10/13/2005

Big Three

I recently had the opportunity to attend the Mountain Plains Management Conference where I listened to Nicholas Avey discuss the big three of the auto industry. In discussing these big three the question was brought up in which of the three you should invest in. The big three are Ford, GM, and DaimlerChrysler. To figure out which one would be best in investing he and his co-author Robert Hull used the dupont model. There outcome was that Ford was the best followed by DaimlerChrysler and followed up by GM. This outcome was not a surprise to me especially with the hard times that GM has been having. One interesting note that Mr. Avey said was how many so-called experts predict that by the end of the year Toyota may very well take over DaimlerChrysler as one of the big three.

7 comments:

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destiny said...

I'm surprised Toyota hasn't already been noted as one of the big three. With all of the efficient technological advances the Japanese have come up with, along with what seems like far superior quality, it's no wonder that Toyota is climbing the ranks. American car companies have had to really step it up in terms of quality to keep up with the foreign producers of cars.

sara said...

The results of this study are surprising to me. I would have guessed that GM would have been higher on the list. I just did an international business report on the growth in China and GM is really pushing hard to capture China's expanding market. It is believed that in the next 15 years China will overtake the U.S. in car and gasoline consumption. I also thought it was interesting that Toyota was not on the list at all. In my opinion I view Toyota as the best type of car to buy. I don't know if that necessarily means that it is the best type of investment but I would guess that they some how correlate.

Dan said...

GM higher on the list? How do you figure? At the present time, bankruptcy is more likely than profits. GM bonds are rated at below investment grade or in other words "junk bonds." Delphi who is their main part supplier just declared bankruptcy also. For every car that GM makes, nearly $2000 of the price is a result from their underfunded pension fund. With the above mentioned problems, was it the $2.5 billion losses so far this year that BusinessWeek Online mentions GM has incurred that made you think that it would have been higher Sara?

Connor said...

This is interesting news for me. Especially since I am not a Ford fan. That is besides the point. I have been hearing and seeing a lot of commercials about Toyota and how they have 9 models that get over 30 mpg. This is a major reason I believe that many experts predict Toyota to be one of the big three. The weird thing is, is that I do not recall very many (if any) Ford commercials pushing their fuel efficient cars. This is catching my interest in the Ford company and their quality. Quality must be there they would not be the number one company to invest in in the automobile industry.

Dr. Tufte said...

-1 on Mia's post for poor capitilization.

I went to this presentation and I thought it was an interesting way of looking at things. I wasn't surprised by the ranking - but that may just mean I read more of the business press than students do.