Tag Archives: Alec Gutierrez

Business, Finance, Occupation & Industry

A Virtuous Cycle for Autos and the U.S. Market

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By Daniel Miller, The Motley Fool

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It’s no secret, if you follow my writing, that I really like Ford  as a great value play. I’ve covered many specific reasons why I think Ford has turned into an incredible company since Alan Mulally took over and waded through the recession without a bailout.

That said, Ford, like many of its peers, remains undervalued, because risk-averse investors cling to past perceptions of the automotive industry. I understand the reluctance to believe that Detroit has finally learned its lesson and is now producing vehicles that are in demand. However, the misperception offers savvy investors an opportunity to profit from others’ reluctance. Let’s take a macro look at some factors and see if future vehicle sales will continue to rise — increasing profits for automakers.

Macro view
To put it simply, the better, faster, and stronger the U.S. economic recovery is, the happier automakers will be. Right now, Detroit gets the vast majority of its profits from North America. The more people feel secure about their jobs and their futures, in general, the more people will make that vehicle purchase that they’ve long put off.

While February’s unemployment report came with plenty of caveats, it was enough to make Wall Street happy. U.S. employers added 236,000 jobs in the month, making it the best jobs report since last November. It was enough to drop unemployment from 7.9% to 7.7%, the lowest since December 2008. Things are looking up, albeit slowly, and that’s good news for Ford, General Motors , and Japanese rivals Toyota Motors and Honda .

Investors will, however, have to keep an eye open going forward, because the substantial budget cuts in D.C. will have an impact on the recovery. Let’s look at some more specific estimates in the auto industry. 

Tax returns
As refunds from tax returns hit consumers’ pockets, automakers could see a potential boost in March sales. My friend recently gave up his clunker and used his tax return to put a down payment on a new truck. I’m guessing that there are many more consumers doing the same thing. Backing up my thesis is Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book.

“Sales will be boosted by record low interest rates and a slowly improving job market, which recently saw the unemployment rate and new unemployment claims fall to five-year lows,” Gutierrez said. “In addition, with attractive financing and ample inventory to choose from, many people receiving tax refunds will use their returns toward a down payment on a new vehicle this month.” That’s good news for investors hoping that March will end the quarter strong for earnings reports. 

Virtuous cycle
Auto output in the U.S. helped factory production numbers last month, which, in turn, is helping to drive economic growth. Vehicle sales have also reached their highest level in five years and are expected to continue rising. We’re on pace this year to sell around 15.4 million vehicles, compared with 10.4 million …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

GM Could Be in for a Bumpy Ride

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By Adam Levine-Weinberg, The Motley Fool

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2013 is a critical year for General Motors as the American auto giant tries to overcome the stigma of bankruptcy and retake market share in the U.S. Management has been touting a series of high-profile vehicle launches, but none is more important than the company’s new line of full-size pickups. If successful, the new pickups have the potential to boost GM‘s profitability, but in the meantime GM has to manage a complex transition between the previous architecture and the new one. Analysts and investors have worried that GM may have too much inventory of the old pickup trucks, which could force margin-sapping discounts or crimp sales of the new models. I expect these concerns to weigh on the stock until the transition is more or less complete at the end of the year.

New trucks coming
GM is launching new versions of the Chevy Silverado and GMC Sierra pickups this spring. On Monday, executives announced that Silverado pricing would remain the same compared to the current generation. Moreover, GM claims that the 5.3-liter EcoTec V8 engine (which will be an $895 option for buyers) will provide better fuel economy than competitors’ V8 engines, and will even edge out Ford‘s V6 EcoBoost by one mile per gallon on the highway.

The risk for GM is that hyping the launch of the new pickups will depress demand for the old ones. With a better version to be available in a few months, customers who can delay their purchases may do so, unless they are drawn in by heavy incentive spending.

Inventory issues?
For investors, uncertainty about the near-term pickup sales trajectory is heightened by the volatility of GM‘s pickup sales pace recently. Weak full-size pickup sales in November led to a spike in inventory worries, but a strong December brought inventories down to from 139 days of supply to 80. January sales were also strong, but inventories increased and days of supply jumped to 117. Strong February sales brought the days of supply number back below 100, but a weaker March caused GM to end the first quarter with 117 days of supply in inventory once again.

Last month’s reversal came as Silverado sales grew 8.4% year over year and Sierra sales were flat compared to 2012. Combined, GM full-size pickup sales were up 6% to 53,378 units. This fell short of the 14.9% gain expected by Kelley Blue Book analyst Alec Gutierrez. By contrast, Ford sold 67,513 F-Series trucks, up more than 16% over the prior year, and Ram pickup trucks were up 25% year over year with 33,831 sold. It is too early to know whether GM‘s underperformance compared to peers last month was a blip or the beginning of a trend caused by anticipation of the new models. Management professes to be very comfortable with the current inventory level of approximately 240,000 full-size pickups. However, if sales slow any further in the spring, GM will need …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Automakers Expected to Report Highest U.S. Sales Since 2007

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By The Associated Press

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Stan Honda/AFP/Getty Images General Motors’ 2014 Chevrolet Corvette Stingray convertible on display at the New York auto show, which runs through April 7. Consumer interest in new cars has grown as the economy has slowly improved, fueling expectations of higher sales in March.

By DEE-ANN DURBIN

DETROIT — U.S. car and truck sales are expected to hit their highest level in nearly six years in March, as buyers armed with tax refund checks were lured by flashy new vehicles and low interest rates.

Auto companies release U.S. sales figures Tuesday.

Analysts predict total sales of nearly 1.5 million cars and trucks, a number not seen since May 2007. That’s almost double the 855,000 vehicles sold in March 2009, the low point for sales during the economic downturn, according to Ward’s AutoInfoBank. Sales are expected to be up 3 to 5 percent over last March.

Alec Gutierrez, a senior market analyst with the car pricing company Kelley Blue Book, said the improving job market is boosting sales. The number of Americans seeking unemployment benefits fell to a five-year low during March. Low interest rates are also making new-car purchases more appealing, Gutierrez said. The average rate for a 60-month new-car loan is now 4.12 percent, down from 4.52 percent at this time last year, according to Bankrate.com.

And Gutierrez says tax refunds can also spur purchases. The average federal tax refund this year is nearly $3,000, or enough to cover the down payment on a three-year lease of a Toyota Camry hybrid or a BMW 3-Series sedan.

Full-size pickup truck sales are expected to rise nearly 15 percent in March, following big gains in February, Kelley Blue Book said. Construction companies are rapidly replacing their truck fleets as the economy improves and they win more business.

Gutierrez said incentive deals — such as the $7,500 cash back now offered for the Chevrolet Silverado pickup — are helping truck sales, and should continue for a while. General Motors Co. (Ford Motor Co. (GM wants to clear out older models before introducing its new Chevrolet Silverado in a few months.

"Consumers looking for a new pickup truck should not hesitate to pull the trigger," he said.

Crossovers are also gaining, thanks to redesigned models like the Ford Escape and Toyota RAV4. Small cars are down slightly, in part because gas prices are relatively low. Gas averaged $3.64 per gallon at the end of March, down from $3.78 at the end of February and $3.91 in March of 2012, according to AAA.

Honda Motor Co.'s (HMC) sales gain should be among the best for March. Sales rose nearly 9 percent, according ...read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Analysts: Strong Sales Continue for GM and Ford

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By John Rosevear, The Motley Fool

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Did U.S. auto sales hold strong in March?

We’ll know for sure when official numbers are reported on Tuesday, April 2, but if analysts are correct, March was indeed another solid month for car and truck sales in the U.S.

Analysts polled by Bloomberg expect an average 4.2% year-over-year increase in U.S. sales of “light vehicles” (cars, pickups, and SUVs). At least one high-profile analyst, Edmunds’ Jessica Caldwell, thinks March was likely the best month for U.S. light-vehicle sales since May of 2007.

While Ford will likely come in with an increase above the average, analysts say, the year-over-year growth winner looks set to be General Motors .

A good month as the General gathers strength
GM is expected to post a 12% year-over-year sales gain for March, according to the Bloomberg consensus analyst estimate. GM’s full-sized pickups are likely to have been a big driver of any sales increase – Kelley Blue Book analyst Alec Gutierrez estimates that overall full-sized pickup sales were up 14.9% in March, and GM is known to be aggressively clearing out pickup inventories ahead of the arrival of redesigned models later this spring.

GM’s increasing strength in cars is likely beginning to pay off as well. The Cadillac ATS and XTS sedans, both introduced last year, are set to benefit as GM’s efforts to revive its old luxury brand gather steam. And GM has more new vehicles on the way: The company is introducing 13 new Chevrolets in 2013, as well as another Cadillac, the mid-sized CTS, due at dealers this fall.

Meanwhile, Ford will likely bask in a strong result for its midsized Fusion sedan, introduced late last year. Kelley Blue Book estimates that Fusion sales will be up 24% over year-ago totals for the last-generation model, itself a strong seller.

Tight supply and strong demand at Ford
Ford is probably selling all the Fusions it can make at the moment, as its factories are at full capacity – and in some cases, beyond. The company is adding 1,200 workers at its plant in Flat Rock, Mich., to build additional Fusions starting later this year.

Ford’s production capacity challenges extend well beyond the hot new Fusion. While the impressive utilization of its factories has meant big profits in North America, the company is likely to be facing tight supplies for a few more months as it works to squeeze more production out of its existing North American factories.

That will likely keep the Blue Oval’s sales increases relatively subdued, at least for a few more months, even as new models bring nice gains to GM. But Ford shareholders can take comfort: Those busy factories should continue to drive strong North American profits for the Blue Oval.

Worried about Ford?
If you’re concerned that Ford’s turnaround has run its course, relax — there’s good reason to think that the Blue Oval still has big growth opportunities ahead. We’ve outlined those opportunities in detail, in the Fool’s …read more
Source: FULL ARTICLE at DailyFinance