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Ford Motor Company (F), Toyota Motor Corporation (ADR) (TM), General Motors Company (GM) & Honda Motor Co Ltd (HMC): The US Auto Recovery Is Unshakeable

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Ford Motor CompanyAs the housing market recovery in the US appears more sustainable, US auto sales continue to gain steam. Low-end luxury is performing exceptionally well, as is the pickup segment—a likely result of the housing recovery.

Let’s take a look at results from the industry.


Valuentum’s Best Ideas Newsletter holding Ford Motor Company (NYSE:F) posted a spectacular May, exceeding consensus estimates with unit sales surging 14% year-over-year to 246,585. As we hit home in our recent piece about the US housing recovery, pickup sales are driving a large portion of Ford’s gains. In fact, F-Series unit sales grew 31% year-over-year to 71,604 units! Other cars posting large sales included the Escape, up 26% year-over-year; the Fusion, up 10% year-over-year; and the Explorer, up 15% year-over-year. Both the Escape and Fusion posted their best Mays ever, with both coming in a shade under 30,000 units.

Lincoln continues to fare poorly, with unit sales up just 0.5% year-over-year (compared to 14.5% for Ford Motor Company (NYSE:F)brand). The MKZ grew 42% year-over-year, but its scope remains limited, and the rest of Lincoln continues to be weak.

Unfortunately the wonderful sales data was tarnished by the announcement of a 465,000 vehicle recall. This looks mostly cautionary, in our view, which Ford admitted. From the  press release:

“While a fuel leak in the presence of an ignition source may result in a fire, there have been no reports of fires (and) we are not aware of any accidents or injuries attributed to this condition.”

We, at Valuentum, doubt the recall will have any material impact on the company, and competitor Toyota Motor Corporation (ADR) (NYSE:TM) has survived several recalls during the past few years with little impact on its reputation. We continue to hold shares of Ford Motor Company (NYSE:F) in the portfolio of our Best Ideas Newsletter, and we see upside over $20 per share.

General Motors

Although we think General Motors Company (NYSE:GM)’s product lineup is a bit weaker than Ford’s product lineup, the company’s sales still grew 3% year-over-year during May to 252,894 units. Chevrolet, in particular, has a hard time keeping pace with Ford Motor Company (NYSE:F), as sales increased just 0.9% year-over-year in May. Volt sales were again sluggish, registering just 1,607 units, a decrease of 4% year-over-year. Still, the company’s SUV and truck lineup registered very solid growth, led by a ‘construction-driven’ 25% increase in Silverado sales, a 29% increase in Tahoe unit sales, and a 13% increase in Equinox sales.

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