What`s up in the auto industry?

If people have jobs and wages with great income, they will spend money on things. One sector to look for is the auto industry. I wrote an article about the auto industry in December last year, and GM said the auto industry was up 75% since 2009.

In 2009, the auto sales was only 10,4 million vehicles, but skyrocketed to as much as 18,2 million in December 2015, which was the highest level since 2001. But what now?


(Picture: Mercedes-Benz patent)


We know there is a fear in the market and so is it in the auto industry. The GM stocks are down and look very cheap at the moment. GM is trading at around $28, which is near multi-year lows and that is after GM has smashed Q4 earnings.

Low interest rate and cheap gasoline have without doubt been extremely good for GM. They sold a lot of trucks and SUV`s which turned the automaker to beat the analysts estimates. Both on revenue and earnings and posted a record net profit of $9,7 billion for 2015.

Not only that. GM promised to do it even better in the next quarter. How in the world can GM say that, and what makes GM`s reward for outperforming in a market where most of the other blue chips cut costs and fire workers to hold the stock up?

German automaker Daimler AG is down about 4% (11 am) so far on thursday followed by a lackluster earnings report and a weaker outlook for 2016. They said 2015 was a strong year, but investors are jumping off the wagon as they warned that the earnings and sales growth in 2016 are likely to fall.

Dieter Zetsche said that Daimler expects growth in China to be slower in 2016. China is Daimler`s biggest market and their sale rose 41% in 2015. Despite expected slower growth in China, Zetsche belive they can achieve market share gains.

The auto industry is not as bad as the oil industry. Low gasoline prices is good for the auto industry and bad for the oil industry. BP announced earnings and its profits crashed 91%! At the same time, Daimler increased their dividends from €2,45 to €3,25 which is the highest ever.

Zetsche also said that big things will happen for Daimler in 2016.


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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