by Mark Goldstein
Due to the current success of the automotive industry, investors in Ford (F) may feel very confident. This is quite reasonable, and the recent news for the company has been quite positive as well. I do think investors should continue to watch for future growth in the electric car market, but Ford may even be able to handle that. For the time being, at the very least, I am confident in Ford stock.
Ford recognizes the importance of music systems in people's car-purchasing decisions, and it has taken one more step to meet the needs of its customers. It has announced that Ford customers may now use the on-demand music service MOG through SYNC AppLink. If someone has the MOG app on their connected iPhone, therefore, they can use it in the car to listen to music. Keeping up with modern developments, this will also have a voice control option. Assuming there are no significant functional problems, this should benefit Ford and translate well to the stock. It is a minor development, but it does give Ford an edge in an industry that is doing quite well.
As a result of the success of the automotive industry, many major companies have posted impressive sales numbers in May. As this information spreads to the public, there will be an increase in confidence from investors, benefiting the stock. Ford sales in the U.S. were up by 13%, which is slightly better than the 11% increase from General Motors (GM). Neither company could compare to the massive 30% growth from Chrysler, but both have a larger share of the market than Chrysler, continuing to beat it in overall sales. The success of Chrysler, therefore, will not be enough to overshadow the significant growth that Ford and General Motors also experienced.
Another competitor may have a slightly larger impact on Ford stock though. Honda (HMC) has recently announced that tests from the U.S. government show that its electric Fit has a better battery range than Ford's electric Focus. With the Fit, one charge lasts for an average of 82 miles, which is better than the 76 mile average of the Focus. Honda also notes that the Fit charges more quickly than other electric cars, which will continue to give Honda an advantage as people increasingly shift toward purchasing electric cars. This will have a positive effect on Honda stock, and this is not great news for Ford. The Focus does still beat the efforts from Mitsubishi and Nissan, however, so Ford continues to be strong, even in the electric car industry. Therefore, this minor defeat should have only a slight impact on Ford stock.
As the electric car industry takes off, however, other competitors will continue to become much more important. Tesla (TSLA) will be moving forward with its Model S, which is an all-electric Sedan it is developing. It announced that it will be offering 5,000 test drives on June 23, the day after its launch. Not only will this build up more hype for the launch, but it will expose this vehicle to more people. This will positively affect this stock as a result.
Tesla is a company that focuses on electric cars, so success for this company is a bad sign for competitors that have only begun to make the transition to electric cars. If the electric car industry takes off faster than Honda or Ford can handle, it could lead to large gains for companies like Tesla and potential losses for Honda and Ford. This will not happen overnight, but investors should continue to track the popularity of electric cars and whether or not automotive companies can keep up with changes in the industry.
As times move forward, another important component of the automotive industry is fuel economy. Cars that use less gas are more environmentally friendly and help people deal with gas prices in a struggling economy.
Ford is beginning a new multicultural ad campaign for the 2013 Ford Escape, and it plans to depart from previous strategies that have used comedy. Instead, the advertisements will show how the car will benefit consumers and will highlight important features like fuel economy. This should be beneficial to the stock, as it shows Ford having confidence in its product and adopting an advertising strategy that reflects this. Its focus on fuel efficiency, furthermore, should help give the Escape an edge in the market, which would also have a positive impact on Ford stock.
Ford has also shown its new 2013 F-150, which will be going on sale in the fall. This is an early move, as General Motors has not yet released details about its upcoming trucks. Its trucks are expected to have improved fuel economy, and Dodge is expected to also show an improved fuel economy in its Ram. Ford is confident in its own fuel economy though, as it claims that these companies are "playing catch-up." The showing of its F-150 should begin to create some excitement for the fall release, and this will have a beneficial impact on Ford stock, even if other companies may become more competitive in terms of fuel economy.
In another aspect of the modern world, Toyota (TM) has reached an interesting milestone that may bring positive results to the stock. Toyota's official Facebook (FB) page now has one million fans, and to celebrate this, the company has handed the page over to some of these loyal fans. This shows the success of this page in terms of advertising, and it also shows Toyota's dedication to its customers. As a result, investors may gain confidence in the company, which would benefit Toyota stock.
Not all is great in the automotive industry, however, as sales have dropped in Brazil. This is particularly bad news for companies that are a big part of that market. Fiat, General Motors, and Volkswagen are all major players in the Brazilian market, and they will certainly be hurt by this drop. Ford may be the fourth largest auto company in Brazil, but its sales numbers in the country are less than half of those reported by any of these other three companies. By comparison, therefore, Ford may be in a fairly good place due to its limited presence in Brazil. General Motors stock will be negatively affected by this, but it should not have much impact on Ford stock.
While the industry is booming, Ford continues to be one of the better companies in this booming industry. It continues to show off an impressive fuel economy and demonstrates strong sales numbers. It may not be the best in the industry for electric cars, but it is still competitive. This is something to watch over time, but I believe that Ford is in a very strong position at the moment, and Ford stock should be rising for months to come.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.