America’s Automakers Vulnerable In Recession

America’s Automakers Vulnerable In Recession

$DIA, $SPY. $QQQ, $VXX, $F, $GM, $FCAU, $MS

General Motors Co. (NYSE:GM), and Ford Motor Co. (NYSE:F) declined the most in 6 months after a Morgan Stanley analyst said their profits are more at risk in a recession than the automakers have estimated.

The 2 companies would break even in a US auto market of about 13 or 14-M vehicles, he said in a note. GM and Ford countered saying they can avoid losses even if US sales fall to 11-M vehicles or lower.

The level at which profits might evaporate is a vital point for the 2 automakers, which have been telling investors they can weather even a steep downturn like the financial crisis of Y 2009, when US sales slid to 10.4-M.

Investors will have more faith in the US automakers if they can show that they are able to stay in the Black during a downturn.

Investors have started to question whether automakers will maintain last year’s record profit levels if Y 2015 industry sales of 17.5-M vehicles in the US was the high.

Through Tuesday, the share declines were 12% for Ford, 14% for GM and 31% for Fiat Chrysler Automobiles NV (NYSE:FCAU)

Wednesday, US major stock market indexes finished at: DJIA +53.21 at 16484.65, NAS Comp +39.02 at 4542.54, S&P 500+8.53 at 1929.72

Volume: Trade was heavy with over 1.1-B/shares exchanged on the NYSE

• Russell 2000: -10.1% YTD
• NAS Comp -9.3% YTD
• S&P 500 -5.6% YTD
• DJIA -5.4% YTD

Stay tuned…

Paul Ebeling

HeffX-LTN

The post America’s Automakers Vulnerable In Recession appeared first on Live Trading News.