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While the domestic automobile industry has been a big subject in the ongoing political campaign, the fact remains that the industry has recovered strongly from the depths of last decade, and their third quarter numbers provide further evidence that the industry is alive, well, and in it for the long run.

General Motors' (NYSE:GM) third quarter earnings were so strong, in response its stock rose more in one day (9.6% on the day earnings were released) than any day since its post-bankruptcy public offering. In the quarter, the company posted revenue of $37.6 billion, up over two percent from the $36.7 billion a year ago. Profits came to $1.48 billion, or $0.93 per share. The profits came in about 15% below the third quarter of last year, but the profit level swamped analysts' expectations, which were for about $0.60 per share.

The profits continued the familiar pattern of strong domestic numbers overcoming disastrous European results. North American profits came to $1.82 billion, whereas European operations lost another $478 million. GM has responded to its Europe problems by reducing capacity and employment levels, but seems unhurried. The company has reduced employment by 2300 this year, and plans for another 300 by the end of this year. But this is coming largely from retirements and voluntary buyouts. I cannot help but wonder, with GM doing so well in not only North America, but also in China, why continue more investment in Europe? At best, GM will make a profit in Europe by mid-decade. Annual losses this year and next on the continent will likely exceed $1.5 billion. Meanwhile, operations in Asia are humming, with profits in the quarter up 89% from the year ago quarter to $689 million. South America swung from a loss of $44 million a year ago to profits of $114 million. Now, if only something could be done about Europe.

GM will be under some scrutiny as the U.S. Treasury still owns 500 million shares of the GM stock. There was talk earlier this fall of an offer to sell a large chunk of that government holding, but the Treasury turned down the offer. Treasury, and taxpayers, would have to have shares rise to $51 per share in order to break even on a sale.

GM's and other automaker's fourth quarter will be negatively impacted by Hurricane Sandy, as over one thousand dealers were closed just in New Jersey and New York. How many of those sales will successfully be pushed into November is anyone's guess. GM's October sales rose 4.7% from the year ago to 195,764 units. Chevrolet Cruze sales in particular were strong, up 34% from the year ago. Analysts had expected a 7.8% jump, but Sandy had other plans.

The tragic hurricane and tsunami that affected Japan was a boon to all the domestic auto industry, allowing them to gain market share at the expense of Toyota (NYSE:TM), Honda (NYSE:HMC), and others. In particular I like Honda, because in addition to cars and trucks it is a leading provider of power equipment, motorcycles, and even small jets. That product breadth helps Honda to historically have much higher margins than its Japanese peers. Its domestic unit is doing very well, with October sales up nearly 9% from October 2011. But things are not so rosy worldwide. Trade disputes with China are cutting not just Honda's, but all Japanese automakers about half their sales in that major market. Due to that, poor currency translations, and increased North American selling costs, Honda management lowered expectations for the fiscal year by about 20% to $4.7 billion, or about $3.50 per share. That still, when combined with its predicted 31% five year earnings growth rate, gives it a five year PEG of 0.28. I would take advantage of the current weakness and view Honda as a long term holding.

Toyota, other than taking back the crown of world's largest auto maker, is enduring the same Chinese problem and currency issues that befall Honda. Prior to 2009, Toyota was regarded as building the highest quality mid-market vehicles in the world. Its recent recall of over 7.4 million vehicles worldwide due to faulty window switches posing fire risks comes on the heels of a string of other recalls, particularly in America.

Compared with the easy comparisons with 2011, Toyota is doing fabulously well. It's most recent first fiscal quarter ended with profits of $3.7 billion, comparing very favorably to $14 million a year ago. Toyota even managed to post modest earnings of $44 million in Europe, compared to the hundreds of millions GM and Ford are losing each quarter in that sinkhole. Management affirmed guidance for the fiscal year ending March 31, 2013 for earnings of about $9.7 billion. But Toyota's 1.8% yield is a long way from Honda's 3.2%, and Honda, as mentioned, has twice the operating profit ratio of Toyota. If forced to choose between the two, give me Honda.

The Chrysler unit of Fiat (OTCPK:FIATY) continues to hum right along. The unit's third quarter profit of $381 million was up 80% from 2011's third quarter's $212 million. This in turn helped Fiat to report a small profit for the quarter of $51 million, up from a loss of $60 million a year ago. Profits were helped along by a 16% hike in revenues, to $26 billion. In its earnings release, Fiat management went out of its way to remind us that its home market, Europe, was in turmoil, and there was no end in sight to the struggle of the European market. The company had previously forecast sales of 6 million cars and trucks worldwide by 2014, but lowered that goal to 4.6 to 4.8 million units, from the 4.2 million vehicles it expects to sell this year.

Fiat's strategy to deal with its stubbornly depressed home market is to increase spending to bring on board new and improved car models as rapidly as possible. It plans to launch 19 new models from 2013 to 2016. Specifically on the drawing board are a new small Jeep model, nine Alfa Romeo models, and six Maseratis. The plan is for Fiat's European division to break even by 2016. But with spending to develop the new models in excess of from $21 to $23 billion in 2013 to 2014, Fiat is making a large bet, especially on the Alfa Romeo brand.

In all, Fiat has substantial hurdles ahead, and I would want to see the potential for the closure of those hurdles before recommending a purchase. I don't have the slightest idea when Europe, now with unemployment over 11%, will regain steady growth.

Ford (NYSE:F) uniquely, due in no small measure to CEO Alan Mulally, has grown its business and cleaned up its balance sheet without any help from Washington. The company recently announced Mulally planned to stay on through 2014, and promoted the dynamic Mark Fields to COO, making him heir to the CEO position.

In its third quarter Ford's revenues fell sequentially for a third consecutive quarter, down to $32.1 billion, down 1.7% from the year ago. It was about one half percent below analysts' expectations of $32.7 billion. GAAP profits came to $1.63 billion, or $0.41 per share, narrowly down from $1.65 billion or $0.41 per share in the third quarter of 2011. Adjusted profits in the third quarter came to $0.40 per share, a full 33% above analysts' expectations of $0.30 per share. Ford stock spiked by about nine percent in response to earnings.

Looking ahead, just like GM, Ford has to do something about Europe, where it lost $468 million in the third quarter and is also on a trajectory to lose $1.5 billion this year. Ford plans a restructuring in order to close some facilities in Europe over the 2013 to 2015 time frame. Costs from that restructuring will start to show up in the fourth quarter of this year, which will make the fourth quarter of this year a challenge. Yet with hugely popular vehicles, including its F-Series pickups, I believe Ford can tread water for a few years until Europe is able to recover. I like Ford for the value investor.

Source: 4 Resilient Auto Stocks To Consider Now