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What September Economic Indicators Could Mean for Auto Industry

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What September Economic Indicators Could Mean for Auto Industry PART 1 OF 4

Auto Industry Optimistic about September US Auto Sales Estimates

Auto stocks in September 2017

In September 2017, stocks of all mainstream US auto companies (IYK) are trading on a positive note. As of September 26, General Motors (GM) has risen about 11.1%, and Ford (F) has gone up by 8.3% on a month-to-date basis. Meanwhile, Fiat Chrysler (FCAU), the Italian-American automaker, continued to outperform its peers by delivering 16.3% positive returns in September so far. Auto stocks’ performance was far better than the 1.4% month-to-date rise the S&P 500 benchmark (SPY) witnessed. Investors’ high expectations for September US auto sales and automakers’ 3Q17 results could be the primary reasons for the optimism in these stocks.

Auto Industry Optimistic about September US Auto Sales Estimates

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In contrast, US electric car maker Tesla (TSLA) was underperforming mainstream auto stocks. Tesla has lost ~4.2% in September so far.

September US auto sales estimates

According to Autodata, the US auto sales SAAR (seasonally adjusted annual rate) was at 16.1 million vehicle units in August 2017, which was a sharp fall from the 17.2 million SAAR reported in August 2016.

In the first eight months of 2017, US auto sales have fallen 2.7%. However, in August, the US demand for heavyweight vehicles recovered 2.4% year-over-year after falling in July for the first time in 2017.

According to Wards Auto’s estimates, September 2017 US auto sales SAAR could be at 17.5 million units as compared to 17.6 million units in September 2016. The report also highlighted that September could be the first month when US auto sales SAAR crosses the 17 million mark after staying below this level for the last six months.

In 2016, US auto sales volumes were at their highest with about 17.6 million vehicle units sold. In contrast, weakness in the first eight months of 2017 has ignited fears about the US auto sales downturn. Continued weakness in September US auto demand could hurt auto investors’ sentiments.

In this series

In this series, we’ll take a look at some key macroeconomic indicators that auto investors should track to get an idea about the future trend in auto sales. For this analysis, we’ll also look at recent jobs-related data and consumer sentiment data.

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