Business Risk Analysis of Ferrari, Mercedes and Toyota in The Automotive Industry

Abstract

As one of the largest industries in the world, the automotive industry is booming in recent years. Recently, engine fuels have also undergone a change from conventional fuels to electric vehicles. With the emergence of electronic vehicles and the deterioration of the environment, traditional car companies are facing critical challenges. The purpose of this paper is to analyze which is the better investment for Ferrari, Mercedes and Toyota from various financial data such as Equity Beta and Assets Beta. This paper also compares different financial data of the three companies to explain the business risks. Then, two sets of comparisons between luxury cars and commercial cars, electric cars and fuel cars are applied to argue the reasons for the business risk for each company. From the data, it can be seen that Ferrari has the highest business risk, which means that they are more sensitive to market fluctuations, followed by Mercedes. On the contrary, Toyota's share price fluctuations are stable throughout the year. Finally, this paper provides investors with advice on investing in the automotive industry from their perspective, to help them make savvy decisions whenever possible.