Here’s How Foreign Automakers Are Boosting the U.S. Economy
The New Year is bringing with it a flurry of positive market activity, and the U.S. auto industry is no exception. Total car sales for 2012 are expected to climb 13 percent over 2011 to 14.5 million units, and annualized rate expectations for December promise more growth in 2013.
Truecar.com is forecasting month-over-month sales growth of over 20 percent for each of America’s top three manufacturers, General Motors (NYSE:GM), Ford (NYSE:F), and Chrysler. Combined with strong sales growth from other major manufacturers, this translates into a seasonally-adjusted annualized rate of 15.6 million vehicles for the month, a 14.7 percent increase year over year.
Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.
In line with this forecast, market-research firm Polk is expecting 2013 new vehicle registrations, an indicator for car sales, to climb 6.6 percent to 15.3 million units. According to Reuters, Anthony Pratt, director of forecasting for the Americas at Polk said that, “The auto sector is likely to continue to be one of the key sectors that leads the U.S. economic recovery.” The auto industry’s role in that recovery is highlighted by reports that indicate consumer spending on vehicles accounted for nearly 30 percent of all economic growth in the first half of 2012.
America’s top three manufacturers can take credit for nearly 50 percent of those sales, but foreign automakers are becoming an increasingly important part of the auto industry in the U.S., and as a result, can take an increasing amount of credit for America’s economic recovery.
In October, Toyota (NYSE:TM) announced the production of its 25 millionth vehicle in North America. The company boasts nearly $24 billion in North American investment and the creation of 365,000 jobs in the U.S. alone. While GM and Ford claim the top two spots for market share in the U.S. — 17.2 percent and 15.7 percent, respectively — Toyota clocks in at a rapidly-growing 13.7 percent of the market, taking third place ahead of Chrysler, which is number four at 11 percent.
Honda (NYSE:HMC) is in fifth place with 10.1 percent of the market, and is deliberately growing its U.S. manufacturing presence. The company recently reached its 1 millionth vehicle produced in the U.S., and has ambitions to export more vehicles the country than it imports from Japan.
Market participants from all sectors have long pointed at the dwindling manufacturing base in the U.S. as a bad omen. But the resurgence of the U.S. as not just a powerful car market, but as an increasingly important vehicle manufacturing base can certainly be taken as a good omen that America’s economy could finally be regaining its strength after years of weakness.