April 11th blog post

This article talks about how Toyota is finally starting to feel the aftermath of the Japanese earthquake and tsunami. Toyota send out a letter to all of its dealerships saying that there will be a shortage of vehicles that will be supplied over the summer. Toyota will be regulating the vehicles' models, colors and inventory parts that it will be making. It will try to produce the most wanted model and color in order to squash the shortage as much as possible. I think what Toyota is doing is a good idea and it might actually help them limit the amount of losses they will have. It is definitely worth the try. I am interested what other companies are thinking about doing and if they will follow in Toyota's steps or come up with their own plan of dealing with the supply problem.

http://www.autonews.com/apps/pbcs.dll/article?AID=/20110411/OEM01/110419979/1117

April 11th, Securities Market

In general terms, what do the industry analysts say about this industry?


In general terms, the analysts are saying the current automobiles today resemble ‘computers on wheels’. More and more, the automotive companies will try to produce their products with new advanced technology. Diverse functions concerning Safety, Convenience Vehicle controls, Driving assistance and Communication devices will have a bigger role on their products. You can now barely find cars without GPS, Airbags, and collision warning signs for vehicles produced today. As for the recent technology, vehicles with ‘blackbox technology’ is gaining attention since it is very helpful when trying to retrieve information on causes of damages, just like the ones attached on the aircraft. Moreover, the companies are in their ‘economy mode’ as for their new trend, and hybrid cars are good example for this and it is predicted that it will grow more in the future as well.
The analysts also assume that there would be a expansion in the future markets particularly in India and China. Recent two years was a recession in the automotive industry due to the downfall of the economic crisis, however, since now the economic conditions in U.S and Europe is improving, growth in the market can be expected in the coming up future.



references :

http://cyberinvestmentguide.com/alternative-investment/market-trends/Market-Trends-In-The-Automotive-Industry.html
http://www.altera.com/end-markets/auto/industry/aut-industry.html
http://www.sjnorcalgroup.com/2011/02/06/future-trends-in-automotive-technology/

April 11th, Securities Market

Which industry individual stocks have some analysts identified as "buys" in the current market? Why?

In the meanwhile and during the unstable situations throughout the whole world, each analysis depends on the price of oil because of the correlation between oil and auto industry. In the Asian market, there is a big concern with the severe damages that happened in Japan because of the magnitude earthquakes. These damages impacted one of the major countries in the Asian market, Japan.

Analysts are not comfortable with the Japanese's auto companies because of two reasons: first, the issues that are impacting some factories and centers of Toyota and Subaru; second, the massive recalls that Toyota suffered from. Therefore, buying Toyota's or Subaru's stocks is not a good decision, especially in the meantime.

However, they added that Hyundai is thriving now while the automotive industry in Japan is suffering. This would let the brokers think of the Korean auto companies and buying their stocks, especially Kia. Because Kia proved that its cars are efficient in consuming gasoline. This an important factor for customers because of the issues that are going in the Middle East which affected the oil’s prices. So, people are likely to buy small or efficient cars which Kia already provides these choices.

I think that the market for big cars, such as trucks and big SUVs is not profitable that much because of the gasoline prices. Now, the price per gallon is almost $4 which is very high. To fill up the tank for big cars, it costs at least $70. This is really a critical issue, especially for those who have big cars and drive long destinations. Because they sometimes need to fill up their tanks twice a week which costs a lot. This might affect the market for inefficient cars that consume a lot of gasoline.

References from two analysts:

1- Sung Moon Suh (Korean Investment & Securities Co., Ltd)

2- David Silver (Wall Street Strategies, Inc)

April 11th, Securities Market

What have been the industry trends in the financial markets over the past 5 years?

There have many industry trends in the automotive industry. Well there has definitely been a switch of roles. Cars used to mainly focus on luxury. So they put their money into manufacturing vehicles that were luxurious. Cars that looked good and made the driver feel powerful, were the cars that were being produced. Today, manufacturers are more focused on saving the earth. Money is being invested more so in cars that are fuel efficient and also cars that are more safe. The auto industry is an industry that has to meet the needs of the consumers. Consumers want to feel safe when driving. They also don't want to have to spend a lot of money on gas.

Recently we have seen poor judgement in the US auto industry with the government having to bailout Ford, Chrysler and GM. I feel like sometimes these companies do not make smart decisions or good judgement when predicting future sales.

April 4th

April 4th– Accounting and Financial Statements
Comment on revenue, profit, and loss of key industry players?
How has the recession (2008-2009) affected companies’ balance sheets?

During the 2008-2009 recession, the companies that were hit the hardest were the American car makers (GM & Ford). Although it was unclear before if these companies were going to survive this recession, they have proven many analysts wrong and have seen a rise in revenue since then. Currently the most profitable car company is Toyota followed closely by Honda. Although the Japanese earthquake stopped production for these Japanese car makers, they are back and running at full production once again.

April 4th, Accounting and Financial Statements

The earthquake in Japan is soon to have an effect on the auto industry. According to the article I found, about 600,000 vehicles will be lost by the time everything calms down. A lot of auto part assemblies are shut down in Japan, which means that as soon as auto makers around the world run out of supplies they will be forced to shut down or slow production down. Even though that will not have any lasting affects on the industry, it will cause it to loose a substantial amount of money.

http://www.businessweek.com/news/2011-03-26/automakers-may-lose-600-000-vehicles-as-quake-hits-parts.html

http://www.huffingtonpost.com/2011/03/26/japan-earthquake-cars_n_840981.html

April 4, Accounting & Financial Statements

What I have found here is the stats of State Auto Financial Corp. I am unsure of what these numbers mean, but if you guys want to check it out and explain to me that would be helpful.

Source: http://quotes.wsj.com/STFC#

April 4th, Accounting and Financial Statements:

The recession's (2008-2009) effects on companies' balance sheets.

Well, the economy is a connected piece as a whole. So anything that affects a part of it, might affect another part. When the recession happened, it affects everything in the economy. The financial crisis affects the auto industry dramatically and by observing the balance sheets for some companies, we can see the effects. Almost each car company has been affected from the recession and that the liabilities in their balance sheets are higher than the total assets. Although those companies are recovering now, they still have more liabilities and obligations.

For example:

Ford's balance sheet:

2007: the total assets are more than the liabilities

Assets: 279, 264, 000 - Liabilities: 273, 636, 000

2008: the total assets are less than the liabilities

Assets: 218, 328, 000 - Liabilities: 235, 639, 000

From 2008 to 2010, the total assets for each year is less than the liabilities. This means that there is an obstacle in the financials that need to be solved.

References:

http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=F