Ford Motor Company (F), General Motors Company (GM), Toyota Motor Corporation (ADR) (TM): The Automotive Industry Is Coming Back

Toyota is still in the driver’s seat

Japan-based Toyota Motor Corporation (ADR) (NYSE:TM) is still the world-wide leader.

The company’s earnings of $10.22 billion increased more than three times, throwing an EPS of $3.23 per share. Toyota Motor Corporation (ADR) (NYSE:TM) is benefiting from cost-reduction initiatives and its strength in the environmental-friendly market.

The company is No. 1 in terms of sales, with 9.75 million vehicles sold worldwide in 2012. As part of its global expansion, Toyota Motor Corporation (ADR) (NYSE:TM) plans to offer eight new compact vehicle models in the emerging markets by 2015 and drive 50% of global sales from these markets. Brazil, China and India are key.

However, continued safety recalls are damaging the brand image and increasing costs, which added more than $1.1 billion between settlements and government fines. The company is experiencing problems in the Chinese and European markets as well. Japan’s conflict with China over islands in the East China Sea is affecting sales in the country, one of the company’s largest markets. In addition, the 10% production Japanese output decrease Toyota Motor Corporation (ADR) (NYSE:TM) will have to face as a product of Fukushima-related power shortages will offset profits coming from a weaker yen.

Bottom line

Ford’s increase in U.S. market share and ambitious plans in Asia are encouraging, but the high costs that the company is assuming could bring problems if future models do not sell well. I would buy Ford Motor Company (NYSE:F) only for short-term purposes and sell if operations and profitability do not improve.

Despite some improvements in other regions, General Motors Company (NYSE:GM)’ performance in Europe is a drag and I do not foresee an important correction coming anytime soon. I would sell the stock.

Toyota Motor Corporation (ADR) (NYSE:TM)’s position in the high-perspective hybrid markets and its expansion in the developing markets make it an interesting option for the long term. I would buy for the short term and keep an eye on its performance primarily in Asia.

The article The Automotive Industry Is Coming Back originally appeared on Fool.com and is written by Vanina Egea.

Vanina Egea has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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