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Cost reductions and sales incentives in the 1990s have been insufficient to enhance market share or per-unit profits in the auto and truck industries, thus leading to consolidation on a global basis. Domestic auto sales in the US are expected to reach 15.5 mil units by the end of 1998, although the US industry is less competitive due to the dollar/yen relationship. Stocks in these industries are attractive mainly for their dividend yields.

The automobile and truck industries in the US had a good year in 1997 and this is expected to continue in 1998 with good demand despite a slight sales drop in Jan. A market share gain for light trucks and the competition between US and Japanese manufacturers are the industry trends for the late 1990s. The cyclical nature of the industry offers some risk to investors, although the Big Three auto makers in the US are financially sound.

Automobile sales in the US are expected to reach 15.3 mil units in 1997, compared to 15.1 mil units in 1996, with only one month left in the sales year. However, unit profitability may decrease in 1998 with large sales incentives and the decision not to increase prices on 1998 models, and sales for Japanese automakers could also be mixed. Chrysler and General Motors stocks appear to be the best investments through the years 2000-2002.

Sales of light vehicles in the US have rebounded in July and Aug of 1997 after a disappointing 2nd qtr of 1997, with the good economy, low interest rates and inflation, and dealer incentives being factors. Chrysler Corp, Ford Motor Co, and General Motors Corp have become more efficient, and 1998 auto prices will rise at a lower rate than before. Some of these stocks are timely for 1997 and are expected to outperform the market.

US car and light truck sales were strong in 1996 and 1st qtr 1997 but have slowed down in May 1997. Japanese automobile manufacturers will probably have a decrease in profits during 1997. Strikes have adversely affected Chrysler and General Motors while Ford has maintained its production momentum. Ford is the best choice for investment although the entire industry is risky because of its dependence upon business cycles.

Almost all of the US automobile and truck industries are expected to show production and profit growth in 1997, aided by a stable US economy and their own new product lines. Although labor conflicts and a poor dollar/yen ratio hurt the industry in 1996, General Motors Corp., Ford Motor Co. and Chrysler Corp., the Big Three of the automobile industry were not seriously affected. General Motors and Toyota Motor Corp. appear to be the best investment possibilities.

The automobile and truck industry have changed into a truly global marketplace. In 1996, the United Auto Workers union has not formally selected any automaker as its strike target and will discuss a labor contract of over three years. Both of these decisions are signs of new attitudes within the union. These stocks are not recommended as good investments in 1996.

New car and truck sales increased during the 2nd qtr of 1996, and 15.4 mil. will be sold by the end of 1996 if the current trend continues. Production capacity may also be increased by the Big Three automakers. About 25% of new cars and trucks are now leased, and this may increase to 50% by the year 2000. Fleet sales are now 25% of the market, as well. Investors need to evaluate these stocks on a weekly basis, as they are not timely for 1996.

Potential investors in the auto and truck industry should note the unfavorableness of the current automotive cycle but should consider each company individually for some attractive options. A spotlight is on Chrysler, as the company could suffer a strike in 1996 because the United Autoworkers want autoworkers to share the company's surging profits, and Chrysler in turn will probably readily accept a reasonable contract as it wants to continue its winning streak.

The auto and truck industry has become global and is being reported as such. More vehicles are being manufactured overseas by Isuzu and Suzuki, and, in the near future, Honda, due to rising Japanese labor costs and currency considerations. Toyota is now the 4th largest car maker in the US. The 10% luxury tax on cars costing over $32,000 is being phased out by Congress. These stocks are untimely in 1996 and best avoided.

Japan has agreed to greater access for American autos and parts in the its home market, to deregulate its system and increase US production, but not to accept numerical targets. The stronger dollar is hurting US auto makers at home, however. Ford and GM are also competitors for a $2 billion auto project in Shanghai, China. The auto industry, with declining sales, is not timely and investment in these stocks is not recommended.

The Clinton administration has announced tariffs on Japanese luxury cars which will take effect June 28, 1995 unless a last-minute agreement is reached. A trade war has been avoided in past years, but several factors, including the instability of the yen, make it less likely that Japan will submit to US demands. German automakers, such as BMW and Mercedes, would be the most likely beneficiaries of the tariffs, not US manufacturers. Automobile stocks should be avoided, due to a possible trade war and other risks.

Generally weak sales in the first two months of 1995 have caused the Big Three US automakers to cut back production schedules. Ford Motor Co and Chrysler Corp are both offering significant buyer incentives to minivan buyers in what might develop into a price war. US automakers are likely to take significant damage due to Mexico's economic hardships.

Chrysler Corp.'s Chairman Robert J. Eaton has been defending his decision to set aside $7.5 billion in preparation for the next recession. His challenger, billionaire Kirk Kerkorian, controls 13.6% of Chrysler's stock and feels that Eaton is being too conservative in his stockpiling of funds. Chrysler's sales are predicted to be steady until 1998 or 1999., Chrysler Corp. Chairman Robert J. Eaton says he'll be driving the first Jeep Wrangler that goes on sale February, but it's doubtful he'll have a lot of time to enjoy [...]

Nonautomakers report gain of 25% in 1Q; Big 3 up 4% Seven years into an economic recovery, your average economist would expect the profit party to be ending for Detroit [...]

The profits of General Motors, Ford Motor Corp and Chrysler Corp will be affected because of bigger incentive allocations to boost sales. This was prompted by an increasing competition from Japanese imports. A survey shows that light vehicle sales in 1998 will have a roughly 2% increase from an expected 1997 total of about 15.1 million. Analysts believe that unless cost-cutting in other areas can keep pace, higher incentives will mean lower profits.

Chrysler Corp. has achieved its goal of $1.2 billion in cost savings 60 days before schedule. Of the amount, $325 million will be realized in direct savings while the remainder will be accumulated during the next few years as the firm brings new models to market. Chrysler's Supplier COst Reduction Effort or SCORE program was responsible for the savings and enabled the firm to save $1 billion in 1996.

Leading automobile manufacturers report lower earnings during the 3rd qtr 1995. Chrysler Corp's earnings fell 45.6% from same period 1994. Ford Motor Co's earnings decreased from $1.12 billion to $375 million. General Motors 3rd qtr earnings actually increased from $553 million in 1994 to $642 million in 1995. The automobile manufacturers all report that new products and lower volume account for the lower earnings., Even with their combined earnings down more than $1 billion in the third quarter of 1995, two of the Big Three domestic automakers appear to be on the right track [...]

Chrysler Corp, Ford Motor Co and General Motors Corp (GM) reported significant earnings increases for 1994. However, due to interest rate increases by the Federal Reserve, a number of analysts are forecasting sales to drop slightly in 1995. Together, Chrysler, Ford and GM reported profits of $13.7 billion on revenues of $335.6 billion. Earnings and profits for each automobile manufacturer are discussed., Sure the Fed raised interest rates for the seventh time in 12 months to cool what Chairman Allen Greenspan thinks is an over-heated economy heading toward inflation. Still, nothing can [...]