Investing in Automobiles

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Since the early 1900s, automobile companies have remained a staple within American society. At same time, investors have been attempting to properly analyze the industry, stocks, and individual companies beyond the traditional P/E ratio. Here are some items that might have an adverse or positive impact on the stock prices and earnings of domestic carmakers.

Employed and Unemployed

It is necessary to show a source of income, when trying to qualify for vehicle financing. This means that the unemployment rate and jobs can influence car sales for automakers. The number of jobs available and a consumer’s confidence that they will maintain their job are huge factors in auto sales.

Loan Rates

Most consumers will finance their vehicle that they purchase. As the loan rates continue to increase, consumers may stop focusing on purchasing a new vehicle and invest more time and money in maintaining their current vehicle.

Tax Breaks

When it comes to saving money, most Americans seem to struggle. This means that a tax refund or a windfall of some sort will quickly be spent by consumers. A great example is when the government delivered stimulus checks. Within a six-month period of time, most consumers had quickly spent their money.

A New Line of Vehicles

When a company suffers from not having a new, exciting line of vehicles, their sales may suffer as well and ultimately affect the stock. From 2001 to 2008, Ford’s stock was in turmoil. The key reason led to their lackluster line of new vehicles. During this same period, Honda, Toyota, and Hyundai continued to grow, thanks to their eye-catching new line of vehicles.

Environmental-Friendly Vehicles

As automakers continue to change and focus on ways to improve their vehicles and help the environment, consumers want to follow suit and upgrade their vehicles to better fuel-efficient and hybrid vehicle.

 

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