Ford & Toyota: A Tale of Two Car Companies

 |  Includes: DDAIF, EWA, F, HMC, TM
by: Richard Shaw

It’s springtime and we’re thinking about maybe getting a new car. That and the recent problems at Toyota (NYSE:TM), plus the strong sales at Ford (NYSE:F), and the not too distant bankruptcy of GM and Chrysler, got us wondering how the car company stocks are doing — not that we are hot to own car company stocks (although we are hot to own a new car).

Toyota and Ford were once locked in a fierce fight for the most widely purchased cars — between the Camry and the Taurus. Ford had major rollover safety problems a few years back, and now Toyota has major accelerator safety problems. Ford survived and so will Toyota, we believe. Toyota outclassed Ford in the luxury market (but this week some Lexus models had some safety problems too). Toyota beat Ford to the hybrid market and they have “first mover” kind of advantage, but Ford is putting out a good line of hybrids, and the Fusion is an award winning model.

Ford is not the largest market share company, but it is having a bang-up sales year, and it avoided the effective nationalization that was the fate of GM, and is not being investigated by the US Congress as is Toyota.

China, not the US, is the dream growth market for car companies in 2010, having recently exceeded US total new car sales. Sad to say that premium brands the US companies once gathered from troubled European companies, have now been gathered by India (Jaguar) and China (Volvo) from troubled US companies (part of the continuing shift of economic power toward emerging Asia). That’s probably a good thing for Australia (NYSEARCA:EWA).

These charts for Toyota, Ford, Nissan (OTCPK:NSANY), Honda (NYSE:HMC) and Daimler (DAI) show quite different stock performances, with Ford, Nissan and Honda in better shape than Toyota and Daimler.

Each chart has three panels. The top panel shows the slope (rise over run) for the best fit trend line (linear regression) for 200 days and 600 days (a long-term and very long-term perspective on the direction of trend). The middle panel shows the 21-day (1-month) and 63-day (3-month) price channels, and the 100-day and 200-day simple moving averages, as well as the daily price range. The bottom panel shows the position of the price in the 63-day 2 standard deviation Bollinger Bands (lines 2 standard deviations away from the 63-day moving average) — the price is at the upper band when the value is 1.00 and is at the lower band when the value is 0.00.

click images to enlarge

A quick visual glance says that Ford, Nissan and Honda stocks are doing OK, while Toyota and Daimler are not.

Looking a bit more closely at the trends (600-day slope, 200-day slope and 63-day Bollinger Band price position), the stocks look like this:

  • Symbol : 600-day direction, 200-day direction, 63-day position
  • TM: Negative, Negative, Mid
  • F: Postive, Postive, Upper
  • NSANY: Negative, Postive, Upper
  • HMC: Flat, Postive, Mid
  • DAI: Negative, Flat, Upper

So much for the stocks. Now off to the show rooms to see what driving pleasures may await.

Holdings Disclosure: As of April 16, 2010, we hold EWA in some, but not all managed accounts, and not necessarily all in any single account. We do not have current positions in any other securities discussed in this document in any managed account.

Disclaimer: Opinions expressed in this material and our disclosed positions are as of April 16, 2010. Our opinions and positions may change as subsequent conditions vary. We are a fee-only investment advisor, and are compensated only by our clients. We do not sell securities, and do not receive any form of revenue or incentive from any source other than directly from clients. We are not affiliated with any securities dealer, any fund, any fund sponsor or any company issuer of any security. All of our published material is for informational purposes only, and is not personal investment advice to any specific person for any particular purpose. We utilize information sources that we believe to be reliable, but do not warrant the accuracy of those sources or our analysis. Past performance is no guarantee of future performance, and there is no guarantee that any forecast will come to pass. Do not rely solely on this material when making an investment decision. Other factors may be important too. Investment involves risks of loss of capital. Consider seeking professional advice before implementing your portfolio ideas.