US auto sales
In September, US vehicle sales topped a SAAR (seasonally adjusted annual rate) of 18 million vehicles. Leading automakers reported a healthy year-over-year increase in sales number—partially due to the Labor Day holiday weekend. Ford’s (F) sales increased 23.3% year-over-year in September as its F-series volumes picked up. In previous months, Ford had reported muted sales numbers on supply side issues concerning its F-150 model.
The chart above shows US vehicle sales. The housing and automobile sectors were among the worst hit in the 2008 financial crisis. However, the automobile industry reached precrisis levels last year, when sales were their highest since 2006. Looking at the current momentum and US consumers’ seemingly unending appetite for new vehicles, sales this year could hit their highest level since 2000.
Despite strong vehicle sales in the United States, investors are not encouraged, as evidenced by automobile companies’ lagging share prices on Wall Street. Both Ford (F) and General Motors (GM) have underperformed the broader US markets (SPY)(VTI). Tesla (TSLA), however, has gained more than 10% so far in 2015. Tesla seems to have struck the right note with investors, but it is seen more as a technology company than as an automobile manufacturer. You can read more about Tesla in our series “An Investor’s Guide to Tesla Motors.”
In this series, we’ll analyze the recent developments in the automobile industry. We’ll discuss what factors have been driving automotive companies. We’ll also explore the possible reasons behind the recent underperformance of mainstream US automobile companies.
One of the reasons driving the sales of consumer discretionary (XLY) products such as automobiles has been the rapidly improving job market. However, the September employment data have not been encouraging if you are an investor in companies such as Ford (F), General Motors (GM), and Honda (HMC).