This article looks at the 10 best car stocks to invest in now and discusses the ongoing trends in the automotive industry, which is at the cusp of a revolution.
The automotive industry has witnessed a constant churn of innovation over the last several decades, with car makers continuously providing drivers with new features. However, there has been a different pace of change lately, with the rapid adoption of electric vehicles (EVs) being the most talked-of topic in the industry.
READ ALSO: 10 Best Used Car Stocks To Buy According to Hedge Funds and 10 Best Self Driving Car Stocks To Buy Now.
A lot of the conversations in the automotive space currently revolve around robotaxis, the autonomous taxis for ride-hailing, especially after Elon Musk unveiled the Cybercab in October this year. His company is showcasing the self-driving two-seater at several key locations across the United States in December, with plans to deploy the autonomous services in California and Texas in 2025.
According to a report in Euro News, global EV sales surged in November, with a record-breaking 1.8 million units sold worldwide, overtaking the record set in the prior month by 100,000 units. China accounted for two-thirds of the sales during the month. Around 15.2 million EVs were sold between January and November, growing 25% year-to-date.
The report stated a 3% decline in EV sales in the region comprising the United Kingdom (UK), the European Free Trade Association (EFTA) and the European Union (EU). With 280,000 units sold in November, annual sales for the region reached 2.7 million units. However, the UK is having an improvement in the second half of the year; sales have grown 17% from last year, driven by the Zero Emission Vehicle (ZEV) Mandate.
China is not only leading the EV market but is also on track to take over the global auto industry because of its massive and growing capacity. Earlier this month, the Council on Foreign Relations (CFR) highlighted that the country’s EV capacity will soon match its domestic auto demand, whereas China’s car production capacity is already half of the global demand for automobiles.
It is projected to have a total output of 20 million electric vehicles in 2024, with production increasing between 4-5 million units annually, helped by heavy investments from Chinese firms to expand production. According to the New York Times, China also has the capacity to produce over 40 million internal combustion engine cars a year.
India’s auto market is also seeing impressive growth, contributing significantly to the global market. Annual production of automobiles in the country stood at 25.9 million units in fiscal 2023. The thriving vehicle market has also resulted in a booming auto components industry, which has grown 11.3% during the first half of FY25, driven by strong demand for larger and more powerful cars.
With that said, let’s head over to the list of the 10 best car stocks to invest in now.
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Methodology
We sifted through screeners to identify stocks in the auto manufacturers, auto parts, and auto dealerships industries. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best car stocks to invest in now have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Car Stocks To Invest In Now
10. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 36
Ford Motor Company (NYSE:F) is an American automobile manufacturer, founded in 1903, that sells commercial vehicles and luxury cars. The company has had erratic returns over the last few years, especially since 2021, due to heavy losses in its EV business unit, inflated warranty costs, and labor strikes.
As of the close of day on December 26, its share price had dropped by nearly 18% year-to-date, with a sharp dip since the Q3 2024 earnings call on October 28, in which Ford announced that it anticipates full-year EBIT to fall in the lower end of its guidance. When the fiscal year started, the automaker expected EBIT to be between $10 billion and $12 billion. The projection is now around $10 billion, as the company grapples with price wars and supply chain challenges.
Revenue for the quarter stood at $46 billion, up 5% from last year, driven by strong truck sales and the launch of Ford Explorer and Lincoln Aviator. Adjusted EBIT was $2.6 billion, with a margin of 5.5%, up 50 basis points year-over-year. The improvement was attributed to higher volume, a favorable mix, and lower costs during the quarter. EPS was logged at 49 cents per share, beating expectations of 47 cents.
While headwinds are likely to continue for Ford Motor Company (NYSE:F) heading into 2025, the company is determined to offset industry-wide pressures. It has reduced costs by $1 billion in the EV business this year. Moreover, Ford’s commercial and gas-engine divisions also delivered strong results in Q3 amid steep EV losses.
In a recent interview, CEO Jim Farley stated that Ford was ‘getting close’ to Level 3 autonomous driving, which allows drivers to take their hands off the wheel and eyes off the road.
Wall Street analysts have a consensus Hold rating for the stock, with an average share price upside potential of 16%. According to Insider Monkey’s database for Q3 2024, 36 hedge funds held investments in the company, making it one of the best car stocks to invest in now.
9. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 36
Ferrari N.V. (NYSE:RACE) is an Italian designer, manufacturer, and retailer of luxury sports cars. It also produces limited series and one-off cars. The company is active in around 60 countries and territories through its network of authorized dealers.
Following his election victory, President-elect Donald Trump has vowed to impose steep tariffs on imports from Canada, China, and Mexico, which could increase costs for automakers, due to their reliance on auto parts from these countries. While Europe has largely been absent from Trump’s protectionist policies, there are concerns the region might be next to face similar scrutiny.
However, Ferrari N.V. (NYSE:RACE) remains unfazed by the chatter. When asked at the Reuters NEXT conference in New York on December 10 whether the company would consider manufacturing cars in the United States, CEO Benedetto Vigna stated that Ferrari will always make its cars in Maranello, northern Italy, and that will not change even if tariffs are introduced.
Morningstar analyst Rella Suskin believes that, unlike its competitors in the industry, Ferrari’s high-end clientele and exclusive market allow the company to absorb high tariffs by adjusting prices without considerably impacting demand. Its order book is already strong, and the sports car maker is planning to launch its first fully electric vehicle by Q4 2025.
Ferrari’s financial performance remained robust. During its recent Q3 2024 earnings call on November 5, the company reported a 7% year-over-year increase in revenues to EUR 1.6 billion ($1.68 billion), with a net profit of EUR 375 million ($394 million). The company is seeing order book visibility well into 2026, driven by impressive order intake for the 12Cilindri coupe Spider, and the unveiling of the F80 Supercar.
Wall Street analysts have a consensus Buy rating for Ferrari with an average share price upside potential of 16%. Hedge fund sentiment around the stock has also improved. According to Insider Monkey’s database for Q3 2024, 36 hedge funds held a stake in Ferrari, up from 30 at the end of Q2. It is one of the best car stocks to invest in now.
8. Autoliv, Inc. (NYSE:ALV)
Number of Hedge Fund Holders: 38
Autoliv, Inc. (NYSE:ALV) is an automotive safety supplier for leading car manufacturers worldwide. It has a wide range of product offerings, including airbag protection systems, seatbelts, steering wheels, battery cutoff switches, and inflator technologies. The company has over 60 facilities across 25 countries. Its products save 35,000 lives and reduce around 450,000 injuries every year.
In December this year, the automotive safety systems specialist formed a strategic partnership with Chinese car manufacturer Jiangling Motors Co., Ltd (JMC). Autoliv has supplied seatbelts to JMC for nearly three decades. Under this new arrangement, both companies aim to leverage each other’s strengths to enhance their global presence by bringing new technologies to the market that redefine safety and comfort.
Autoliv, Inc. (NYSE:ALV) is also increasing its footprint in the flying cars segment. The company’s China division in June signed a strategic cooperation agreement with XPENG AEROHT to develop safety solutions for future mobility. XPENG AEROHT is among Asia’s leading flying vehicle innovators.
Despite challenges in the global automotive industry, Autoliv, Inc. (NYSE:ALV)’s financial performance remains resilient. In its recent Q3 2024 earnings call on October 18, the company reported consolidated net sales of $2.6 billion, down 2% from last year due to lower light vehicle production and negative currency translation effects. EPS was posted at $1.84 per share, falling shy of expectations of $2.
Autoliv, Inc. (NYSE:ALV) outperformed the global light vehicle production by 4%. It also posted an 18% year-over-year increase in sales with domestic OEMs in China. During the quarter, the company paid a dividend of 68 cents per share and repurchased and retired 1.33 million shares for around $130 million, reflecting its commitment to a high level of shareholder returns.
Wall Street analysts have a consensus Buy rating for Autoliv, with an average share price upside potential of 31%. According to Insider Monkey’s database for Q3 2024, 38 hedge funds held a stake in the company, making it one of the best car stocks to invest in now.
7. Group 1 Automotive, Inc. (NYSE:GPI)
Number of Hedge Fund Holders: 40
Group 1 Automotive, Inc. (NYSE:GPI) is an international automotive retailer that sells new and used vehicles and spare parts. It also provides repair and maintenance services. According to CNBC, the company operates around 260 dealerships, 338 franchises, and 44 collision centers in the US and UK.
Group 1 Automotive, Inc. (NYSE:GPI) in July announced the expansion of its operations in the UK with the acquisition of four Mercedes-Benz dealerships in Hertfordshire County, north of London. These locations are expected to sell over 2,800 units annually and generate $105 million in revenue.
Earlier in the year in February, Group 1 Automotive, Inc. (NYSE:GPI) expanded its US portfolio in the greater Baltimore/Washington DC area. The acquisitions included new vehicle dealerships for Toyota, Honda, Hyundai, and Kia, a Toyota Certified pre-owned center, and three collision centers. These dealerships are projected to earn over $500 million in annual revenue.
During its recent Q3 2024 earnings call on October 30, the company reported strong results for the quarter. Total revenue reached an all-time quarterly record of $5.2 billion and quarterly records across all business lines. New vehicle sales generated $2.6 billion in revenue, while used vehicle sales were logged at $1.7 billion. Parts and service revenues stood at $660 million, and F&I at $214 million.
The recent integration of 54 dealerships in the UK from Inchcape added $2.7 billion in revenue. Adjusted net income for the quarter was $133.5 million, translating to an EPS of $9.9, beating expectations of $9.87 per share.
Wall Street analysts are bullish on the stock, with a consensus Strong Buy rating. Hedge fund sentiment around Group 1 Automotive, Inc. (NYSE:GPI) continues to improve as well. According to Insider Monkey’s database for Q3 2024, 40 hedge funds had investments in the company, up from 37 at the end of Q2. It is one of the best car stocks to invest in now.
6. Lithia Motors, Inc. (NYSE:LAD)
Number of Hedge Fund Holders: 43
Lithia Motors, Inc. (NYSE:LAD) is an American automotive dealership that provides a range of products and services throughout the life of a vehicle. It operates through two segments: Vehicle Operations and Financing Operations. The company has a presence in 473 locations, representing 52 brands across the US, UK, and Canada.
On October 23, LAD announced financial results for the third quarter of fiscal 2023. Revenue for the quarter was posted at $9.2 billion, up 11% year-over-year. This was the highest third-quarter revenue in the company’s history. Diluted earnings per share were logged at $8.21.
Lithia Motors, Inc. (NYSE:LAD) also achieved $200 million in annualized cost savings, driven primarily by personnel-related reductions. The company stated that it sees further opportunities ahead to improve its cost structure and will be looking to eliminate an additional $100 million in costs in 2025.
In 2024, LAD welcomed several new acquisitions that have contributed nearly $6 billion in year-to-date revenue. During the quarter, the company acquired three stores from Duval Motor Company in Jacksonville and Gainesville, marking its expansion into new Florida markets. Collectively, these acquisitions are expected to generate $200 million in annualized revenue for Lithia Motors, Inc. (NYSE:LAD).
Investor sentiment around the stock continues to improve. According to Insider Monkey’s database for Q3 2024, 43 hedge funds held investments in the company, up from 35 at the end of the second quarter. Appalaches Capital stated the following regarding Lithia Motors, Inc. (NYSE:LAD) in its Q3 2024 investor letter:
Lithia Motors, Inc. reported earnings, which were expectedly weaker year-over-year, but results were still better than feared. The shares have run up quite a bit since our initial purchase, but we still own them at a price at which I believe is a significant discount to their intrinsic value.
Wall Street analysts are also bullish on LAD, with a consensus Buy rating. It is one of the best car stocks to invest in now.
5. CarMax, Inc. (NYSE:KMX)
Number of Hedge Fund Holders: 44
CarMax, Inc. (NYSE:KMX) is a used car retailer in the United States. It operates through two segments. The first is CarMax Sales Operations, which deals with auto merchandising and service operations, like selling and purchasing used vehicles and related products and services. The second segment is CarMax Auto Finance, which focuses on financing customers buying cars from the company.
On December 19, the company announced financial results for the third quarter of fiscal 2025. KMX achieved over 50% in earnings growth, fueled by gains across the business. Retail used unit sales increased 5.4% from last year during the quarter, while comparable store used unit sales were up by 4.3%. Wholesale unit sales also grew by 6.3%.
Total revenue was posted at $6.2 billion, 1.2% higher than the prior year’s third quarter. Gross profit for the quarter was $677.6 billion, increasing 10.6%, due to strong unit margin performance and unit volumes. Net earnings per diluted share were logged at 81 cents, up 56% versus a year ago.
CarMax, Inc. (NYSE:KMX)’s robust financial performance has been luring hedge funds into investing in the company. According to Insider Monkey’s database for Q3 2024, 44 hedge funds held a stake in KMX, up from 35 at the end of the second quarter. This includes Holocene Advisors LP, which lifted its stake in CarMax, Inc. by 740% during the third quarter, acquiring an additional 834,232 shares.
Wall Street analysts are also bullish on the stock, with a consensus Buy rating. It is among the best car stocks to invest in now.
4. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 52
Aptiv PLC (NYSE:APTV) is a technology and mobility architecture company that manufactures vehicle components and provides electrical, electronic, and safety technology solutions to the automobile market.
The company’s share price has lost over 34% of its value this year, primarily due to the downward trajectory in the broader automotive industry, including factors like a dip in electrification momentum, growing labor and raw materials costs, and geopolitical tensions. Despite challenges, APTV has managed to maintain robust margins, which is a testament to its operational efficiencies.
On October 31, Aptiv PLC (NYSE:APTV) announced financial results for the third quarter of 2024. Revenue stood at $4.9 billion, down 6% from last year, driven by lower volume production at select customers in Europe and China. Adjusted EBITDA for the quarter was $778 million while operating income was posted at $593 million.
Improved operational performance across business segments, combined with efficient management of expenses in the current fiscal year and effective cost reduction measures taken at the end of 2023 have helped the company increase its operating margin by 120 basis points year-over-year. Moreover, its Q3 2024 EPS of $1.83 per share was the highest ever, growing 41% year-over-year.
APTV is confident about ending the year on a high by delivering strong earnings growth and margin expansion. The trend is projected to continue in 2025, with the company stating that it expects to pay dividends in the year and beyond. Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of 43%.
Hedge fund sentiment around the stock has considerably improved as well. According to Insider Monkey’s database for Q3 2024, 52 hedge funds had investments in Aptiv PLC (NYSE:APTV), up from 38 at the end of the second quarter. It is one of the best car stocks to invest in now.
3. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 64
General Motors Company (NYSE:GM) is an American automotive company that sells trucks, cars, and auto parts and provides software-enabled services and subscriptions. It is best known for manufacturing and marketing vehicles under the Chevrolet, Cadillac, Buick, and GMC brands.
The company recently announced that it will fold its Cruise subsidiary, which was working on developing self-driving taxis, to shift focus to building fully autonomous vehicles for personal use. This has ended a years-long project that General Motors had spent billions of dollars on, leaving the field open for competitors such as Tesla and Waymo. However, the decision is expected to save the company $1 billion per year.
Analysts believe shunning the project will allow General Motors Company (NYSE:GM) to restructure its research and technical teams. The knowledge and competencies achieved in the development of Cruise can be used to improve driver assistance technology for personal cars.
On October 22, General Motors Company (NYSE:GM) announced financial results for Q3 2024. Revenue for the quarter was reported at $49 billion, up 10% from last year, driven by volume growth in both internal combustion engine and electric vehicles. Adjusted EBIT stood at $4.1 billion. Adjusted earnings per share (EPS) were posted at $2.96, beating market expectations by 53 cents and up around 30% year-over-year.
Following the announcement of these results, GM’s share surged 8%, reaching its highest trading price since February 2022. Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of 12%. Investor sentiment also remains strong, with 64 hedge funds having investments in the company, as of Q3 2024, making it one of the best car stocks to invest in now.
2. Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Holders: 66
Carvana Co. (NYSE:CVNA) is one of the fastest-growing car retailers in the United States. Based in Tempe, Arizona, the company operates an online platform to buy and sell used cars. In 2021, it was included in the Fortune 500 list, making it one of the youngest companies to be named in the list – just eight years after it was founded.
The company experienced significant growth during the pandemic years, as the e-commerce industry boomed with restrictions on in-person shopping. However, CVNA’s fortunes suffered in 2022, burdened by high interest rates, rising costs of automobiles, and heavy debt. A year later, it turned things around again, with its share price increasing by over 1000%, driven by cost cuts and strategic debt restructuring.
The growth story is still ongoing. As of December 26, its share price had surged by over 300% year-to-date, as the company focuses on enhancing operational efficiencies and cash flow. Carvana Co. (NYSE:CVNA) is continuing to see strong demand for vehicles. During its recent Q3 2024 earnings call on October 30, the company reported a 34% increase in retail units sold from last year.
Revenue for the quarter was $3.655 billion, up 32% year-over-year. Net income stood at $148 million, whereas operating income was posted at $337 million. Adjusted EBITDA was $429 million, with a margin of 11.7% – a new company record. EPS was logged at $0.64, beating expectations of 25 cents per share.
Looking ahead, Carvana Co. (NYSE:CVNA) anticipates sequential growth in retail units sold in the fourth quarter of 2024 and adjusted EBITDA to be significantly above the high end of its previously communicated range of $1 billion to $1.2 billion for the full year. These forecasts have resulted in a bullish sentiment around the stock, with Wall Street analysts having a consensus Buy rating for CVNA.
Hedge fund sentiment is improving as well. According to Insider Monkey’s database for Q3 2024, 66 hedge funds held a stake in the company, up from 61 at the end of Q2. It is one of the best car stocks to invest in now.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an American automotive and clean energy company, headquartered in Austin, Texas. It is a pioneer in the EV industry and has significantly contributed to the global shift toward sustainable transportation through its electric cars.
As of the close of day on December 26, its market value has swelled by 87% since Trump’s election victory in early November, which has lifted Tesla back into the elite club of companies having a market cap of $1 trillion.
The company’s CEO, Elon Musk, spent a whopping $277 million on Trump’s election campaign and is set to lead the Department of Government Efficiency under the new administration, which will give him the ability to eliminate inconvenient regulations. Investors are also expecting Tesla, Inc. (NASDAQ:TSLA) Robotaxi and FSD technology to drive another phase of growth for the company.
Tesla’s financial performance also remains strong. During Q3 2024, it reported a revenue of $25.18 billion, up 8% from last year, driven by strong growth in vehicle deliveries. EPS was logged at $0.72, beating forecasts of 58 cents per share.
The company also experienced improved profit margins during the quarter, fueled by automotive regulatory credit revenue of $739 million. Automakers are mandated to obtain a certain amount of regulatory credits every year and often purchase them from companies like Tesla if they fail to meet the target themselves. Since it only manufactures electric vehicles, Tesla, Inc. (NASDAQ:TSLA) has excess credits.
Looking ahead, Musk expects vehicle growth between 20% and 30% next year, due to the advent of autonomy and the lower cost of vehicles. He is also confident about Cybercab reaching volume production in 2026, aiming for at least 2 million units a year.
Tesla is the best car stock to invest in now, with 99 hedge funds having investments in the company, according to Insider Monkey’s database for Q3 2024.
Overall, TSLA ranks first among the 10 Best Car Stocks To Invest In Now. While we acknowledge the potential of car companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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