Ford, GM positioned to grow in 2011
The Chevy Volt is where the IBM PC was 1981: an overpriced, bulky first step toward a new world.
By Ted Reed, TheStreet
Estimates for 2011 light-vehicle sales include 13 million by Morningstar analyst David Whiston and 15 million by Bank of America Merrill Lynch analyst John Murphy. Ford sales analyst George Pipas says 2011 sales "will be above 12 million and perhaps closer to 13 million," according to The Detroit News, an increase from current year sales of about 11.5 to 11.6 million. Incidentally, Whiston puts 2012 sales at 18.5 million.
Whatever the exact numbers, the trend is obvious, given 2009 sales of 10.4 million, the lowest total since 1970. Automakers may not be at the center of the U.S. economy, as they were a few decades ago, but it is clear that few economic indicators are more important than consumer decisions to spend tens of thousands of dollars on a new vehicle.
Among the automakers, the best positioned are probably Ford (F), General Motors (GM) and Volkswagen, said Michael Yoshikami, a chief investment strategist at YCMNET Advisors, which manages about $1 billion in assets in the Bay Area.
Yoshikami said reduced industry capacity is helping all the automakers, while Ford benefits from strong management, GM from reduced debt and a strong position in China, and Volkswagen from a "novel strategy in the U.S.," moving both upscale with the return of the Phaeton and downscale with the Jetta. He said that Honda (HMC) and Toyota (TM) will "hold their own" but that the momentum is with the U.S. companies and VW.
A principal advantage for U.S. automakers, he said, is that they have embraced the move to electric and hybrid cars, particularly in the way that GM has developed the Volt.
"I see a sea change in the transition to alternative-energy cars, not just to the Prius but also to the Leaf and the Volt," Yoshikami said. "The Volt is overpriced and bulky now, but it's not unlike the first PC."
IBM (IBM), which helped to develop the Volt, brought out the first PC in 1981. "After that, we had Dell (DELL) come along and really help adaptation. That is what's going to happen with these cars," Yoshikami said.
"Once we get done digesting the stimulus, economic growth is likely to be sluggish, so Americans will gravitate towards more efficient cars, towards energy-efficient cars," he said. "If you can buy a hybrid SUV that looks like the Yukon and gets 30 miles a gallon, then everyone who drives one getting 15 miles a gallon will get rid of it. So there will be a huge product replacement cycle."
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