Transcript Presentation Ford & Toyota en

COMPARATIVE ANALYSIS:
FORD MOTOR COMPANY
TOYOTA MOTOR CORP
dr Agata Kocia
based on presentation by:
PAWEŁ ORZECHOWSKI, MACIEJ OŚWIT &
ANDRZEJ BENCZEK
FORD: the beginning
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Henry Ford designed his first moving assembly
line in 1913
“Wheels for the world”-the motto behind
popularization of cars
Each section of the production process was
divided into component parts
Combination of precision, continuity, and fastpaced brought the world – mass production
In Highland Park, Model T production reached
record levels, every day a car came of the
assembly line every ten seconds
TOYOTA: the beginning
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Toyota's history began at the end of XIX century
Sakichi Toyoda invented Japan's first power
loom which revolutionized the country’s textile
industry
 Two years later, he founded the company
Toyoda Automatic Loom Works
 Toyody Sakichi’s son, Kiichiro Toyoda invested
100,000 pounds in the creation of Toyota Motor
Corporation in 1937 (TMC)
 Sakichi Toyoda received this money for selling
the patent rights to an automatic loom
FORD
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The fourth-largest automotive company in the world in terms of sales
Sells cars on 6 continents
Car Brands: Ford, Mercury, Lincoln and Volvo
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in March of 2010 confirmation of sale of Geely Automobile Holdings Ltd)
Since the mid-90’s Ford continually loses significance in the
American market
Over the same period steadily increases its share in the European
market
Reasons for the gap between the development of the brand in the
U.S. and Europe:
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high labor costs in the U.S.
high expenditure on healthcare in the U.S.
strong trade unions in the U.S. (high pension commitments)
strong economic growth in lower combustion cars
TOYOTA
 The
biggest carmaker in the world in 2009
(more than 7.5 million cars)
 Main markets are Japan and North
America, but recently we can see a strong
growth in Asian and South America
markets
 Toyota has three brands: Toyota, Lexus
and Scion
FORD: more economic
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Dominance of large cars: SUVs, Pick ups
Rapid fluctuations in oil prices and legislators
striving to reduce consumption of materials led
to reorganization
 Restructuring of the three production lines for
production of more economic models in Europe
(Mondeo, Focus etc.)
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in short-run minimization of costs
Ultimately, Ford intends to make engines in all
their models to be more economical
 In 2009 to market were introduced four hybrid
models based on technology leased from Toyota
FORD: hybrid technology
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Currently, Ford has four hybrid models
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Ford Focus Hybrid is a direct threat to so far the most
popular Prius (hybrid line of Toyota)
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In 2010, the company plans to spend an
additional $450 million to develop electric motors
 By 2012, Ford wants to produce own hybrid
technology and plug-ins
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Ford has invested more than $550 million in
restructuring its manufacturing facility in Michigan
What if the market chooses a different path?
TOYOTA: hybrid technology
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Toyota as one of the first ones started a hybrid
cars production line (including leasing its
technology to Ford)
 At present, hybrid Toyota - Prius line, represents
approximately 73% of all hybrid vehicles sold in
the U.S.
 So far in the U.S. Toyota sold the 1,000,000+
hybrid cars
 In addition, Toyota announced its intention to
manufacture electric cars with lithium-ion
batteries “Toyota Plug-HV”
FORD: ONE FORD
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Despite the very large amount
of cars produced, so far Ford
has derives small economies
of scale by applying a
separate, independent
technologies and models for
European, US and developing
markets
“One Ford” – changed
approach
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Ford moves the emphasis to
universal models for use in
different regions of the world
(the first "world car"-new Ford
Fiesta)
FORD: wrong sales model
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From the 90s Ford has created demand
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Ford exceptionally strong suffered from a crisis on a real
estate market
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sales on installments without interest charged
discounts
promotions combined with a loan
in recent years, sales in the U.S. were strongly associated with
the property market
it is estimated that in California, 30% of car purchases has been
financed with a mortgage
Feeling the effects of this approach, Ford began to
change strategy
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less emphasis on creating demand
emphasis on quality and safety
FORD: developing markets
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Ford is mainly engaged in the American market,
which slowly begins to lose its attractiveness
 Ford’s task now is to develop a universal line for
use in every country (European Ford Fiesta in
the U.S., Ford Transit Van in Asia)
 Whether european car models will be appealing
to clients in India or Brazil depends the future of
Ford in the long term.
TOTOTA: withdrawal of models
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Several serious flaws in the models has significantly hurt
Toyota’s image
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In the short term:
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in 2009, the company had to withdraw from the market 3.8
million vehicles due to the acceleration system flaw
it is estimated that due to defects and withdrawals Toyota models
suffered losses of $ 3 billion in 2010
over the past year, throughout the world over 9 million vehicles
have been withdrawn
for consideration more than 30 lawsuits are waiting
In the long term:
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current crisis has significantly hurt the reputation of the company
competition has used well (Chrystler, Ford and Honda
hasorganized the promotions, giving discount on a new car for
customers who got rid of the old Toyota)
TOYOTA: the future
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Car Sales in highly developed countries will fall and
remain at low levels
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majority of consumers’ demand is already satisfied
relatively low economic growth
The biggest outlays directed on emerging markets
mainly Brazil, Russia, India, China (BRIC) countries
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Toyota earlier than other companies in the sector began to invest
in the development of appropriate infrastructure and brand
awareness in the above countries
in 2009 Toyota announced the beginning of motor vehicle
production in India (the company Toyota Kirloskar)
in 2010 Toyota plans to produce 100,000 cars in the new factory
opened in India
TOYOTA:
trends and expectations (1)
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Japan
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investing in luxury brands (Lexus)
• in 1990 10% of Japan's population was over 65 years, in 2006, the number
suppose to double
• older society saves more and raises the demand for more luxury goods
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USA
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collapse of the real estate market
• strength of real estate market has always been related to car market
because consumers often fund the purchase of car with a mortgage owed​​
• stagnation in credit market will reduce demand for new cars
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demand for green technologies
• oil prices are rising, resulting in increased demand for cars Hybrid (Prius
model)
• in December of 2007. U.S. government passed a law requiring the car
manufacturers to reduce the combustion of up to 35 mpg for cars, trucks and
SUVs – Toyota,
typically produces small, economical cars and its standards are already
satisfy new requirements
TOYOTA:
trends and expectations (2)
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USA
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hybrid legislation
• USA introduces new law to encourage development of hybrid
technologies
• at present, when buying a car you can count on the hybrid
tax relief of up to $ 3,400, depending on the amount of car
sales (the more cars the company sells the smaller the
deduction ) – the aim is to support companies desiring to
enter the market with hybrid technology
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World Market
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demand for cars will depend on the trend in oil, steel
and aluminum prices
FORD/TOYOTA:
general data (in $ mln)
Sales (FORD)
Sales (TOYOTA)
Income from operations
(FORD)
Income from operations
(TOYOTA)
Net income (FORD)
Net income (TOYOTA)
Employment (FORD)
Employment (TOYOTA)
Total assets (FORD)
Total assets (TOYOTA)
2006
143,249
203,874
-7,926
2007
154,379
256,581
8,031
2008
129,166
2081,262
-4,130
19,058
22,159
-4,674
-12,613
13,996
283
286
279,196
277256
-2,723
16,766
247
299
279,264
318875
-14,672
-4,430
213
316
218,328
294627
TOYOTA: production (in 1000s)
North America
South America
Europe
Asia, Africa, Australia
Japan
2006
1201
122
623
1081
4684
2007
1205
147
709
1019
5100
2008
1268
150
711
1258
5160
FORD/TOYOTA: sales (in 1000s)
North America (FORD)
(TOYOTA)
South America (FORD)
(TOYOTA)
Europe (FORD)
(TOYOTA)
Asia, Africa, Australia
(FORD)
(TOYOTA)
Japan (TOYOTA)
2006
3051
2556
381
233
1846
1023
589
2007
2890
2943
438
284
1918
1224
535
2008
2329
2958
435
320
1820
1284
464
1384
2364
1361
2273
1559
2188
Risk factors
FORD
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Ford is exposed to various kinds of risk not only to the
market risk
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currency risk, commodity price changes, interest rate risk,
financing risk, risk of extraordinary events are just some of the
most important kinds of risk present
risk of loss of liquidity: hedge against it by sale of receivables
(securitization), issue of debt and bank loans
insurable risks: the loss (damage) of property, civil liability –
companies insure themselves privately
they use derivatives to hedge – currency, interest rate or change
in commodity prices risk – by forwards, swaps, options
• does not use derivative to speculate
TOYOTA
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Toyota is exposed to risks arising from:
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Instruments used to protect:
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changes in exchange rates
interest rates
availability of materials
changes in prices of materials
forward contracts
currency and interest rate options
swaps
Unfortunately, Toyota does not protect itself from price
changes and changes in supply of materials
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only protection is to maintain reserves of some materials
TOYOTA: currency risk
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Toyota settles its invoices in Japanese yen
which increases its currency risk
 Changes in exchange rates reflect very strongly
on company results
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change in the dollar-yen exchange rate of 1% will
change revenues by about $42 million
Toyota protect itself from risk with the help of
swaps and futures
 Despite this, the company is unable to protect
itself from a falling demand for exports of
Japanese cars due to a change in exchange
rates
Ratio analysis
Liquidity ratios (1)
2006
2007
2008
Toyota
1,00
1,01
1,07
Ford
2,28
2,32
1,33
Current ratio
Liquidity ratios (2)
Quick ratio
Toyota
Ford
2006
0,80
2,13
2007
0,82
2,19
2008
0,87
1,25
Debt ratio
Debt ratio
Toyota
Ford
2006
0,62
0,62
2007
0,61
0,60
2008
0,64
0,71
Turnover ratios (1)
Receivables (A/R) turnover ratio
Toyota
Ford
2006
32,14
15,89
2007
29,59
17,14
2008
26,15
14,95
Turnover ratios (2)
Inventory turnover ratio
Toyota
Ford
2006
13,21
13,60
2007
14,79
13,20
2008
11,80
13,80
Turnover ratios (3)
Asset turvover ratio
Toyota
Ford
2006
0,70
0,57
2007
0,76
0,62
2008
0,66
0,67
Profitability ratios (1)
Net profit margin
Toyota
Ford
2006
0,07
-0,08
2007
0,06
-0,01
2008
-0,03
-0,10
Profitability ratios (2)
ROA
Toyota
Ford
2006
0.05
-0.05
2007
0.05
-0.01
2008
-0.02
-0.06
Profitability ratios (3)
ROE
Toyota
Ford
2006
0.14
0.00
2007
0.14
-2.52
2008
-0.04
0.00
Market value ratios (1)
Earnings per share
Toyota
Ford
2006
4.34
-6.46
2007
5.40
-1.38
2008
-1.42
-6.72
Market value ratios (2)
Price/Earnings ratio
Toyota
Ford
2006
29.94
-1.16
2007
18.68
-4.86
2008
-44.58
-0.34
Market value ratios (3)
Dividend yield
Toyota
Ford
2006
0,01
0,11
2007
0,01
0
2008
0,02
0
Cash flow analysis
FORD
Operating
2006
2007
2008
+
+
-
Investing
-
Financing
TOYOTA
Operating
+
-
+
+
-
Investing
-
Financing
-
SWOT analysis
FORD
Strengths
Weaknesses:
 Hybrid technology
 Weak sales results
 Well-known brand in the USA
 Inability to accommodate products
to changes on the market
Opportunities:
 Promotion of ecology-friendly cars
 Appeal of a national brand in crisis
Threaths:
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Further evolution of the crisis
TOYOTA
Strengths
 Hybrid technology
Weaknesses:
 Lack of protection against changes
 Ability to cope in crisis
Opportunities:
 Promotion of economical and
ecology-friendly cards
 In crisis, lesser importance of
competitors
in prices and demand
Threaths:

Rapid increase of material costs or
decrease in supply
Thank you for your attention