and trucks in 33 countries Engaged in automotive production and marketing and financing and insurance operations largest operating presence in North America
EXECUTIVE PROFILES G. Richard Wagoner, Jr. GM Chairman & Chief Executive Officer l l l Since June 2000 BA in economics from Duke University MBA from Harvard Business School Frederick (Fritz) A. Henderson GM Vice Chairman and Chief Financial Officer l l BBA from the University of Michigan MBA from Harvard Business School Robert A. Lutz GM Vice Chairman, Global Product Development l l l BA in production management from the University of California-Berkeley MBA from the University of California-Berkeley degree of doctor of management from Kettering University
Brands ¡ ¡ ¡ Buick Cadillac Chevrolet Fleet & Commercial Operations Holden Vauxhall ¡ ¡ ¡ ¡ GMC GM Daewoo HUMMER Pontiac Saturn Saab Opel
GMAC Financial Services A finance company ¡ offers automotive, residential and commercial financing and insurance ¡
GM's On. Star subsidiary a provider of vehicle safety, security and information services ¡ use (GPS) satellite and cellular technology to link the vehicle and driver to the On. Star Center ¡ advisors offer real-time, personalized help 24 hours a day, 365 days a year ¡
Global Partnerships ¡ ¡ ¡ majority shareholder in GM Daewoo Auto & Technology Co. of South Korea Product, powertrain and purchasing collaborations with Suzuki Motor Corp. and Isuzu Motors Ltd. of Japan Advanced technology collaborations with l l l ¡ Daimler. Chrysler AG BMW AG of Germany Toyota Motor Corp. of Japan Vehicle manufacturing ventures with l l l Toyota Suzuki Shanghai Automotive Industry Corp. of China AVTOVAZ of Russia Renault SA of France
Market ¡ GM's largest national market is the United States, followed by China, Canada, the United Kingdom and Germany
GM in 2005 One of the most difficult years Reported loss of $10. 6 B
The size of GM’s 2005 loss, most of which related to its North American operations
Global Sales GM had its second highest sales volume globally last year, with nearly 9. 2 million vehicles sold ¡ More than half of GM’s sales globally came OUTSIDE the United States ¡ In the Asia Pacific region, GM sold more than 1 million vehicles ¡ GM became the No. 1 car manufacturer in China along with their joint venture partner ¡ Significant growth in Latin America, Africa and the Middle East region, with sales up 20 percent ¡ Eighth consecutive year of sales leadership in region such as: Chile, Ecuador, Venezuela, South Africa and the Middle East ¡ GM Europe cut its losses significantly
GM Production Schedule
GM Car Deliveries
Challenges and Weakness Due to: 1. huge legacy cost burden 2. inability to adjust structural costs in line with falling revenue 3. global overcapacity 4. falling prices 5. rising health-care costs 6. higher fuel prices a) 7. 8. reducing demand for some of the highest-profit product global competition international exchange rates tend to help Japanese and Korean imports
¡ ¡ ¡ Rising retiree health care costs and Other Post Employment Benefit (OPEB) fund deficit prompted the company to enact a broad restructuring plan For every active GM employee in the United States last year, GM supported 3. 2 retirees and surviving spouses GM’s health-care bill in 2005 = 5. 3 B
Financial Burden Health care and pensions. * Number of U. S. retirees and surviving spouses who received pension plan benefits ** Est. number of U. S. employees, dependents, retirees and surviving spouses covered by health benefits
Delphi Chapter 11 proceedings ¡ ¡ Delphi is an automotive parts company spun-off from GM GM recorded a charge of $5. 5 billion ($3. 6 billion after tax) as an estimate of contingent exposures relating to the Chapter 11 filing of Delphi Corporation GM receiving only a portion of amounts owed by Delphi to GM obligations in excess of amounts recognized by GM in 2005 in connection with benefit guarantees
Consolidated Results
GM North America
GM North America The loss due to: ¡ declines in sales of higher margin large cars ¡ Unfavorable material costs ¡ Increased health-care expenses ¡ Advertising and sales promotion cost increases ¡ restructuring charge
GM Europe
GM Europe In February 2005, GM successfully bought itself out of a put option with Fiat for $2 billion USD Restructuring charges ¡ negative pricing ¡ unfavorable exchange rates ¡ Pricing declines ¡
GM LATIN AMERICA/AFRICA/MID EAST
GM LATIN AMERICA/AFRICA/MID EAST significant industry growth in 2005 ¡ 19% increase in vehicle unit sales ¡ net sales and revenues improved by approximately 34% Lost due to: ¡ quarter impairment charges of $99 million for assets ¡ A full valuation allowance charge ¡
GM Asia Pacific
GM Asia Pacific ¡ ¡ ¡ General Motors is the top-selling foreign auto maker in China unit sales in the Asia Pacific region increased approximately 6. 3% the fastest growing automotive region Unit sales increase by 20% Lost due to: l l l ¡ Write-down of GM’s investment in FHI (Fuji Heavy Industries ) asset impairment charges restructuring activities Continue to take advantage of the strong position and growth in China, leverage its capabilities at GM Daewoo, and execute the turnaround at GM’s Holden unit
GMAC
GMAC goodwill impairment charges ¡ lower net interest margins ¡
North America Turnaround Plan Four-point turnaround plan l l Keep raising the bar in the execution of great cars and trucks Revitalize sales and marketing strategy. Significantly improve cost competitiveness Address health-care and pension legacy cost burden.
Turnaround Plan – Plant and labor reduction ¡ ¡ ¡ ¡ cease production at 12 U. S. plants by 2008 reduce manufacturing workforce by 30, 000 positions (cumulative reduction to 38 percent ) reduce our retiree health-care obligations by about $15 billion cap the company’s contribution to salaried retiree health-care costs modify pension benefits for salaried and executive employees reduced salaries of our top executives reduced our dividend by 50 percent Expected to result in annual cost reductions totaling $7 billion
Consolidated Balance Sheets Assets
Consolidated Balance Sheets – Liabilities and Stockholders’ Equity
Available Liquidity
Cash flows from continuing operating activities
Cash flow from continuing financing activities
Q 3 financial Highlights
2006 Q 3 Highlights ¡ ¡ ¡ ¡ Record Q 3 revenue of $48. 8 B Adjusted EPS $0. 93 $529 million Adjusted Net Income r $1, 643 million improvement vs. Q 3 ’ 05 Adjusted results Significant improvements continue in GME and GMLAAM Lower results at GMAC Cash balance of $20. 4 B at quarter-end, Favorable results in Corporate Other largely driven by reduced
Goals ¡ ¡ ¡ Automotive operations improved by $1. 5 B on an adjusted basis, on strength of cost actions in GMNA and continued momentum in other regions On track to achieve $9 B structural cost target on a running rate basis by the end of 2006 – and continuing to work on goal to reduce to 25% of revenues by 2010 Key priority is to finalize negotiations with Delphi Continue to be on track to close the GMAC transaction in Q 4 Automotive liquidity remains strong at $20. 4 B, but continued focus on improving operating cash flow
Key Success Factors 1) 2) 3) 4) 5) Continued demand for GM’s most profitable products and the maintenance of a strong product mix The introduction of innovative new products on a timely cadence, through the integration of global architectures, engineering, and procurement efforts The implementation of measures for reducing structural costs, offsetting legacy and health-care burdens Maintenance of sufficient balance sheet strength and liquidity Other factors affecting GM’s Financing and Insurance Operations (FIO) reportable operating segment results, including interest rates, credit ratings, and demand for mortgage financing.
Issues to consider ¡ ¡ ¡ ¡ ¡ GM is the healthiest of the Big Three !!! ability to compete with Asian automakers ? ? ? Jerry York !!! GM's accounting subject of inquiry market share in China ? ? ? GM vs. Toyota? ? cash flow problems? ? High structure cost? Sustainable?
Recommendation HOLD
Toyota Motor Corporation
Company Snapshot n n n Industry: Consumer Products (Automotive) Ticker Symbol: TM Listed on: NYSE Stock Price: US$ 123. 460 Net Change: US$ 2. 250 52 -Week High: US$ 124. 000 n n n EPS: 7. 90 52 -Week Low: US$ 89. 800 n % Change: 1. 86% P/E: 15. 60 Dividend Payout: 17. 25% ROA: 8. 19% ROE: 13. 5% # of shares outstanding: 3, 609, 997, 492 shares Data as of 08 Nov 06
Chart 1 year (daily)
Chart – 5 years (monthly)
Financial Highlights
Company Overview n n n Established in 1937 Producing vehicles in 26 countries Marketing vehicles in more than 170 countries and regions Toyota’s Brands: Toyota, Lexus, Daihatsu, and Hino Sold ~ 8 millions vehicles in 2006 More than 280, 000 employees
Management Team n Chairman of the Board/Director (since 2006) Fujio Cho (69 years old ) ¨ Joined Toyota in 1960 ¨ Director of Aioi Insurance Co. , Ltd ¨ Director of Central Japan Railway Company ¨ Director of Toyota since September 1988 n President Katsuaki Watanabe (63 years old) ¨ Joined Toyota directly from college in 1964 ¨ Director of Mitsubishi Securities Co. , Ltd. ¨ Director of Toyota since September 1992 n Executive VP/Director (since 2005) Mitsuo Kinoshita (60 years old) ¨ Joined Toyota in 1968 ¨ Director of Toyota since June 1997 ¨ Vice Chairman of the Board of Gamagori Marine Development Co. Ltd.
Current Business n Automotive Operations ¨ Japan ¨ North America ¨ Europe ¨ Asia and other regions n Financial Services Operations ¨ Auto sales financing ¨ Retail sales of corporate bonds ¨ Investment trusts ¨ Asset development services for individuals ¨ Housing loans ¨ Insurance n Other Business Operations ¨ Manufactured housing ¨ Advertising & e Commerce services ¨ Industrial & aerospace equipment ¨ Marine equipment ¨ Telecommunications services ¨ Sports teams and golf courses
Consolidated Segment Information n Revenues segmented by business operations:
Revenues by Business Operations Yen in millions 2006 By Business Operations: Revenues: Automotive 19, 338, 144 Financial Services 996, 909 All Others 1, 190, 291 Operating Income: Automotive Financial Services All Others 1, 694, 045 155, 817 39, 748
Automotive Operations n Revenues: ¨ n Operating income: ¨ n ¥ 19, 338. 1 billion (+13. 0%) ¥ 1, 694. 0 billion (+16. 6%) Causes: Currency exchange rate fluctuations Increases in vehicle production and sales ¨ Cost reduction activities ¨ Minus the higher expenses resulting from business expansion ¨ ¨
Vehicle Production and Sales
Sales and Production Distribution
Products Distribution
Manufacturing Companies Distribution
Vehicle Production and Sales
Market Shares
Vehicle Sales Projection by Region
Financial Services Operations
Financial Services Operations (cont’d) n Revenues: ¨ n ¥ 996. 9 billion (+27. 6%) Causes: Higher financing volume from increasing vehicle sales ¨ Toyota has the highest credit rating in S&P’s and Moody’s ¨ n Operating income: ¨ n ¥ 155. 8 billion ( – 22. 4%) Causes: ¨ ¨ Valuation losses on interest rate swaps Accounting adjustment in 2005 for loan origination costs by a sales finance subsidiary in the US
Other Business Operations n Revenues: ¨ ¥ 1, 190. 3 billion (+15. 5%) n Operating income: ¨ ¥ 39. 7 billion (+17. 8%) n Causes: ¨ Favorable production and sales in the housing business
Consolidated Segment Information n Revenues segmented by region:
Revenues by Region Yen in millions 2006 By Region: Revenues: Japan ¥ 7, 735, 109 North America 7, 455, 818 Europe 2, 574, 014 Asia 1, 836, 855 Other Regions 1, 435, 113 Operating Income: Japan North America Europe Asia Other Regions ¥ 1, 075, 890 495, 638 93, 947 145, 546 67, 190
Threats n n n n Hikes in crude oil price Hikes in raw materials price Fluctuations in currency exchange rates and interest rates Structural changes in demand for automobiles Change governmental regulations in automotive industry Political instabilities Fuel shortages or interruptions in transportation systems
Competitive Strengths n Superior Quality ¨ Brand Image: safe, environmental friendly Cost competitive n R&D Technology leader n ¨ Fuel efficient vehicles Solid financial base n Personnel development n
Cost Reduction Strategies
Solution to Hike in Oil Price n Hybrid Vehicles ¨ ¨ Prius has become the top selling hybrid car in America. Toyota now has three hybrid vehicles in its lineup: n n n ¨ Prius Highlander Camry The popular minivan Toyota Sienna is supposed to join the hybrid lineup by 2010.
Financial Statements Annual Balance Sheet n Annual Income Statement n Annual Cash Flows Statement n Semiannual Balance Sheet n Semiannual Income Statement n Semiannual Cash Flows Statement n
Selected Financial Summary (Cont’d)
Semiannual Report Released on Nov. 7, 2006
Semiannual Report Released on Nov. 7, 2006
Semiannual Report Released on Nov. 7, 2006
Semiannual Report Released on Nov. 7, 2006
Semiannual Report Released on Nov. 7, 2006
Future Strategies n Enhancing technology development capabilities centered on environmental technology n Increasing production through the advancement of localization
Expand Production Capacity
Future Strategies by Region
Recommendation
Volvo Group
Company Snapshot Data as of Nov 02 06 Last: US$ 62. 420 Net Change: US$ 0. 240 % Change: 0. 38% Open 62. 240 Bid 0. 010 High 62. 690 Ask 2, 000, 0 00 Low 61. 930 EPS 4. 64 Volume 19, 506 P/E 13. 5 52 Week 63. 290 High Yield 0. 00 52 Week 40. 800 Low Div. 0. 00 # Shares 404. 8 M
Company Snapshot n 3 year weekly chart n 5 year weekly chart
Stock Analysis (Volvo VS Market) n 2 Year n 1 Year
Competitor Volvo Paccar Market Cap 26. 60 B 14. 90 B Employ ees 81, 860 21, 900 Qtrly Rev Growth 10. 20% 18. 80% Revenue 35. 93 B 15. 86 B Gross Margin 22. 83% 15. 43% EBITDA 4. 58 B 2. 42 B Oper Margins 8. 13% 12. 61% Net Income 1. 93 B 1. 43 B EPS 4. 761 (404. 8 M) 5. 651 (248. 30 M ) P/E 13. 80 10. 62 P/S 0. 73 0. 93
Management Team n Leif Johonsson 43, 538 Series B shares and 50, 000 employee stock options President and CEO Master of Engineering With Volvo since 1997 n Jorma Halonen 2, 000 Series B shares and 25, 000 employee stock options Executive Vice President Bachelor of Science in Economics With Volvo since 2001
Company Overview n n n Establish: 1927 Employees: more than 80, 000 Product & Service:
Company Overview A global group: Conducts sales in about 185 countries Has production facilities in 18 countries Most of the Volvo Group’s sales are to markets in Western Europe and North America n n Brands:
Production Facilities
Sales by Business Area n Volvo Trucks (67%) n Volvo Buses(7. 2%) Construction & Equipment(15%) Volvo Penta (4. 2%) n n n Volvo Aero (3. 3%)
Sales by Business Area (Cont)
Sales by Market Area
Business Strategy n Customer oriented Develop the dealer networks & improve service to customers n Strong product portfolio Invest in future technologies such as alternative drivelines and supplementary fuels & offer various applications n Capitalize on economies of scale Volvo Powertrain: provides engines and other driveline components Volvo Parts: optimizes inventory management and distribution of parts Volvo Logistics: handles optimal logistics solutions for materials flow
Key Drivers n n n n Cyclical industry Intense competition Unstable prices for commercial vehicles Operations exposed to currency fluctuations Profitability depends on successful new products Relies on suppliers Government regulation
Quarterly Income Statement 3/2005 – 3/2006 (1 SEK=0. 1398 USD)
Key Operating Ratios
Nine Month Ended Report Sep 30 2006 (1 SEK=0. 1398 USD)
2005 Financial Highlights n n Net sales increased by 14% Income for the year increased by 32% Earnings per share increased by 37% Proposed dividend SEK 16. 75 per share
2005 Financial Highlights (Key Ratio)
Consolidated Income Statement (1 SEK=0. 1398 USD)
Sales & Margin
Operating Income / R&D Cost
Consolidated Cash Flow Statement (1 SEK=0. 1398 USD)
Cash Flow Statement 2005
Capital Expenditures n Current & past n Future
Consolidated Balance Sheet (1 SEK=0. 1398 USD)
Change in Net Financial Position
Dividend Payout
Recent News n n Strategic decision on closure of Volvo Aero’s operations in Bromma Volvo initiates a Traffic Accident Research Centre in China n n n Volvo Aero Norway to be supplier to the General Electric Engine for the Joint Strike Fighter Volvo Trucks laying off 600 at Powertrain Plant in Hagerstown Volvo Aero expands in US
Recent News (cont) n Volvo Construction Equipment invests in China Plans bus body cooperation in India n AB Volvo increases its holding in Nissan Diesel n
Скачать презентацию Global Automotive Presenter n n Industry—-Frank GM—-Raymond
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