CHICAGO, May 25, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Auto Industry, including General Motors Company (NYSE: GM), Ford Motor Co. (NYSE: F), Toyota Motors Corp. (NYSE: TM), Honda Motor Co. (NYSE: HMC) and Nissan Motor Co. (OTC: NSANY).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/53895/Auto+Industry+Outlook+and+Review+-+May+2011
The auto industry is highly concentrated, with the top 10 global automakers accounting for over 77% of production worldwide. In the first four months of 2011, General Motors Company (NYSE: GM) led with a 19.6% market share in the U.S., followed by Ford Motor Co. (NYSE: F) with a 16.2% market share, Toyota Motors Corp. (NYSE: TM) with a 14.1% market share, Honda Motor Co. (NYSE: HMC) with a 10.3% market share, Chrysler-Fiat with a 9.6% market share and Nissan Motor Co. (OTC: NSANY) with a 8.5% market share.
The recent economic crisis provided the impetus for a massive structural change in the auto industry, setting the stage for growth over the next decade. Given the high barriers to entry and the need for scale economies (in operations, supply chain and marketing), the global auto industry landscape is expected to be ruled by global automakers and suppliers based in the six major auto markets – China, India, Japan, Korea, Western Europe and the U.S.
OPPORTUNITIES
To remain competitive, automakers will need to design vehicles that will meet the requirements of consumers in both mature and emerging markets. Automakers will focus on more user-friendly and low-cost vehicles that are also the most advanced technologically.
The automakers will continue to shift their production facilities from high-cost regions such as North America and the European Union to lower-cost regions such as China, India and South America. For example, Greater China and South America together are projected to represent more than 50% of growth in global light vehicle production in the auto industry from 2008 to 2015.
There are two underlying factors behind this location shift in the auto industry. The first is the cost factor. The cost of labor in emerging auto markets continues to be a fraction of that in the developed world. The second is the demand factor. Many low-cost regions, including the emerging auto markets, have high potential for growth. Thus, the shift in auto industry production facilities will lead to a localization of the manufacturing base that will bring down transportation costs.
The emergence of trading blocs is also giving this process a push in the auto market. It is likely that over time there will be fewer car imports from outside a trade zone.
The role of governments must not be overlooked. Governments in all major countries have become active auto industry players. Their energy and environmental policies will be strongly responsible in molding the auto industry in the coming years.
Further, automakers have started to reduce the number of technological platforms with a greater diversity of models produced from each platform in order to remain cost competitive in the auto industry.
For example, Honda, with its flexible common platform, has developed three dimensionally distinct versions of the Accord, allowing for designs where 60% of the components are common. Ford aims to build 680,000 vehicles per core global platform by 2015, up from the current level of 345,000 units.
"Green" Cars
Higher fuel prices and concerns over global warming have pooled attention on the auto industry that either rely less on traditional fossil fuels or use renewable sources of less expensive energy. Thus, "green" alternatives such as fuel-efficient electric vehicles (EVs) and hybrids will attract consumers in the wealthier countries while flex-fuels such as ethanol and natural gas will be highly sought-after in the emerging auto markets where the local climate or resource base favors their usage by automakers over petroleum.
Consequently, there will be a variety of powertrain technologies in the auto industry by the next decade. It is likely that "green" cars will represent up to a third of total global sales in developed auto markets and up to 20% in urban areas of emerging auto markets by 2020. Some of the "green" cars have already generated a huge response in the auto industry. These include the Ford Focus, GM Volt, Nissan Leaf, Toyota Prius and Daimler AG's smart USA micro EV.
The market for hybrid cars was hit hard by the global economic recession in the second half of 2008 due to poor availability of consumer credit, low gas prices and other economic conditions. However, they are projected to become popular option for car buyers, particularly in the U.S. and Europe, as the economic backdrop has started improving again.
Globally, the hybrid market is ruled by Toyota and Honda. Meanwhile, other automakers such as Ford, General Motors and Nissan are also aggressively pursuing a plan to push hybrid sales.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2679.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4581.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Share this article