Toyota Motor Corporation (ADR) (TM), Honda Motor Co Ltd (ADR) (HMC): Three Auto Makers That Could Roll Towards Additional Gains

Nissan, has focused on sales of its autos, light trucks, and related parts primarily in the U.S. and the U.K., as well as in Mexico. The company also produces industrial motor vehicles including forklifts and towing tractors. In addition to sales of vehicles and parts, Nissan also generates revenue through its financing services.

While Nissan shareholders do not receive regular dividend payouts, they have been well rewarded, as the share price is currently up more than 25% from its 52-week low. Some of this rise could be due to the recent multi-year high of the Nikkei, but as April car sales figure show an increase of more than 23.2% from the year-ago period, the share price could continue to rise even further over the next 12 months.

The bottom line

While the outlook appears good for all three automakers, one thing for investors to keep an eye on going forward is the increased quality of some of the U.S. made vehicles — especially in the mid-size market. Years ago, both the Toyota Motor Corporation (ADR) (NYSE:TM) Camry and the Honda Motor Co Ltd (ADR) (NYSE:HMC) Accord outsold their competition by quite a wide margin. Yet now, especially as the quality gap has narrowed between the Detroit Big Three and the Japanese automakers, it could be anyone’s game. In fact, in April 2013, Honda and Toyota Motor Corporation (ADR) (NYSE:TM)’s share of the U.S. mid-size sedan market dropped from 37% (reached in 2008) down to 28%.

While 28% is still a fair share, these companies may find themselves scrambling to create other ways of differentiation from the U.S.-made vehicles in order to catch consumers’ eyes — and wallets. Nissan has also not been immune to the competitive nature, as it has recently cut the price of its Altima by nearly $600, or 2.7%.

While it may only represent one area of the market, automakers must win over the buyers of mid-sized vehicles as this particular segment represents one-quarter of the entire light vehicle market. And, if translating that into a dollar figure, at an average price $25,000 per vehicle, that could mean $90 billion in business.

The article 3 Auto Makers That Could Roll Towards Additional Gains originally appeared on Fool.com and is written by Nauman Aly.

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