Everyone I know working in the car business is looking for ways to make money on their money and everyone I know, NOT in the car business is asking me who’s going to be around next year? Dealers are closing shop and car company stock is in the “tank”, BUT, truth be told there are bargains to be had on both fronts. It’s a great time to buy a car, if you’ve got the cash, or the credit line. Likewise, it appears to me , an auto industry stock watcher, that all the indicators deem this a great time to buy in. (Buy low, sell high and get a dividend.) Jim Cramer of MAD MONEY, told his viewers to “BUY,BUY,BUY,” speaking about Toyota stock, this past Tuesday. Cramer’s reasoning, “…that while General Motors and Ford are busy cutting staff and production, Toyota is spending to ensure future growth.” Well, I’m not sure Toyota is the ONLY one spending on the future, but they have enough strong product in the pipeline to carry them through this year and into the economic rebound of 2009. Toyota stock may be down thanks to the coversion rate of the dollar against the yen, but that doesn’t seem to be slowing the demand for their top selling HYBRID models on the market: Toyota Prius, Camry and Highlander. Add to the Toyota roster the Lexus RX400h, GS350h and the LS460lh, and you have a formidable field of choices. The largest selection of any of the major car lines.
Hyundai is adding a little havoc to the sales drive-stock dive showdown. Hyundai stock is at an all time high (HYMLF $57)> Their showrooms are moving metal, and they have NO HYBRIDS, but lots of less expensive cars that get good fuel economy; Sonata, Tucson, Santa Fe, Veracruz are all taking a bite out of Toyota, where buyers can’t make the financial jump. I’m not the only one that considers Hyundai a contender, as “Toyota chairman Fujio Cho told a group of Korean journalists that it (Hyundai)was a “strong enemy”. The well marketed 10yr/100k warranty has lured many potential domestic and Japanese car-buyers to Hyundai and pushed Chrysler to create a “LIFETIME /Unlimited Mileage WARRANTY” to compete.
While Cramer doesn’t like GMC and Ford, I noticed GMC (GM $19.50) offering preferred stock with a nice fat dividend to lure the car savvy investor. On the product line side of things; GMC has released several strong HYBRID contenders: Yukon, Tahoe, Saturn Vue, and Malibu hybrids available now and a Cadillac Escalade hybrid coming this summer. GMC has also enjoyed success with the gas engine Arcadia, and Enclave as well. Watch for the summer release of the 2010 Camaro.
I mention HYBRIDS as an important component of car sales and stock value because consumers are looking seriously at the price/ride/fuel cost when making a buying decision. Scott Burgess of DETNEWSblog (Detroit News) had his own twist on the hybrid picture quoting from a J.D.Powers study of hybrid buyers: “The study finds that, in particular, new-vehicle buyers who express a strong willingness to pay more for environmentally friendly vehicles are more likely to be female and are highly educated. The concentration of consumers who express willingness to pay extra for an environmentally friendly vehicle is highest in the western United States and lowest in the Midwest.” He added that some pay a premium of up to $5000.00 to drive a hybrid. WELL NOOOO… I’m seeing an equal number of men and women buying, driving and touting their fuel savings while paying MSRP or slightly off sticker in my hometown of Las Vegas, Nevada. And let’s not forget the TAX CREDIT some of these models send home each year!
Ford (F, $5.62) offers up the Escape/Tribute/Mariner hybrid. Oh, and let’s not forget the “Bullitt” mustang patterned after Steve McQueen’s movie machine. I’m not sure all the baby-boomers haven’t overdosed on muscle-car mania already, but after the Bullitt, Camaro and Challenger SRT8, sucking down $4.00+/gallon gas, I’m thinking the party may well be over. All these models are in limited production, which means the dealers will certainly jump the asking price, but the stock probably won’t rise on these short-run models.
In my humble opinion, GMC is in the best position of the Big 3, to survive the current market with products revised to consumers tastes and needs.
I wouldn’t poo-poo a merger between Chrysler and a major Japanese company or Ford and GMC finding some international marriage partner.
So, whether your money is on the cars or the car stocks, doing your homework could payoff in the long run.
Sarah Lee
Sarah Lee is the author of “The Complete Internet Car Buying Guide”. She is a 20yr. auto industry veteran dedicated to helping consumers with their transportation needs. visit her at www.mycarlady.com]]>
