Morningstar

Will 2017 Be Joyful for Automakers?

Both GM and Ford reported a strong finish in 2016, and we remain optimistic about the demand environment this year.

Securities In This Article
Ford Motor Co
(F)
General Motors Co
(GM)

Automakers reported a strong finish for 2016. U.S. auto sales with December deliveries to final customers rose 3% year over year to nearly 1.69 million. The seasonally adjusted annualized selling rate came in at 18.38 million compared with 17.32 million in December 2015. Full-year 2016 sales grew 0.3% year over year to 17.54 million, the seventh straight year of growth. We remain optimistic about the demand environment for 2017 but due to already high leasing penetration levels and increasing levels of vehicles coming off-lease compared with prior years, we do not expect dramatically larger growth from current levels and it is possible auto sales peaked for this cycle in 2016. Still, we believe even a sales dip to the low 17 million unit or 16 million unit range is quite healthy for the industry. Furthermore, the fleet remains old at 11.6 years on average so reasons remain to visit a showroom.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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