The American auto industry has made a radical turn around in the over the last year, TCL Associates analysts are predicting huge upsides for Ford and General Motors as the industry experiences its best year of sales in more than a decade.
It has been five years since the start of the finical crisis, in that time American auto manufactures have gone from bankruptcy to boom. In August 1.5 million cars were sold, the most in one since May 2007 and the annual selling rate has surpassed 16 million, the quickest rate since October 2007. Analysts at TCL Associates interpret this to signal the best year for auto manufactures since the 90s.
Over the past twelve months Ford has climbed 31% and General Motors is up 24%, compared to the 16% gain of the S&P 500 index. Analysts at TCL Associates predict strong sales throughout the rest of the year driving the stock prices up another 20% to 30%. They forecast for the end of the year a 20% gain for GM setting a target share price of $43 and a 30% gain for Ford setting a target share price of $22. Last year Ford, GM and Chrysler, had a combined profit of $13.5 billion, which resulted from leaner companies, restructured operations, less debt, and improved product lines. The improved profits are coming from cars that once lead losses such as family sedans.
Before the crisis the strongest auto sales were of sport utility vehicles and pickup trucks, but since then demand has shifted to smaller cars with better gas mileage. Sales of the Chevy Impala and Ford Fiesta rose 60% last month. The average age of cars in the states has hit a record of 11.4 years and the fuel economy gained compared with newer models is enormous, which will help to drive sales.