Ford Motor Company (F), General Motors Company (GM), Toyota Motor Corporation (ADR) (TM), Honda Motor Co Ltd (ADR) (HMC): A Virtuous Cycle for Autos and the U.S. Market

Virtuous cycle
Auto output in the U.S. helped factory production numbers last month, which, in turn, is helping to drive economic growth. Vehicle sales have also reached their highest level in five years and are expected to continue rising. We’re on pace this year to sell around 15.4 million vehicles, compared with 10.4 million in 2009, when Detroit was struggling to make a profit and was producing vehicles that few wanted to buy. But that sales collapse served its purpose in paving the way for Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) to fix their business models and prepare for a comeback. Lessons were learned, and automakers are now able to break even at sales of 10 million units a year.

Bottom line
That breakeven level should have potential investors excited. It’s much easier to invest in a company that can now profit at the lowest sales level in decades.

Most forecasts don’t have the U.S. reaching pre-recession vehicle sales until 2020. But if Detroit can achieve profitability at 10 million vehicles, it will remain in good shape.

With the economy still adding jobs, manufacturing pushing the economy, and companies finding ways to run leaner operations, the future is bright for automakers. Ford Motor Company (NYSE:F)’s recent sales growth, along with the release of popular vehicles, and the company’s ability to avoid bailouts during rough times, gives me reason to buy more shares. Now it just has to make sure it doesn’t forget the lessons it learned when the good times roll. I don’t believe it will, and I think investors would be smart to pick up some shares before everyone else realizes how undervalued Ford is.

The article A Virtuous Cycle for Autos and the U.S. Market originally appeared on Fool.com.

Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Ford and General Motors and owns shares of Ford.

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