Ford is rapidly restructuring its European operations as it tries to get back to profitability by 2015. It has also increased its market share to 8.1% from 7.6%, which is significant. This is the first year-over-year gain in the last one year. A blue print of the European transformation plan from the company’s earnings presentation is given below.
Given that Europe has been a major concern with the investors, improvements in this market will be a major catalyst for the stock.
Automotive is THE sector to invest in
The US auto industry has grown by 7.5% during the first six months and the Detroit three – General Motors Company (NYSE:GM), Ford, and Chrysler – have all gained market share. They currently hold 46.1% of the domestic market, a full 1% higher than last year. The improving prospects are reflected in the upward trends of auto stocks. General Motors Company (NYSE:GM) is up 27% through the year, Ford 33%, and American Depository Shares of Chrysler’s parent Fiat 56%.
The booming US truck market is a big positive for the domestic auto giants. During the fist six months, the market expanded by 22% and General Motors Company (NYSE:GM) increased its truck sales by 23%, Ford by 22%, and Chrysler by 23%.
There is also lot of pent up demand from the aging of the US vehicles, which is creating a big opportunity for the automakers. Ford has augmented its US annual production capacity by an additional 200,000 vehicles through shift additions and minimizing summer downtime.
General Motors Company (NYSE:GM) plans to spend $16 billion through 2016 on fortifying its factories and facilities in the domestic market as it gears up of the biggest product offensive in the country. It has plans to introduce 20 new or refreshed vehicles.
Chrysler has spent $5.2 billion in the US since it came out of bankruptcy in 2009 and continues to make steady stream of investments. This year it has already announced investments of $374 million and $19.6 million on two different occasions.
Parting thoughts
Ford is an investor’s delight. The company has a solid business model, abundant resources to explore new growth opportunities, and earns incredibly well. It also comes at an attractive price together with a nice dividend opportunity. Things rarely get better.
The article This Auto Stock Is Dynamite originally appeared on Fool.com and is written by Eshna De.
Eshna De has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Eshna is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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