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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 Stock Price Honda Net Income VW Stock Price Honda Revenue


Honda Net Income -.273 1.000 Honda Revenue .735 1.000

VW Stock Price Toyota Net Income VW Stock Price Toyota Revenue


Toyota Net Income -.167 1.000 Toyota Revenue .641 1.000

VW Stock Price Ford Net Income VW Stock Price Ford Revenue


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


Toyota Net Income .544 1.000 Toyota Revenue .508 1.000

Honda Stock Price Ford Net Income Honda Stock Price Ford Revenue


Ford Net Income -.026 1.000 Ford Revenue .140 1.000

Honda Stock Price VW Net Income Honda Stock Price VW Revenue



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)


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)


($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


Honda Net Income .599 1.000 Honda Revenue .232 1.000

Toyota Stock Price Ford Net Income Toyota Stock Price Ford Revenue


Ford Net Income .148 1.000 Ford Revenue .691 1.000

Toyota Stock Price VW Net Income Toyota Stock Price VW Revenue


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)


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)


($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