Thursday, September 26, 2013

Market Cap and Ownership Structure of Auto Companies

Automotive companies are generally compared by the number of cars sold. For example; Toyota and GM are often in competition to sell the most number of cars in a year. While interesting, these seem kind of irrelevant. For instance; if one sells many cars but makes no money on them, they won't be in business for long. 

I think a more interesting indicator is market capitalization. This is basically the value of the company on the open market and is based on the beliefs of future earnings. Below is the value of each company as of September 2 2013.

Toyota is number one by a large margin and blows GM out of the water in terms of value. The second most valuable company, VW at $108 Billion dollars, is just over half of Toyota's $208 billion. 

Fiat, which currently owns over half of Chrysler (Chrysler isn't showed because it's owned by UAW and Fiat with no shares on market to price it), and is worth less then Tesla a new company that sells relatively few cars. 

These market values are not independent in the sense that some companies own parts of other companies. Below is a network graph with percentage of ownership along the edges with size of vertex proportional to market cap. An arrow pointing to a company from another indicates that company is partly owned  (for example A <- B means B owns part of A). 

Two things to note about the ownership graph:
1. It's easier to see how VW and Toyota both own part of Suzuki with this graph. Of course since Toyota owns Suzuki through its holding in Subaru so it's holding is minuscule.

2. There is cool menage a trois between Nissan, Renault, and Mercedes, where all have ownership in another.

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