Toyota Motor Corporation (ADR) (TM), Ford Motor Company (F), General Motors Company (GM): Which Car Producer Could Best Drive Your Investment?

Page 1 of 2

With the housing market stabilizing and global demand picking up, the North American car industry looks to finally be getting a breather as it witnesses positive quarterly results. However, the car makers cater to not only America, but also to Europe and rest of the world.

Ford Motor Company (NYSE:F)Toyota Motor Corporation (ADR) (NYSE:TM)Ford Motor Company (NYSE:F), and General Motors Company (NYSE:GM) are experiencing contrasting fortunes across the world and have had their share of economic jolts in the last few years. In this article, I aim to deliver a clearer picture on where the three car makers stand; our argument made a largely statistical case for suggesting which stock was the best bet for your profits.

General Motors Company (NYSE:GM) has faced a decline in its year-on-year revenues for the first quarter of 2013 despite a surge in its U.S. and China sales by10%and9.6%, respectively. The decline in revenues is due to the contraction in General Motors Company (NYSE:GM)’s sales in the European markets as well as incentives offered such as price cuts to drive the sales. These inadvertently suppress margins and the income available to the investors. The government bailout back in 2008 and 2009 proved to be a setback for General Motors Company (NYSE:GM) in terms of sales, as many potential customers moved toward rivals.

On the brighter side, this company is targeting the Indonesian market with its new Chevrolet Spin. The Indonesian market is spiking at 11% growth per year, and General Motors Company (NYSE:GM) is pouncing on this opportunity, having sold 1,294 Spin vans in just one month. Moreover, the company is making its way into the Chinese luxury market, investing $1.3 billion in a joint venture, which is yet to be materialized in 2015. Overall, the Indonesian market as well as the Chinese luxury markets is not good enough, the company needs to revamp in order to sustain.

Ford Motor Company (NYSE:F) recently has been in a fix where the company recalled around 465,000 vehicles to fix minor faults, under their corporate social responsibility, realizing the responsibility the company bears to provide the best to their customers. This has spurred a positive image of Ford Motors, resultantly enhancing customer loyalty. Ford Motor Company (NYSE:F) has a strong market demand, a 13% rise in its U.S. sales testifies to that, leading to increased sales and profit margins.

U.S. sales of hybrid cars rose by 23% recently, Ford with its Hybrid Sedan and C-Max Wagon was able to capture a major chunk of this market, by selling 46,197 hybrid units. Expansion in hybrid and battery-only cars exposes Ford Motors to a wide market, with its potential to grow rapidly. Moreover, adopting the 3D printing technology Ford Motor Company (NYSE:F) is saving up to 25% of manufacturing time as well as cut the production costs by 30%. All in all, Ford Motor Company (NYSE:F) has brighter prospects.

Toyota Motor Corporation (ADR) (NYSE:TM) had hurt its reputation back when it was recalling not just a few, but millions of its vehicles due to a glitch in the clutch and floor mat. A slow response in the most damagingly manner had hurt the reputation of the company. Moreover, the company is exposed to the risk of reduced production due to a rise in the inventories of vehicles produced.

The company sales are increasing in a reasonable manner. Its sales in June increased by 9.8% from 2012. Meanwhile, the sales from the Hybrid Prius are very encouraging, but are poised to stringent competition from General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F). Furthermore, Toyota Motor Corporation (ADR) (NYSE:TM) was unable to realize the 4.4% year-on-year increase in sales in China, which is the roaring car market. To top that its position in North America has also deteriorated, this accounts for 25% of its total revenues. Due to the devaluation of the Japanese Yen, Toyota Motor Corporation (ADR) (NYSE:TM) did well over the fiscal year. Apart from that, Toyota Motor Corporation (ADR) (NYSE:TM) is facing real troubles.

Competition

Indicator General Motors Ford Motors Toyota Motors
Price/Earning TTM 8.9 11.4 20.7
Price/Book 1.8 3.7 1.6
Revenue Growth (3 yr. Average) 13.3 4.9 5.2
Income Growth (3 yr. Average) -61.1 27.8 66.2
Return on Equity 22.7 34.4 8.5
Dividend Yield - 1.80% 0.54%
Current Price $34.78 $16.85 $124.90

Data from Morningstar and Financial Visualizations on July 9, 2013

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 30 percentage points in 13 months Learn how!

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!