3. Sales across the Pond
Unfortunately for auto makers, Europe’s economy is in the midst of recession. This means that the European auto market is greatly contracting. In fact, the market as a whole contracted 6.7% in the first half of 2013. Ford is by no means immune to the contraction, but June sales offered a glimmer of hope for the company.
In June, Ford saw its vehicle registrations in Europe increase by 6.9% from the year before. Comparatively, General Motors Company (NYSE:GM)’s brands combined for a 7.2% decrease in registrations for June. Ford’s June success can largely be attributed to its presence in the U.K., where the auto industry continues to outperform the rest of Europe.
Both Ford and General Motors Company (NYSE:GM) warned investors earlier this year that they are headed for losses in Europe in 2013, so the rebound in June comes as a pleasant surprise to investors. Even if Ford can’t beat the recession, it can stay afloat and gain market share from companies such as General Motors Company (NYSE:GM) whose troubles seem even more severe.
Ford is back. CEO Alan Mulally’s turnaround plan is paying off, and Ford’s stock will mirror this fact. Currently Ford’s shares are trading around $17.00, but I think they will reach the illusive $20.00 as Ford’s sales and market share increase around the globe. Unlike many firms post-recession, Ford is benefiting from responsible decisions that it made five years ago.
Ford was down too long. It’s comeback time.
The article 3 Reasons to Go Long With This Automaker originally appeared on Fool.com and is written by Marie Palumbo.
This article was written by Randy Holcombe. Randy has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors (NYSE:GM). The Motley Fool owns shares of Ford. Marie 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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