Face-Off on Stocks: General Motors, Ford, Toyota [Video]

The longest economic downturn since the Great Depression has left a lot of older cars on America's roads as cash-strapped consumers have had no choice but to squeeze more miles out of aging vehicles. In theory, at least, that has the auto industry set up for a big rebound in sales.

As Alan Mulally, chief executive of Ford (F), told investors and analysts recently: "We have tremendous pent-up demand. The average age of a vehicle in the U.S. is over 10 years now because people have been delaying this decision for all of the obvious reasons."

But an industrywide pickup won't necessarily benefit all players equally. Market share, after all, is pretty much a zero-sum game in the developed world, and conquering China and other emerging markets is easier said than done.

Emerging-market opportunities, especially those found in China, are a cornerstone of the bullish case on General Motors (GM). After a nearly two-year odyssey through bailout and bankruptcy, storied automaker made a historic return to the equity markets last week in one of the biggest initial public offerings of all time. But as much progress as GM has made, it still faces stiff competition, plenty of looming legacy costs and public distaste with its time as a ward of the state.

Ford has the distinction of being the only Big Three American car company to avoid bankruptcy, thanks to the foresight of management, and it's gaining market share. But after a 40% rally over the last three months, is the stock still a bargain?

Toyota (TM) is putting up strong year-over-year revenue growth in an industry where that's hard to come by, and its stock appears to have put the worst of the recall-related sell-offs behind it. True, its production capabilities are the envy of the industry, but its brand has been tarnished, and the company continues to lose money in Japan and Europe. Whether shares look at attractive at current levels is very much open to debate.

For the bull and bear cases on GM, Ford and Toyota, see the video above.


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ldmerriam

It will be interesting to see how it all plays out. The new brand structure might help the company with its bureaucracy problem and its image problem: http://bit.ly/fxZpnx

November 24 2010 at 9:41 AM Report abuse rate up rate down Reply
A B

No one wants GM cars. They killed the Astro Van, and they should revive it.

November 24 2010 at 2:19 AM Report abuse rate up rate down Reply
savemycountry911

BUY A FORD

November 23 2010 at 9:08 PM Report abuse +2 rate up rate down Reply
Gumby

Drum roll! BAN FIREWOOD NOW!!!!!!!!!!!!!! Health costs associated with inhalation of firewood soot and particulates is soaring through the roof, yet Dr Oz is not talking about it... He is a funny doctor to watch!!

November 23 2010 at 5:07 PM Report abuse -5 rate up rate down Reply
2 replies to Gumby's comment
Solid Wall

Come out to my neck of the woods and say that... you'll get laughed out of the state.

November 23 2010 at 7:39 PM Report abuse +1 rate up rate down Reply
savemycountry911

People used wood for heat and cooking for thousands of years.

November 23 2010 at 9:07 PM Report abuse rate up rate down Reply
Gumby

The bottom line for our economy is to stop rewarding Big Oil and its shareholderss. Simple as that... We must conserve energy for unemployed workers since it is the main reason we had started job outsourcings not only because of lower wages overseas but America is fast running out of cheap energy. To add to the insult, the rich is still driving gas guzzlers! C'monm, dont give the rich extended tax cuts... They will spend it on fossil fuel !

November 23 2010 at 5:06 PM Report abuse -2 rate up rate down Reply
1 reply to Gumby's comment
laceyautosales

Stop the class warfare...the top 2% of wage earners are already paying 40% of the taxes in this country and you liberal loosers want them to pay even more so your entitlements can grow larger and you can lay around and complain about how unfair our system is. Everyone who pays income taxes should have their rate reduced and the 47% on the bottom who currantly pay NOTHING TO LIVE IN THE GREATEST COUNTRY ON EARTH should have an income tax rate of 5% instead of getting money back each year (unearned income benifit) without having to pay in. Everyone should have to pay something. No one should be allowed to live off of the sweat of others. Liberals know that if you rob from Peter to give to Paul...you will have the support of Paul. Paul 47% and growing. Peter 53% and shrinking....paying for everything and everyone else.

November 23 2010 at 6:06 PM Report abuse -1 rate up rate down Reply
Gumby

Also people will drive far less annually which mean insurance companies will have to adjust premiums downwardly... More people will drive about 5K miles annually instead of 15K annually . People will carpool more often . People will rent cars more often along with flight plans instead of drving cross country which is already cost prohibitive for most of us. Long distance family vacation trips is no longer commonplace. Ford, GM and Chrysler , take notice!

November 23 2010 at 5:04 PM Report abuse -1 rate up rate down Reply
Gumby

Maybe ten to fifteen year loans will be commonplace to buy a new car at the going prices we see today. Forget sticker shock, it is already passe!

November 23 2010 at 5:00 PM Report abuse -1 rate up rate down Reply
jpnunan

Well at least Ford has made an effort to provide quality vehicles without taxpayer subsidies, but that really does not matter. Americans today flock to see what people like Donald Trump will pull off next as long as he can bankrupt his own casinos yet never invest a dime in the stockmarket. If you want to see change in America , just feel your pockets, thats all you'll hear is a jingle, GM at $33 and Ford at $16 , I'd file for bankruptcy too. let the losers ( I mean taxpayers ) suffer while the investors speculate on companies like GM . Oh , and if you want a great investment in the casino industry , go for Harrah's IPO , I'm sure investors like Gary Loveman can layoff some more employees to line his pockets with that " change " !

November 23 2010 at 4:00 PM Report abuse +2 rate up rate down Reply
ultraz2

MULALLY, IS DEAD WRONG 15years is the averge age of autos in a good economy. The new average age will now be streached to 25 years before trade or scrap. This is all due to the nation on the BRINK OF A DEPRESSION and the National budget about to be slashed. DEFENSE LAYOFFS will soon be unavoidable , if not this year no more than three years from now we will see massive defense layoffs. CAR SALES WILL NOT IMPROVE, THEY MAY ACTUALLY GET MUCH WORSE. Ford stock investors have made all of the easy money. FORD stock is now tied to the risk of an ever uncertain economy. People are more concerned about paying their mortgages than buying a new car which they don't really need.

November 23 2010 at 2:56 PM Report abuse +1 rate up rate down Reply
Bryan Citrowkse

I’m going to buy my a mercury and cruise it up and down the road ;-)

November 23 2010 at 2:27 PM Report abuse +3 rate up rate down Reply