tigerhonaker
10-29-2006, 07:38 PM
Posted on Sun, Oct. 29, 2006
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US. automakers are speculative choices
In terms of the environment, car companies are getting on the same page.
The number of highly fuel-efficient vehicles continues to grow. Toyota Prius, Honda Civic Hybrid, Toyota Camry Hybrid and Ford Escape Hybrid top the government's list of the most fuel-efficient vehicles for 2007.
Talks about a three-way combination of General Motors Corp., France's Renault SA and Japan's Nissan Motor Co. failed, as did a brief discussion between GM and Ford about an alliance.
Nonetheless, expect that global carmakers will team up to develop environmentally friendly technology. For example, GM, DaimlerChrysler AG and BMW AG are jointly developing a hybrid system to compete with Toyota Motor Corp., Honda Motor Co. and Ford Motor Co. Toyota already supplies its hybrid system to Nissan in the United States.
But in sales, it's every carmaker for itself. Each manufacturer is aware the next several model years will put in place trends likely to be with us for quite a while.
In terms of investing, U.S. car companies are the most speculative choices because they continue to lose market share to imports. They have large inventories, especially in trucks, and no one expects a boost from the economy. Even with a recent decline in gasoline prices, no expert is certain of the road ahead.
"I think you buy stock in Toyota for long-term investment and GM for speculation because it is showing a dramatic turnaround," said David Healy, veteran auto industry analyst with Burnham Securities Inc. "Ford may not get the bridge financing it needs and is a bankruptcy waiting to happen, so I wouldn't touch its stock with a 10-foot pole."
The question is whether GM, which has cut its hourly payroll and launched new SUVs, can continue recent momentum. GM investor Kirk Kerkorian, who championed the failed Renault-Nissan combination, continues to demand shareholder value and corporate change.
Ford, with sales of its St. Paul-made Ranger pickup at a 24-year low, has a lot riding on its new Edge crossover utility vehicle that will battle the likes of Toyota's RAV4. Even with new Chief Executive Alan Mulally in charge at Ford, some critics say the plan offering buyouts to 75,000 U.S. hourly workers doesn't go far enough.
While DaimlerChrysler eventually will do well, experts said, thanks in part to its new small SUVs, it has stumbled badly, and Healy expects "horrible" results the next couple of quarters.
"I have a 'buy' on GM stock with a price target of $40 a share, a 'sell' on Ford and a 'hold' on DaimlerChrysler," said Kevin Tynan, senior auto analyst with Argus Research. "I don't want to be a doomsayer, but because imports have yet to roll out their best trucks, the pickup truck market that domestic manufacturers dominate is going to come under pressure."
Because the U.S. Big Three have been unable to deal effectively with market pressure from "the Toyotas of the world," Tynan said, expect their market share losses to continue.
Columnist Andrew Leckey
can be reached at andrewinv@aol.com (andrewinv@aol.com).
http://www.twincities.com/mld/twincities/business/financial_markets/15868069.htm
http://www.cleanmpg.com/photos/data/500/site_logo_340x60.gif
US. automakers are speculative choices
In terms of the environment, car companies are getting on the same page.
The number of highly fuel-efficient vehicles continues to grow. Toyota Prius, Honda Civic Hybrid, Toyota Camry Hybrid and Ford Escape Hybrid top the government's list of the most fuel-efficient vehicles for 2007.
Talks about a three-way combination of General Motors Corp., France's Renault SA and Japan's Nissan Motor Co. failed, as did a brief discussion between GM and Ford about an alliance.
Nonetheless, expect that global carmakers will team up to develop environmentally friendly technology. For example, GM, DaimlerChrysler AG and BMW AG are jointly developing a hybrid system to compete with Toyota Motor Corp., Honda Motor Co. and Ford Motor Co. Toyota already supplies its hybrid system to Nissan in the United States.
But in sales, it's every carmaker for itself. Each manufacturer is aware the next several model years will put in place trends likely to be with us for quite a while.
In terms of investing, U.S. car companies are the most speculative choices because they continue to lose market share to imports. They have large inventories, especially in trucks, and no one expects a boost from the economy. Even with a recent decline in gasoline prices, no expert is certain of the road ahead.
"I think you buy stock in Toyota for long-term investment and GM for speculation because it is showing a dramatic turnaround," said David Healy, veteran auto industry analyst with Burnham Securities Inc. "Ford may not get the bridge financing it needs and is a bankruptcy waiting to happen, so I wouldn't touch its stock with a 10-foot pole."
The question is whether GM, which has cut its hourly payroll and launched new SUVs, can continue recent momentum. GM investor Kirk Kerkorian, who championed the failed Renault-Nissan combination, continues to demand shareholder value and corporate change.
Ford, with sales of its St. Paul-made Ranger pickup at a 24-year low, has a lot riding on its new Edge crossover utility vehicle that will battle the likes of Toyota's RAV4. Even with new Chief Executive Alan Mulally in charge at Ford, some critics say the plan offering buyouts to 75,000 U.S. hourly workers doesn't go far enough.
While DaimlerChrysler eventually will do well, experts said, thanks in part to its new small SUVs, it has stumbled badly, and Healy expects "horrible" results the next couple of quarters.
"I have a 'buy' on GM stock with a price target of $40 a share, a 'sell' on Ford and a 'hold' on DaimlerChrysler," said Kevin Tynan, senior auto analyst with Argus Research. "I don't want to be a doomsayer, but because imports have yet to roll out their best trucks, the pickup truck market that domestic manufacturers dominate is going to come under pressure."
Because the U.S. Big Three have been unable to deal effectively with market pressure from "the Toyotas of the world," Tynan said, expect their market share losses to continue.
Columnist Andrew Leckey
can be reached at andrewinv@aol.com (andrewinv@aol.com).
http://www.twincities.com/mld/twincities/business/financial_markets/15868069.htm