U.S. automakers are back, baby.

And so are their stocks.

December vehicle sales in the U.S. climbed to a 12.5 million unit annual rate. That’s without help from “Cash for clunkers” or any other government subsidy program. And with relatively restrained incentives from the automakers themselves.

For the month General Motors saw sales climb by 8.5% from December 2009 and Ford saw sales grow by 6.8%. General Motors retained a leading 19.6% share of the U.S. market and Ford jumped over Toyota to take the No. 2 slot with a 16.6% share. For the full year General Motors saw a 6.7% climb in sales and Ford’s sales grew by 15.2%.

No wonder the price of Ford soared in 2010—up 67.9%. General Motors only emerged from bankruptcy this year. The company’s November 10 IPO (initial public offering) closed at $34.19 on its first day of trading. From that close to the close on January 6, the shares were up 13.8%

But looking ahead, if in 2011 you really want to leverage the recovery in auto sales, shares of General Motors and Ford aren’t the best stocks to own. To get the most mileage from the auto industry, to really turbo charge your returns, to … well, you get the idea, look to the shares of auto industry suppliers. Read more

Auto sales support view U.S. economy is recovering

Look, Ma, no smoke and mirrors. Or not much anyway.

That’s the best thing about the 11% growth in sales reported by automakers in the United States for December 2010 from December 2009.  The seasonally adjusted annualized sales rate of 12.5 million didn’t depend on a government subsidy such as “Cash for clunkers” or even on much help from automakers’ own incentive programs.

Car sales for the month actually reflect real consumer demand. Imagine that. Read more

Auto sales stagnate in September

Be careful what you compare things to.

If you compare U.S. auto sales in September 2010 to the horrendous sales of September 2009, the industry looks like it’s roaring ahead.

If you compare sales for September 2010 to those from a recovering August, the industry is barely inching ahead.

For example, Ford Motor (F) showed a 46% year-to-year jump in sales.

Super, right?

But Ford showed just a 2% increase in sales from August 2010.

The story was the same for Chrysler Group—up 61% from September 2009 but just 1% ahead of August 2010.

And the effect wasn’t limited to U.S automakers either. Read more

Update Johnson Controls (JCI)

Forget about the penny miss in quarterly earnings. Put a failure to increase guidance for the full year on the back burner.

Wall Street seems to be nervous about the long-term direction of Johnson Controls (JCI). At a time when exposure to China is a worry rather than a growth opportunity, Johnson Controls is committed to growing its business there. Today’s miss and lukewarm guidance are really just an excuse for short-term thinkers to jump ship. And jump they have today. The stock is down 6.7% for the day as of 11:30 a.m. ET on July 23.

Before the New York markets opened on July 23, Johnson Controls reported earnings for the third quarter of its fiscal year of 54 cents a share. That was a penny worse than Wall Street had expected, but still represents earnings growth of 116% from the third quarter of fiscal 2009. Revenue climbed by 22% from the third quart of fiscal 2009, edging just above consensus.

The company’s guidance for the fiscal year came in a little short of Wall Street projections too. The company said it expects full year earnings of $1.95. That’s up slightly from earlier guidance of $1.90 to $1.95 a share, but it is a bit below Wall Street estimates of $1.98. In the full 2009 fiscal year Johnson Controls lost 31 cents a share so even the horribly disappointing $1.95 a share represents quite a turn around.

So why the big sell off?    Read more

Can China’s auto market save GM? Do pigs fly?

So what do you do if you’re a car maker with a home market that’s not buying as many cars as it used to?

If you’re General Motors (GM), you invest as fast as you can in making and selling cars in China.

Great plan.

So great that Toyota (TM), and Nissan, and Volkswagen (VLKAY), and BMW (BAMXF), and Honda (HMC) and Hyundai (HYMLY) have all adopted the same plan.

The result is a capital spending spree so large, and resulting new manufacturing capacity so great, that it could be the cause of the next collapse and shake out in the global auto industry. And the best guess is that this shakeout could arrive as early as 2015. That’s long before companies such as General Motors that are still working to emerge from bankruptcy or companies such as Toyota that are struggling to rebuild profitability have put away cash for a rainy day.

The collapse is likely to be even more brutal than that of the U.S. car industry in the recent recession. (The auto industry story is just an extreme version of what I’ve called the danger of a profitless economic recovery. For more on what that means across the global economy, see my post http://jubakpicks.com/2010/01/19/get-your-portfolio-ready-for-the-profitless-global-economic-recovery/ )

I don’t think there’s any way that the auto industry can avoid this collapse. The logic behind expanding in China is just too irresistible. Read more