Yesterday, automakers reported strong U.S. sales–but that doesn’t mean life is going to get any easier for U.S. manufacturers like General motors (GM) and Ford Motor (F).
Nick King for the Wall Street Journal One of the bigger issues: The falling yen, which Morgan Stanley’s Adam Jonas and team don’t think its getting its due from investors.
We expect the US auto industry will continue to find new ways to attract incremental consumers into the market, pushing SAAR to higher and higher levels while sacrificing pricing, quality and sustainability of volume. With the Japanese Yen now at 114, the stakes are even higher…as it has effectively placed an extra $3k of profit per unit into Japanese hands versus levels from just 2-3 years ago. We expect this will help Japanese manufacturers bring to market attractively designed and engineered vehicles at great prices, helping to expand their 40% share of the of the US market, pressuring rivals. We don’t believe the Yen is getting anywhere near enough investor attention despite it likely being the #1 macroeconomic factor keeping US auto industry executives up at night.
Shares of Ford Motor have dropped 1% to $30.85 at 10:51 a.m., while General Motors has fallen 0.6% to $13.90.
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