Morningstar

December Looks Good for Automakers

Ford's November sales were led by F-Series pickups while GM enjoyed robust growth across brands.

Securities In This Article
Ford Motor Co
(F)
General Motors Co
(GM)

Automakers reported November U.S. light-vehicle sales on Dec. 1 that got help from incentive spending as well as two extra selling days compared with November 2015. Total sales rose by 3.6% year over year to about 1.38 million while the seasonally adjusted annualized selling rate, SAAR, was 17.83 million per Automotive News compared with 18.17 million in November 2015. TrueCar estimated November incentives increased 13% from November 2015 to $3,475 a unit. We expect December will be a good month as automakers clear out remaining 2016 model year inventory and heavily advertise holiday sales programs. We still think that due to rising supply of used vehicles coming from the off-lease market and already high penetration of leasing that the industry is done growing on a full-year basis for this cycle. We do not think a recession is imminent and we remain upbeat on U.S. auto demand because even if sales fall all the way to 16 million from the mid-17 million range they are at now, that is still a very healthy level for profitability across the supply chain.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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