April Was A Mixed Bag For Automakers

 |  Includes: F, GM, TM, VROM
by: TradersHuddle

April has come to a close and it's fair to say the fourth month of the year was a real mixed bag for the world's major automakers. Broadly speaking, the U.S. economy continues to show signs of improvement. That fact was highlighted by news on Tuesday that the Institute for Supply Management's factory index surged to 54.8 last month, easily topping the reading of 53 economists expected. The April reading is the highest since June 2011.

Automakers are obviously manufacturers, but not all of them contributed to the bullish ISM number during April. Shares of General Motors (NYSE:GM), the second-largest U.S. automaker by market cap, closed modestly higher today despite the company saying its April sales fell 8% due to increased competition. Translation: Lower prices and new products from rivals hindered GM in April.

GM lifted its full-year forecast to 14 million to 14.5 million cars and trucks, up from 13.5 million to 14 million, according to the Associated Press. In April though, Buick, Cadillac and Chevy sales dropped.

Shares of Ford (NYSE:F), the largest U.S. automaker, fell by a nickel after the company said its April sales slid 5%. Ford's situation is at the same time different and similar to GM's. The company's April sales were dinged by increased competition among subcompact models, but Ford also opted to discontinue its Ranger small pickup, a model that had proven popular with truck lovers over the years.

Japanese auto giant Toyota (NYSE:TM) flexed its muscle last month and executives from the U.S. automakers acknowledged as much. Toyota has struggled with some public relations gaffes over the past few years that led some car buyers to question the integrity of a company previously known for making perhaps the most reliable cars in the world.

Consumers appear to have worked past their issues with Toyota. The company's April sales surged 12%, as Japan was able to ramp up manufacturing activity to its highest levels since before the 2011 earthquake that ravaged the country. Toyota's U.S.-listed shares fell 2% today.

Chrysler reported a stunning 20% jump in April sales. The company is forecasting an annual selling rate for April of 14.6 million cars and trucks, on the high end of analyst predictions, according to the AP.

More good news could be on the way for auto stocks as economists are forecasting decent gains in U.S. employment last month. Economists are estimating 170,000 new non-farm jobs were created last month. The Labor Department delivers the April jobs report this Friday before the open of U.S. markets. Shares of the Global X Auto ETF (VROM) gained 1.5% as the automakers posted their sales figures. The ETF has surged 25% this year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.