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Ford Motor Company (F), Toyota Motor Corporation (ADR) (TM): American Muscle vs. Japanese Imports

The net income increase was mainly due to a rise in the number of units sold in Asia to 280,000 for the fourth quarter of 2013, compared to 236,000 for the fourth quarter of 2012. Units sales declined in Japan and North America by 12% and 9% respectively, however.

In brief, Toyota Motors has had stronger sales recently. Honda, on the other hand, is losing its market share and has no future catalyst to help it increase its sales. Although I love Honda cars and actually own one, I believe that investing in the company is not wise at the moment. Investors should delve into the company’s next earnings report to see if the number of units sold increases. The automobile market is strong, and if Honda can’t increase its sales now then it never will.

It’s also worth noting that these Japanese stocks have rallied recently due to monetary policies from the Bank of Japan. Other countries are politely asking the bank to hold its horses, however, in hopes of preventing the bank from triggering a currency devaluation battle. When, not if, the Bank of Japan reduces its quantitative easiness policies, the yen will gain strength and Japanese exporters such as Honda and Toyota will be punished.

I want to invest in the automobile industry. Which one do I pick?

The automotive market outlook looks strong, and Ford has the best business model. Its units sold increased in North America, Asia and Japan, though they did decline in Europe. Recent reports suggest that the auto market in Europe is picking up, however, and this was the last component Ford needed to begin a steep ascend. Although Toyota also looks strong, the yen fluctuations due to monetary policies from the Bank of Japan might damper its net income in the future.

The article American Muscle vs. Japanese Imports originally appeared on and is written by Robinson Roacho.

Robinson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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