The August automobile sales were reported this week, jumping 5.4% from August 2013. Every major auto maker reported higher sales except for the troubled General Motors (GM).
Auto Sales Highest Since 2006
Due to an improvement in consumer confidence, lower gasoline prices and new automobile product offerings, the auto industry has sold over 17 million vehicles on an annual basis – the highest since 2006. At the height of the recession in 2009, the auto industry sold just 10.2 million vehicles
For August, sales are up over 5% from last year, partially due to an early Labor Day weekend, which fell at the end of August. For August, this is the best year for sales since 2003.
Despite the upside in total auto sales, the country’s largest auto maker General Motors (GM) was the only major auto maker to report a decline in sales. GM reported a 1.2% dip in sales to 272,423 units, although it sold more total cars than any other auto company in the U.S.
Ford Motor Company (F) reported a 0.4% increase in sales to 222,174 units, its best August in 8 years.
Toyota Motors™ saw a 6.3% upside for August – selling 246,100 units.
Analysts Bullish on Auto Makers
With the upside in the industry, it is likely that analysts will be boosting outlooks on the big-names. Consumer spending in the auto industry has already blown past expectations – resulting in the largest upside for Chrysler and Nissan North American.
As the economy continues to improve, the long term outlook on some of these automakers could be a positive one. The industry was crushed by the Great Recession, leaving nothing but upside for GM, Ford and Toyota in the last five years.
Ford shares are up over 135% since 2009, as it continues to execute its turnaround strategy.
Toyota is up around 40% since 2009, although its downfall from the recession was much less traumatic than its U.S. peers.
GM is up less than 2% since its stock re-listing in 2011. Although the company has struggled with bad press and sluggish shares, it still holds the largest market share for automakers in the U.S.
What About Tesla?
Tesla (TSLA) is up 1,370% since its inception. The electric car maker has been absorbing attention from investors and car enthusiasts as some consider it to be the “car of the future.”
The company now has a market capitalization of over $35 billion, yet it sold just 20,000 cars globally in 2013.
The expectations for the company are enormous. On Tuesday, TSLA was given another analyst upgrade from Stifel Nicolaus. The upgrade suggested that TSLA’s stock price will rise almost 50% to $400.
While TSLA’s current product offerings are limited to an elite group of buyers, the company plans to manufacturer lower priced vehicles. The company’s innovations have many investors and analysts wondering what its future sales and market share could do to the big-name automakers we know today.
Auto Makers For Mutual Fund Investors
The potential upside for these stocks has gained the attention of many investors. The Vanguard Total Stock Market Index Fund (VTSMX) currently has the highest exposure to Ford and GM, while American Beacon Large Cap Value funds (ALVAX) is the largest mutual fund holder of Toyota.
For mutual fund investors seeking exposure to Tesla, the Fidelity Contrafund Inc (FCNTX) is the largest mutual fund holder.