Japan's economy and its automotive market still may be on the rocks, but some of its automotive suppliers look attractive to investors.
Six of the 10 best total shareholder values in the global supplier arena last year came from Japanese companies. And for the three-year period ended Dec. 31, 2000, all five of the industry's top five shareholder results came from Japanese suppliers, according to the new Automotive News/PricewaterhouseCoopers Total Shareholder Return Index.
Stanley Electric Co. Ltd., a Tokyo global producer of lighting components, concluded the past three-year period with a soaring 245 percent return on its total stock value. The company also led the list for the past 12 months, with an 89.2 percent return, despite a 26.1 percent drop in the fourth quarter.
But those stock results are out of line with the global supplier industry as a whole.
The supplier segment overall has seen a total shareholder value decline of almost 32 percent over the past three years.
According to the Automotive News/PricewaterhouseCoopers index, the global supplier group was the worst-performing category of the industry last year.
One key reason: Auto sales appear to be slowing.
Another reason: Automakers have been pushing down supplier costs for a decade. As automakers adjust to falling sales, they will look to more supplier cost cuts as a way to bolster profitability, says Michael Burwell, a partner at PricewaterhouseCoopers.