Ford Motor Company (F), General Motors Company (GM): What Could Drive This Automaker Higher?

This car maker’s recent results are just another vote of confidence that Ford Motor Company (NYSE:F) could be one of the top company’s in the auto industry. Late last month, Ford managed to post preliminary adjusted 1Q 2013 EPS of $0.41 compared to $0.39 for the same quarter last year, meeting consensus estimates. From the announcement, North American results remain positive, but Europe continues to struggle.

Yet, Ford Motor Company (NYSE:F) hopes to change that in the near future. It is looking to reach a long-term operating margin of 6% to 8% by 2015 by restoring profitability in its European operations. Ford also expects its 2013 U.S. market share to be higher than 2012, Europe to be almost the same as in 2012, and China to be higher. Its market share in 2012 was comprised of 15.2% in the U.S., 7.9% in Europe and 3.2% in China.

Much like many of the other car makers, Ford Motor Company (NYSE:F) hopes to leverage hybrid vehicles for future growth. This includes investing $135 million to develop key components, including advanced battery systems, for next-gen hybrid-electric vehicles.

Also, further growth should come from the emerging markets, where Ford Motor Company (NYSE:F) expects Asia to account for some 70% of its global growth over the next 10 years. The car maker also expects small cars to account for 55% of total sales by 2020, compared with 48% presently, with one-third of the small-car sales expected to come from Asia.

For General Motors Company (NYSE:GM), some of the big headwinds for this automaker include the weakness in Europe. GM Europe’s revenue fell 17.6% in 2012 year-over-year. The segment also saw a broader loss for 1Q, losing $1.8 billion, compared to the $747 million loss for the same period last year. General Motors Company (NYSE:GM) expects modest growth in global auto sales in 2013 as improvements in China and the U.S. are offset by sluggish car sales in Europe. The automaker predicts a 5% rise in industry sales in the U.S. and international markets each, while the European market is expected to shrink 4%.

Analysts expect GM to only grow EPS by 3.3% in 2013 from 2012 levels. S&P also recently cut its rating on General Motors Company (NYSE:GM) from buy to hold, citing lower EPS estimates on expectations that the automaker will see an increase in its tax rate from 10% to 35%. Another key factor worth noting is that the car company saw debt increase to $16 billion at the end of 2012, up from $13.8 billion at the end of 2011.

Toyota Motor Corporation (ADR) (NYSE:TM)  is the better-performing Japanese car market year-to-date compared to Honda Motor Co Ltd (ADR) (NYSE:HMC). Its strength is its number-one spot in hybrid vehicles, with the most offerings in that space. Toyota has managed to sell some 3.4 million hybrid vehicles over the last 15 years and it expects to launch 21 gas-electric hybrid models by 2015. What’s more is that Toyota plans to launch a fuel-cell vehicle, which runs on hydrogen to produce electricity, by 2015.

The other key growth focus for Toyota is emerging markets, where the company hopes to introduce eight new compact car models in Brazil, China, India and Indonesia by 2015. This should help the company with boosting sales in emerging markets to 50% of global sales from 18.6% in 2000.

Toyota Motor Corporation (ADR) (NYSE:TM) also managed to top General Motors Company (NYSE:GM) as the sales leader for 2012, selling some 9.8 million vehicles compared to GM’s 9.3 million vehicles. This comes after GM topped Toyota in 2011, after Toyota wrestled with a series of safety concerns and natural disasters in Japan and Thailand.

General Motors Company (NYSE:GM) had, by far, the most hedge-fund interest among the major automakers; there were a total of 98 hedge funds long the stock going into 2013. The top owner (by market value) was billionaire Warren Buffett and Berkshire Hathaway, with a $721 million position (check out Buffett’s high upside picks). Meanwhile, fellow billionaire David Einhorn of Greenlight Capital wasn’t far behind with a $610 million position.

Ford Motor Company (NYSE:F) had 58 hedge funds long the stock, with Bill Miller’s Legg Mason Capital having the largest position, making up 2.8% of the fund’s 13F portfolio (check out Legg Mason’s best small caps). Honda Motor Co Ltd (ADR) (NYSE:HMC) had a mere nine hedge funds long the stock at the end of 2012, a 10% decrease form the previous quarter. The company’s largest hedge-fund owner was billionaire Jim Simons’ Renaissance Technologies, with only a $9.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio (check out Simons’ cheap picks). Toyota had little hedge fund interest as well, albeit a bit more than Honda. There were a total of 14 hedge funds long the stock going into 2013.

Ford Motor Company (NYSE:F) appears to be effectively working its turnaround and is also relatively cheap. Ford trades at only 9.3 times forward earnings, compared to General Motors Company (NYSE:GM)’s 10.6, Honda’s 18.5 and Toyota’s 20.9. This is also encouraging when you consider that Ford has an ROE of 34% and GM is at 18%, with both Toyota and Honda at only 7%. Oh, and Ford pays investors a solid 2.9% dividend yield (read more about Ford’s great dividend).