June was a good month for the three leaders in the motor industry, namely Ford (F), General Motors (GM) and Chrysler, all of which experienced a significant increase in sales over this time period. The good luck is not limited to the big names. Ford and General Motor's main competitors, Honda (HMC) and Toyota (TM), also experienced an increase in June this year, with very few companies, such as Tata (TTM), actually reporting a decline in sales.
Ford made a single digit increase over the course of June in terms of sales while General Motors and Chrysler each made sales increases in the double digits. This is something of a win for the three big car companies in that they were able to make these increases despite the fact that there has been widespread economic uncertainty of late. To be precise, General Motors sales climbed by an impressive 15.5% to the highest month since September, and Ford sales went up by 7% during this time period. Chrysler, however, took the lead in that it experienced an increase of 20% during the course of June. Since the beginning of the year share prices in both Ford and General Motors have declined overall, an indication of the afore mentioned economic uncertainty that the various car companies operating today have had to face of late. However, a marked increase such as the ones we are seeing across the board at present may be just what these companies need to reach recovery. The high sales that Ford and General Motors have had are being reflected on the stock market. Recently, Ford went up 2.24% to over $9 and General Motors is up 5.62 to about $21, showing us that out of these two major players on the stock market in the automotive industry, General Motors is still in the lead. That being said, Ford still has the higher market cap ($36.64 billion) than General Motors ($32.37 billion) and is always looking to flex some more muscle. Several of Ford and General Motor's other competitors also reported marked increases during June.
If we take a look at Honda, for example, we are in for a big surprise. Again, despite the economic difficulties faced by the world at present, Honda is a car company that managed to experience a marked increase in sales during June. The company in total experienced an increase of almost 50% since June last year. This places Honda "back in the race", which is not exactly good news for the leaders in the industry such as Ford and General Motors who, I am sure, would like to maintain their dominance unchallenged. This news has had a great impact on Honda's shares. Honda is up over $34 and currently has a market capital amount of $62.4 billion, making it more valuable than either Ford or General Motors.
Toyota has also benefited from this boom period for the automotive industry, posting a 60% increase since the same period last year. Toyota states that one of the main reasons why it experienced such a significant increase in sales over this period was due to the fact that there was a high level of consumer interest in its new offerings to the market, such as in its new Prius. As a result of bringing new products to the market its sales went up noticeably, keeping Toyota in the running as a significant player in the automotive industry. Toyota is trading for over $80 after starting the year under $70. Certainly, experts though Toyota could really boom in 2012, and, in some cases, this has not been the huge boom that was anticipated, but it is certainly a sign of healthy growth.
Not all companies have been lucky enough to experience higher sales numbers over the month of June. Tata, for example, experienced a decline in June sales of 3%. This has had an impact on the company's stock, causing it to drop substantially. The company's shares dropped by about 1.5 % at the time that the information was released. The company's domestic sales in particular seem to have taken quite a significant hit. As Tata is a competitor to Ford and General Motors, this is good news for the two larger companies as it means that it will have to face competition from one less source for a while to come.
Although Ford and General Motors are both major players in the industry, and the increases that they have reported are indeed significant, there are still other players on the field which seem to have a little more clout than they do. If the June figures are anything to go by, both Toyota and Honda are ahead of General Motors and Ford and the two companies only have an edge over smaller competitors such as Tata.. However, this increase across the board is good news for any investor with an interest in the automotive industry. Early indications in July suggest that sales should be strong. However, Ford has already taken some hits early on, including being downgraded by Zack's to "underperform" and hit with a target price below its 52-week low.
We will have to see where Ford goes, but there is plenty of healthly companies in the industry to take a ride in the passenger seat with.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.