Who’s the biggest and baddest of the auto stocks? Here’s a hint, it comes from the same island as Godzilla.
Last week, Toyota Motors (TM) reported its final sales figures for 2013, and for the second-consecutive year the Japanese behemoth beat out other auto stocks and hoisted the trophy as the biggest kid on the auto block. Toyota said it sold 9.98 million vehicles last year, which is a record for the company. That figure also represents a 2.4% jump from the prior year.
Never a firm to shy away from tactics that will make it a winner, in 2013 TM stock moved aggressively to take advantage of “Abenomics,” the term used to describe Japan’s policy (named after Prime Minister Shinzo Abe) to deliberately debase the yen.
The yen’s weakness allowed Toyota to slash prices on their vehicles in the US without fear of material loss, and the lower U.S. dollar price allowed the company to sell more vehicles in a single year than ever before — and more than any competing auto stocks, last year.
The company said it expects sales to rise again in 2014 to more than 10 million. Will that make 2014 a three-peat for Toyota? Can Toyota stock rise another 25%-plus the way it did last year? If TM stock wants those results, it will have to stave off some serious competition from other auto stocks.
Here are a few other auto stocks intent on chasing Toyota down in 2014:
General Motors (GM)
The biggest of the U.S. auto stocks, General Motors (GM), is once again the runner-up when it comes to auto sales.
For the second consecutive year, GM failed to best its Japanese counterpart, selling 9.71 million vehicles in 2013. That metric was up 4% from the prior year. The gain also means GM is closing in on Toyota. In 2012, GM sold approximately 450,000 fewer vehicles than Toyota. However, in 2013 that gap was just 270,000 vehicles.
GM’s ability to close the distance with the auto stocks leader is particularly impressive given the fact that Toyota had the benefit of a falling yen.
New GM CEO Mary Barra is intent on making her mark at the helm, and I suspect nothing would make her happier than steering GM to the top in 2014. Can she do it? Well, the company recently announced that it expects profits to rise in 2014.
That may drive GM stock higher, but the jury is still out on whether GM can oust Toyota from the top spot on the auto stocks podium.
German auto giant Volkswagen (VLKAY) isn’t idling by in the pits waiting for auto sotcks like Toyota and GM to make an error. The company is intent on passing GM for second place, and then it has its sights set on Toyota.
Volkswagen currently trails GM in total vehicle sales by approximately 200,000, selling 9.5 million vehicles in 2013. So one good year in its wheelhouse European market could make passing GM a very real possibility.
I suspect that if (and this is a big “if”) the European economy can stage a comeback this year, the German car maker could muscle its way further up the list of top auto stocks in 2014.
America’s second-largest automaker, Ford (F), just reported a 90% spike in Q4 income, logging one of its best full-year performances ever. The company claims the top spot on the podium in terms of U.S. sales, as it has for each of the last four years.
Ford’s F-Series trucks are the best-selling vehicles in America, and Ford intends to continue that supremacy when it begins selling its redesigned F-150 in the fall.
While this new lighter, more fuel efficient and more powerful vehicle will likely be a big hit with American truck buyers, there’s no way that Ford will break into the top three auto stocks in terms of sales volume. Still, Ford and particularly F stock are most definitely worth a test drive for investors looking for a well-run company in which to build a long-term position.
Fellow Japanese automaker Honda (HMC) is well off Toyota’s pace in terms of overall sales, and even though Honda has one of the best-selling small cars in the U.S. in the Civic, the company doesn’t do the volume worldwide that the top tier auto stocks do. Still, Honda has benefitted from Abenomics, and will likely continue to do so in 2014.
Honda is slated to report earnings on Friday, and the consensus is for a strong fiscal third quarter reflecting a 74% rise in quarterly profits. If the company exceeds expectations, HMC shares could get the boost they need to get out of their recent rut. Yet no matter how well the company performs, there’s no way Honda can keep up with the really big auto stocks.
The race to No. 1 among auto stocks is close, and it’s definitely still dominated by the global “Big 3,” of Toyota, GM and Volkswagen.
May the best carmaker win.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.