Japanese vehicle manufacturers and suppliers have swept the board in the PricewaterhouseCoopers Global Shareholder Value Indices (SVI), against a backdrop of the Nikkei Index declining over both one and three year periods (1 year period decline of 17.48% and 3 year period decline of 49.9%) and the continuing poor economic climate in Japan.
Nissan Motor Company was the winning global vehicle manufacturer in both the one and three year categories, showing a 49% return and 102.3% respectively. Calsonic Kansei and Showa were the one and three year winners in the global parts suppliers section.
The PricewaterhouseCoopers Shareholder Value Indices capture the essence of a company’s performance by taking into account both rises and falls in a company’s share price, dividends, share buy backs and new share issues, and provide an objective and reliable measure of shareholder value for stock market listed companies.
The winners were determined by their total shareholder return performance relative to the index in each of three categories, namely: global vehicle manufacturers, global parts suppliers and US retailers over the one and three year periods.
Philip Wylie, Director of Corporate Finance – Head of PricewaterhouseCoopers Automotive Group, said:
“Japanese vehicle manufacturers have faced two major issues over the past five years, that have made them leaner and more global in outlook. Firstly, a number have passed effective control to foreign companies, Nissan to Renault, Mazda to Ford, Mitsubishi to DaimlerChrysler, resulting in a streamlining of their businesses and the opening up of outdated procurement processes to world competition.”
“Secondly, the Japanese car market remains depressed (forecast 1% sales decline in 2002) and Japanese manufacturers have been forced to protect their profitability by moving production overseas and gaining vital market share in the largest markets, North America and Europe, with China a longer term target.”
In the suppliers section Japanese groups again dominated the top performing companies. PwC pointed out that Japanese suppliers have faced the momentous change from the traditional intertwined (Keiretsu) relationship between manufacturers and suppliers, to become more independent and global and have been forced to reduce costs in order to meet the price cuts demanded. They have also faced the need to obtain custom from independent manufacturers across the globe to protect the profitability on the back of the weakened Japanese domestic market and reduce dependence on their affiliated manufacturers as they reduce their shareholdings in the various suppliers.
PwC noted that there has been a trend to move production overseas, particularly towards the US in order to continue to service their traditional Japanese customers as they themselves move vehicle assembly to North America. They have consequently enjoyed the same growths/benefits from the gain in North American car market share as the vehicle manufacturers. Japanese suppliers are also looking to gain significant market share in Europe and are opening plants to produce for local vehicle assembly plants.
PwC added that they are also positioning themselves in China and in several SE Asian countries in order to reduce costs and over-dependence on Japanese produced components and the impact of the Japanese economy.