On Tuesday, RBC Capital Markets provided an analysis of the US automotive industry, highlighting a positive outlook based on December 2024 data. The firm noted an increase in the US Light Vehicle Seasonally Adjusted Annual Rate (LV SAAR) to 17.2 million units, up from 17.1 million the previous month. This represents an 8.9% year-over-year growth on a Seasonally Adjusted Daily Average (SDA) basis, compared to a 5.9% increase in November.
According to InvestingPro data, this positive industry trend comes at a crucial time for major automakers like Ford, which currently commands a market capitalization of $39.42 billion.
December also saw a decrease in industry inventory levels to 46 days, down from 58 days in November and 60 days in October. Moreover, industry Average Transaction (JO:TCPJ) Prices (ATPs) remained strong at $49,591, marking a 1.9% year-over-year increase and a 28% rise since December 2019.
RBC Capital's analysis of Ford highlighted a mixed situation. While dealer inventory levels have risen month-over-month and are above pre-pandemic levels, ATPs have maintained a 29% increase since the end of 2019. Ford management attributed the higher inventory to product buildup ahead of new launches in the first quarter of 2025, including the Navigator and Expedition.
Key models like the Ford F150, Explorer, Super Duty F-250, and Bronco account for nearly half of Ford's US dealer revenues. InvestingPro analysis reveals Ford's current P/E ratio of 11.2 and an attractive dividend yield of 7.86%, with the company maintaining dividend payments for 13 consecutive years.
Trading near its 52-week low at $9.92, Ford's stock currently appears fairly valued according to InvestingPro's Fair Value model. For deeper insights into Ford's valuation and 8 additional ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.
General Motors (NYSE:GM) presented a healthier picture, with dealer inventory levels for November aligning with pre-pandemic figures and ATPs remaining stable despite a 31% increase since year-end 2019. GM's management is confident in reaching its 50-60 day inventory target. Key models such as the Chevy Silverado, GMC Sierra 1500, and Chevrolet Equinox contribute to nearly 45% of GM's US dealer revenues.
In contrast, RBC Capital expressed concerns for Stellantis (NYSE:STLA), noting that dealer inventory levels for November were slightly above pre-pandemic levels and ATPs have been declining, despite being 41% higher in December 2024 compared to year-end 2019. Models like the Jeep Grand Cherokee, Ram 1500, and Jeep Wrangler are significant contributors to Stellantis's US dealer revenues.
RBC Capital concluded that while there are signs of a healthy consumer market and pent-up demand post-pandemic, the sustainability of the industry's strength will depend on January data. The firm emphasized the importance of the upcoming data to gauge the continued momentum in the automotive sector.
With Ford's next earnings report due on January 30, InvestingPro subscribers can access real-time updates and in-depth analysis of the company's performance metrics, including revenue growth trends and financial health scores, to make more informed investment decisions.
In other recent news, Ford Motor Company (NYSE:F) reported a 4.2% increase in U.S. sales for 2024, driven by heightened demand for gasoline and hybrid vehicles. The automaker's total annual sales reached 2,078,832 units, a significant rise from the previous year. CFRA analyst Garrett Nelson revised Ford's 12-month price target to $10.00, maintaining a Hold rating on the shares. Nelson also updated the earnings per share estimate for 2024 to $1.83.
In the face of these developments, Ford is set to appoint a new head of quality to improve its record on recalls and decrease warranty costs. Bernstein showed positivity towards Ford, noting strong performance despite challenges faced by competitor Stellantis.
However, Jefferies downgraded Ford's stock due to concerns over inventory and strategic decisions that could impact financial stability. These are the recent developments for Ford Motor Company.
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