Camelot Portfolios Talking Points

U.S. Auto Industry at a Glance

On my drive to work in the morning, I pass by two car dealerships. Most of the time I glance quickly at the cars in a parking lot similar to the one you find at a Costco. The lot seems to be full of new cars all the time, so I presume these dealers are only for show. Apparently, initial looks can be deceiving.

The past couple of years, the U.S. auto industry was on top with record sales and plant production expanding. This tends has seemed to stall for some vehicle types, but light trucks continue to expand. June sales for cars have decreased 11.4 year to date while the light truck industry grew 4.6 percent (Wall Street Journal). General Motors was the leading domestic manufacturer year to date selling 1.41 million vehicles (Wall Street Journal). Ford Motor Company leads the top spot in the vehicle category with their F150 line of pickups. Ford has increased the F150 sales year over year by 8.8 percent (Wall Street Journal).

International Motor companies are taking market share away from the big three in other vehicle categories. Import cars account for 76.4 percent of the car category. Challenges are prevalent with a shrinking market in this space, due to a 7.7 percent decrease in sales year over year (Wall Street Journal).

Average gas prices nationwide continue to stay quite steady. The current national average for a gallon of gas is $2.258 per gallon (AAA). From a historical perspective, US citizens are below the inflation adjusted average when they pay at the pump. The state with the lowest average for a gallon of gas is South Carolina at $1.962 per gallon (AAA).

Source: energy.gov

Source: energy.gov

Although sales of automobiles have picked up in the past couple of years, the average age of vehicles continues to increase. As of 2016, the average age is 11.6 years.

Source: Bureau of Transportation Statistics

Source: Bureau of Transportation Statistics

There are other macroeconomic factors that play into the sales, age, and total usage in the auto industry. Sales for automobile are forecasted to flatten out compared to the growth in 2015-2016 (Wall Street Journal).  While headwinds from increased regulation on safety and fuel consumption, the car will continue to be a major part of operations for the US workforce.

 

Compiled by the Camelot Portfolios Investment Committee

Darren Munn, CFA, Chief Investment Officer

Eric Kartman, Research

Drew Steinman, CPA, Trader/Research

Zach Hartenburg, Analyst

Frank Echelmeyer, MBA, CKA®, Advisor Consultant

-for Broker/Dealer and RIA use only-

References

AAA. Gas Prices. July 2017. July 2017.

Wall Street Journal. Auto Sales. 5 July 2017. July 2017.

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