Toyota Motor Corporation (ADR) (TM), General Motors Company (GM): This Auto Giant Is Strong as an Ox

Toyota Motor Corporation (ADR) (NYSE:TM) is out to make China its third one million unit market. However, since the second half of 2012 it was suffering from a fall in demand due to political tension between China and Japan. Although y-o-y sales had increased in January it had to do more with seasonality than any real increase in demand.

Now, there are some signs of improvement in the situation and Toyota Motor Corporation (ADR) (NYSE:TM) has reported a 0.4% increase in May sales to 79,000 units. During the first five months, sales are still down by 8.6%.

Providing diesel power to North America

Of late, Volkswagen has been faltering in the US markets with May numbers indicating a 1.7% decline. This could be worrisome given that North America accounts for around 10% of total deliveries. But Volkswagen has an ace up its sleeve which could change its fortunes in this market.

It is the top provider of diesel cars in the US, accounting for 72% of domestic diesel car sales. Diesel engines have been traditionally snubbed in North America due to their dirty emissions. But newer technology is fast changing this. The modern engines burn much cleaner while still delivering diesel’s considerably improved fuel economy.

If gasoline prices remain high in the long term, Volkswagen’s head start with this technology will be advantageous as consumers will definitely try to cut their fuel costs.

The US auto market was up 8.2% in May; General Motors Company (NYSE:GM) grew its sales by 3% and Toyota by 2.5%.

Last word

Volkswagen has a heart of steel. It is combating odds and setting challenging goals for itself. Irrespective of whether it can realize its dreams, growth is a given for Volkswagen, which makes it an excellent investment opportunity.

Eshna De has no position in any stocks mentioned. The Motley Fool recommends General Motors.

The article This Auto Giant Is Strong as an Ox originally appeared on Fool.com and is written by Eshna De.

Eshna is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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