How Does Your Favorite Automobile Stock Fare?

Shaunak is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There are certain things that'll give you the perfect kick to start your day off- A cup of strong cappuccino, bright Autumn sunshine and to some the sound of well oiled machinery. The vroom of an engine is music to the ears contrary to the cough and splatter of a junk car. So as Honda recalls almost half a million CR-Vs from their customers, lets take a look at a few of the big players in the automobile industry and their investment prospects. 

Honda Motor Co. (NYSE: HMC)

As if the economic slowdown wasn’t enough, HMC had to face intense anti-Japanese sentiments leading up to violent attacks on their factories and outlets. China was about the biggest market for Honda worldwide and this tense situation has put a dent on the statistics as September sales plunged 40% to 33,931 vehicles. As a direct result of this Honda will cut production and shorten working shifts as well.

In the past month, Honda has announced the recall of approximately 1.3 million Accords, Civics, and Pilots for possible fluid leaks and headlight wiring issues. Add to it the near half a million CR-Vs called back from all over the world and you’re looking at some serious quality issues at their production units.

The effect that these recalls might have on HMC’s finances is yet to be seen and analysts have not come up with credible projections yet. As far as the current state of things, HMC sales soared 31.0% to 117,211 vehicles during the month driven by impressive sales of Acura, Accord sedan and Civic.
Good things have happened to HMC but will they continue? Time will tell.

Ford Motor Co. (NYSE: F)

Ford was the only major US automobile manufacturer that did not receive the bail-out package. There are some folks who believe that The US Government saved the day for the entire industry by injecting $63.4 billion into General Motors and Chrysler. Had they not done so, we would have witnessed a sort of domino effect that would have had every player in the industry hit bottom, one after the other. Arguably, It might have taken us to a depression.

So how does Ford fare now that things are relatively stable?

Growth of Ford has been pretty sluggish. They have also been hit by a bit of volatility and its earnings are expected to drop in the next year by over 70%. Their revenue decreased faster than anticipated this year affecting their bottom line.

We can only hope that Ford’s latest kid on the block, Fusion Hybrid revives Ford’s luck. Fusion gives a mileage of 47 mpg making it one of the most efficient hybrids on the road.

Tesla Motors (NASDAQ: TSLA)

What a breath of fresh air. I am really interested in Tesla Motors and not just from an investor’s point of view but from a third persons perspective as well. Their Model S all-electric got exactly the kind of review a fresher would want. Tesla is running along with Industry oldies like Ford and GM to deliver near perfect products one after the other. This is one stock for the future.

I’ll buy Tesla Stock for a couple of reasons.

Firstly, I want to be associated with what might be the Apple of the automobile industry in the near future and since the car itself is a tad bit too heavy on the wallet for now!

Secondly, I believe in Elon Musk. If you know him, you’d follow him. You don’t need elaborate analysis on any stock with someone like Elon Musk at the helm. Musk’s decision to put a million out of his own hard earned cash into Tesla can indicate one thing only for me- more money. This is why insiders buy their stocks, either to make more money immediately or make more money later.

 


Shaunak88 has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford and Tesla Motors. Motley Fool newsletter services recommend Ford and Tesla Motors . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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