An Overview of Japan’s Auto Stocks

The Japanese automotive industry is one of the largest industries in the world. Japanese auto brands such as Toyota and Honda are household brands in almost every country. So it is no wonder that shares of auto manufacturers are some of the most valued stocks on the Japanese Stock Exchange.

2020 was a tough time for car manufacturers throughout the world including those based in Japan. And this has reflected in their stock prices as well. One way to gauge the stock price performance of the Japanese Auto sector is by looking at Bloomberg’s Japan Automaker Share Index, which includes the stocks of the top 5 automakers in Japan.

The index is currently at 2,723 points after reaching a high of 3,093 points in February 2020 (-12%). The index fell to a low of 2,174 in early April, as the fear of the pandemic and its impact on the auto industry spread.

In this article, we will give an overview of the top 5 auto stocks listed on the Tokyo Stock Exchange.

Toyota Motors Corp

Toyota Motors Corp is the largest company in Japan with a market cap of JPY 24.326 trillion. Toyota is one of the most well-known brands in the world and in 2020 the company regained its title as the world’s bestselling automaker. During the year, it managed to sell 9.5 million vehicles globally in comparison to 9.3 million sold by the Volkswagen Group.

But 2020 proved to be a tough year for Toyota as its overall sales declined by 11.3% year on year. During the three months ended September 2020, the company recorded revenue of JPY 6.774 trillion which is 11% lower in comparison to the same period last year. Net Profit for the quarter ended September 2020 was JPY 482 billion, a decrease of 13% over the same period last year.

Toyota Motors’ current share price is JPY 7,455, just 2% down year on year (on February 2, 2020, it was JPY 7,580). However, during the year the share price remained quite volatile and touched a low JPY 5,941 in March 2020 before reaching a high of JPY 8,018 in late December.

Currently, there is a lot of interest in Toyota Motors. In December, the company announced the launch of its second-generation “MIRAI” fuel cell car. Apart from developing fuel cell cars, Toyota is also investing in the development of the Hydrogen ecosystem which could increase the company’s competitiveness in a carbon-neutral society.

Honda Motors Co. Ltd.

Just like Toyota, Honda is one of the largest automakers in the world which sells and manufactures vehicles in countries such as the US, Japan, India, Pakistan, Europe, South America, etc. Apart from the manufacturing and selling of cars and automobiles, Honda Motors also builds motorbikes and heavy machinery. The company also operates a substantial used car financing segment. 

Honda’s most profitable segment is its motorbike business which has maintained margins and profitability. For the three months ended September 2020, the company posted revenue of JPY 14,931 bn.

Honda Motor’s current share price is JPY 2,808 with a market cap of JPY 5.086 trillion. The share price has been range-bound thought the year and reached a low of JPY 2,135 in April 2020.

Nissan Motors Co Ltd

Nissan Motors Co Ltd is another large Japanese automaker with a market cap of JPY 2.338 trillion. The company became famous in recent times due to the scandal involving its former CEO Carlos Ghosn.

Nissan is part of an alliance of three auto companies (Nissan, Renault, Mitsubishi) that act as a single entity. The alliance was made in 1999 when the French automaker Renault bailed out Nissan by acquiring a 43% stake in it. Mitsubishi Motors also joined the alliance in 2016 when Nissan acquired a 34% stake in the company.

The group is one of the bestselling automakers in the world, selling around 10 million vehicles in 2019. However, among the three companies, Nissan sells the most cars.

One of the reasons for Nissan’s success has been attributed to Carlos Ghosn, who held multiple executive positions in the alliance. He was the Chairman and CEO of the Renault–Nissan–Mitsubishi Alliance, CEO of Renault, Chairman, and CEO of Nissan, and Chairman of Mitsubishi Motors.

In 2018 Carlos Ghosn was arrested in Tokyo on charges of underreporting his earnings and misappropriating company funds. What followed was nothing short of a movie worthy drama, as Mr. Ghosn fled Japan in December 2019 with the help of American contractors.

Nissan Motor’s stock price followed Mr. Ghosn’s fall from grace as it declined from JPY 1200 in 2018 to JPY 600 in early 2020. Over the past 12 months, Nissan’s stock price fell by 8%, from JPY 604 on 2nd February 2020 to JPY 554. In March 2020, the stock hit a low of JPY 300.

Mazda Motor Corp

Mazda Motors Corp. is a Japan-based automaker that manufactures and sells automobiles and their parts. The company also has a distribution network of used cars, special purpose vehicles, and automobile parts. It also manufactures and distributes machine tools. The company’s primary markets are Japan, North America, Europe, and Others.

Mazda is also in a strategic alliance with Toyota. The alliance was announced in 2017 when Toyota acquired a 5% stake in Mazda. Both companies are working together on developing electric vehicles and building a new production facility in the US.

In the quarter ended September 2020, Mazda posted revenue of JPY 739 billion, a decline of 14% over the same period last year.  However, due to the pandemic, the company has been posting losses over the last three quarters.

Mazda’s share is currently priced at JPY 775 a decline of 15% over the last 12 months. In April 2020, the share touched a low of JPY 511. It has a market cap of JPY 489 billion.

Suzuki Motor Corp

Suzuki Motor Corp is a Japanese automaker that is very popular in Asian countries such as India, Thailand, and Pakistan. The company manufactures and sells four-wheel automobiles and is quite popular in the small car market. Suzuki also produces motorbikes and its heavy sports bikes are very popular throughout the world. It also has a marine motors segment.

Suzuki’s largest market is India, which also accounts for almost half of the company’s sales. In India, the company operates through its subsidiary Maruti Suzuki, which has a 50% share of the Indian passenger car market.

Over the last year, Suzuki’s share price has been volatile. Currently, it is worth JPY 4,917 (market cap of JPY 2.415 trillion) after witnessing a low of 2,465 in March 2020.

Other Japanese Automakers worth mentioning are:

Isuzu (Current Share Price JPY 1,073; Market Cap JPY 910 billion)

Mitsubishi Motors (Current Share Price JPY 247; Market Cap JPY 368 billion)

Hino (Current Share Price JPY 947; Market Cap JPY 544 billion)

Nidec Corp (Current Share Price JPY 14,480; Market Cap JPY 8.6 trillion)

Denso (Current Share Price JPY 6,351; Market Cap JPY 5.008 trillion)

Subaru (Current Share Price JPY 2,027; Market Cap JPY 1.559 trillion)

Further Reading

https://www.bloomberg.com/quote/7203:JP

https://www.reuters.com/companies/7203.T/financials/income-statement-quarterly

https://edition.cnn.com/2021/01/28/business/toyota-volkswagen-japan-germany-intl-hnk/index.html

https://www.bloomberg.com/quote/7201:JP

https://www.reuters.com/companies/7201.T

https://www.reuters.com/article/us-renault-nissan-ghosn-allegations-fact-idUSKBN1YY1HV

https://www.bbc.com/news/business-46321097

https://www.bloomberg.com/quote/7261:JP

https://www.reuters.com/companies/7261.T/financials/income-statement-quarterly

https://www.bloomberg.com/quote/7269:JP

https://www.reuters.com/companies/7269.T

https://www.bloomberg.com/quote/7267:JP

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