Ford’s new engine announcement shows direction of auto industry

Better gas mileage and enough power to keep customers happy.

You can see where the global auto industry is headed in Ford Motor’s (F) announcement that it will build its first three-cylinder engine.

The small engine—the smallest Ford has even used—will go into global car lines such as the Fiesta and Focus. By shrinking the size of the engine and using direct-fuel-injection technology Ford hopes to get up to a 20% improvement in gas mileage from these engines over its current smallest four-cylinder engines

And thanks to the addition of turbochargers, Ford thinks it will be able to get enough va-va-voom from its three cylinder engine to make up for their smaller displacement.

Ford hasn’t identified which auto supplier will provide the turbochargers for the three-cylinder engine. Read more

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

February auto sales disappoint but no reason for panic

You can come up with lots of reasons why investors shouldn’t panic at the slide in February U.S. auto sales to a seasonally adjusted annual rate of 10.4 million. That was down from the seasonally adjusted 10.8 million sales rate in January 2010 although up from the 9.2 million rate of February 2009.

Snow storms. Troubles and more troubles at Toyota. A big drop in sales from brands such as Saturn, Pontiac, Hummer, and Saab that General Motors (GM) has decided to discontinue.

All those cut in February sales and make hard to argue that the recovery in the auto industry has stalled.

But the numbers aren’t a rousing endorsement of pedal to the metal growth either. Read more