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Domestic brands are not thriving, but not doing that badly either . I think the post-2013 era big, luxury trucks and SUVs, which have high markups and became especially popular post-Covid, saved them from certain demise in the early to mid 2000s. Japanese brands cannot compete on size.
A lot of this can be explained by valuation, which is not the same as earnings. Tech companies tend to trade at higher valuations/multiples compared to auto.
This is smart rhetoric by Trump to help win those swing voters , like Michigan. Similar to wall and other promises, not much will come of it should he win though.
What do you mean? They lose market share every year and their stock prices trail the S&P by huge margins. I just checked the stock price of GM and it's the same price today as it was in 2014. While it's true that the Big 3 are still making money on paper, we haven't had a recession in 15 years.
There is a reason for this.
Here is what tech earnings look like: 10,12,15,19,25,...
Here is what automaker earnings look like: 7,3,(-1),4,11,(-50)
When valuing a cyclical you have to take into account full-cycle earnings. Do this and the carmakers are more than fairly valued. They are just not a good businesses and haven't been for decades. Detroit is dying.
Probably right. But didn't he build some of the wall though?
These stocks have been paying 5% dividends for the last 10 years. They have single-digit P/E ratios. People aren't going to stop wanting cars anytime soon unless the singularity happens, at which point it doesn't really matter what your portfolio allocation is. EVs aren't going to take off as expected. They're too inconvenient. You can't buy-low/sell-high without buying low, and right now automakers are low.
I couldn't disagree more with your investment thesis. On a cyclical, buying low looks like $BTU for $2/share in 2020. The cycle always goes down further than you expect (Hofstadler: even when you take this into account)
But I definitely agree with your assessment of EV's. There are massive problems and externalities that need to be dealt with before mass adoption. I fear the government is going to force it down our throats anyway. The Biden administration has certainly been pushing in that direction, especially when the "I did that" stickers start showing up at gas stations.
See, electric cars do have use cases- commuter mobiles and mildly sporty luxury cars. Both of which Tesla is doing quite well in.
The government’s unwillingness to promote hybrids to nearly the same extent is inexplicable, considering that technology is ready for prime time.
Sure it's explainable. They don't want to promote hybrids. They just want to ban cars.
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