by Jim Woods | March 2, 2012 11:26 am
Auto sales for February are out, and the data shows buyers are getting back behind the wheel. Forget about those persistent and pernicious high gasoline prices, people are driving to the lot with the old, and leaving with the new.
Ford (NYSE:F) reported a 14% in February year-over-year sales, while General Motors (NYSE:GM) posted an increase of only 1% — though that bested expectations for a February decline. And both Honda (NYSE:HMC) and Toyota (NYSE:TM) posted 12% monthly year-over-year gains, respectively.
The upward-trending sales numbers in February, along with the positive metrics in the space in 2011, suggest a marked resurgence in the industry that’s liable to have legs. It’s also a positive harbinger for the future, because the bigger the profits now, the more these companies can expand and improve their offerings to consumers.
Part of the improvement in cars these days is the degree of technology even the most modest new models offer. Thanks to new GPS navigation technology, batteries for hybrid cars, new software systems and many other developments, technology is the new horsepower of auto world. Innovations such as helping to avoid traffic jams, reserving parking spaces and even driving themselves all will be attributes of the autos of tomorrow. Here’s a look at six companies building these cars of the future:
Software behemoth Microsoft (NASDAQ:MSFT) is largely responsible for the technology explosion of the past three decades, and not surprisingly, it’s likely to play a role in building the car of the future. If you buy a new Ford model, it’s probably equipped with Ford SYNC, which is a factory-installed, fully integrated in-car communications and entertainment system that allows drivers to combine their digital lifestyles with their life on the road.
Ford’s SYNC is powered by Windows Embedded Automotive, also known as Microsoft Auto. The inboard software system allows you to digitally interact with the vehicle, and it enables us to do what we all are likely to do more of in the future, and that’s communicate with others in a variety of new digital ways.
One of the pioneer firms for GPS navigation systems, Garmin (NASDAQ:GRMN) will play a key role in the newly expanded auto navigation offerings. The company already is seeing its revenue from its auto/mobile division surge, with that metric up 50.8% sequentially in the fourth quarter of 2011, and 3.6% year-over-year. Those numbers helped the company post Q4 revenue of $909.6 million, a 36.4% sequential increase and an 8.6% year-over-year gain.
The car of the future likely will require increasingly sophisticated navigation systems, and this is the kind of technology that’s smack-dab in the middle of Garmin’s map.
The car of the future most likely will run either partially or completely on electric power, and supplying that power is the province of A123 Systems (NASDAQ:AONE). In August, GM chose A123 to produce batteries that will be used in future electric vehicles being sold in select global markets. More recently, A123 entered into a deal with Indian automaker Tata Motors (NYSE:TTM) to make lithium ion battery packs for use in commercial vehicle hybrid electric systems.
The company has had contracting revenues of late, thanks to a delay in orders from luxury electric vehicle maker Fisker Automotive. But this probably is just a speed bump on the road for A123, as more and more hybrid vehicles will be produced in the years to come — and that undoubtedly will allow A123 to power up both revenue and earnings.
The car of the future needs to be both high-performance and hip to appeal to enthusiasts, and that’s where electric vehicle maker Tesla Motors Inc. (NASDAQ:TSLA) comes in.
The company’s Roadster model will accelerate from 0 to 60 mph in under 4 seconds with little more than a high-pitch hum. The two-seat Roadster will soon be joined by the highly anticipated Model S sedan and its Model X SUV. Already, the company has seen big-time sales interest in each, with buyers already plunking down up to $5,000 just to reserve the Model S, and $4,000 to have first dibs on the Model X.
Tesla’s tentacles are growing too, as other automakers want to tap its expertise to develop new electric models. German luxury auto maker Daimler (PINK:DDAIF) has a deal with Tesla to produce an electric Mercedes-Benz that uses the Tesla power train. Toyota also has a deal with Tesla to develop an electric version of the Japanese automaker’s RAV4 model.
When you enter the car of the future, you’ll want to be entertained. Most of us listen to the radio to fulfill our entertainment needs while commuting, and that market is right where Internet radio service Pandora (NYSE:P) wants to be.
In a recent interview with Fast Company, Pandora co-founder Tim Westergren said he considers only one mobile device the “Holy Grail” of his industry, and that’s the automobile. “Half of all radio listening happens in the car,” Westergren told Fast Company, and he added, “It’s a place we need to be.” No matter how the car of the future is powered, or how it navigates the road, you’re going to want to listen to something — and Pandora plans to stream that something straight to your dashboard.
Much to the chagrin of driving enthusiasts, the car of the future might not even require an operator. Internet search-engine giant Google (NASDAQ:GOOG) actually is developing a vehicle that drives itself. The Google vehicle will navigate using video cameras, radar sensors, a laser range-finder and detailed maps supplied by the company’s map operations.
Though a real driverless car still is a thing of the future, the future might come faster than you think. Google already has successfully lobbied for new regulations allowing its autonomous vehicles to be road-tested and registered in Nevada, and there’s a bill in the California state senate to allow the vehicle to be tested there. Who knows? Maybe someday if you get caught speeding in the car of the future, you’ll just be able to blame it on Google.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2012/03/6-companies-building-the-car-of-the-future-msft-grmn-aone-tsla-p-goog/
Short URL: http://invstplc.com/1fuoWqR
Copyright ©2016 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.