The fears of an imminent bankruptcy for both General Motors (GM) and Chrysler are already having effects on their sales numbers. In March, Chrysler experienced a 39% decline in sales, GM experienced a 45% decline in sales and Ford Motors (F) experienced a 41% decline in sales. Overall, the number of units sold currently stands at 9.86 million units on an annualized basis. This pales in comparison to the yearly average of 16.8 million units sold in the last decade.
Ford Motors (F) stands to gain substantially from a demise of Chrysler and GM. Ford has already benefited from GM’s woes, it gained about 20% of the market share lost by GM in 2008. Ford Motors is the only viable car manufacturer in the United States. Considering all of Ford’s challenges, Ford believes that it will return to profitability by 2012 and that they will not need bailout funding from the federal government.
|Sign up now for PowerOptions 14-day free trial|
If Chrysler and GM were to go bankrupt, Fords biggest challenge would be their dependence on a lot of the same automobile parts suppliers that GM and Chrysler use. United States automobile manufactures get about 85% of their parts from domestic parts suppliers. As a result, a bankruptcy of GM and Chrysler will put tremendous pressure on the car parts suppliers; if this happens, Ford will be challenged with making cars when the supplier base has disappeared. Clearly, this is not a viable thesis for Ford.
|See what the stock option experts are doing
Sign up now for PowerOptionsApplied 30-day risk free trial
The current economic downturn has taken a toll on all car manufacturers. The Asian manufacturers have experienced steep declines in sales; in some cases they have experience more than a 30% decline in sales. Additionally, the Asian car manufacturers have struggled with their exports to the United States, as a result of their currencies appreciating against the United States dollar, which made their goods more expensive in the United States. However, a combination of the recent depreciation in their currencies against the United States dollar and the looming bankruptcies of both Chrysler and GM bode well for these companies.
| Free stock option newsletter
» return goal > 2% / month
» works in any market
The Asian car manufacturers, Honda (HMC), Toyota (TM) and Hyundai (HYMLF.PK) stand to gain the most market share in the United States if Chrysler and GM go bankrupt. These companies have continued to penetrate the United States market and are gaining a very strong foothold. These companies have been concentrating their efforts on building manufacturing facilities in the Southern States, where labor is cheaper and regulations and taxes are more favorable. Their efforts are paying off, as many of the southern state governments compete for their business by creating incentives for these car manufactures to build their plants in their states. Other car companies – Mercedes Benz, BMW, Nissan, Volkswagen and Kia also stand to gain if GM and Chrysler fail. As at the end of 2008 the market share of the top three foreign manufactures in the United States was, Toyota 18%, Honda 12% and Hyundai 6%, these are the companies that stand to benefit the most if Chrysler and GM fail.
| Want to protect your portfolio/401K from market downside?
yet still benefit from market upside
Sign up now for the free Sketch
The United States market continues to be a highly sought after market. Foreign car manufacturers Kia and Toyota will be opening plants. Kia’s plant will be in Georgia and Toyota’s plant will be in Mississippi. Other car manufacturers such as Volkswagen have plans that are scheduled further out. Volkswagen plans on opening a car manufacturing plant in Tennessee in 2011. Demand for cars in the United States is expected to revert to the ten-year annual average of $17 million units by 2010. As the automobile industry continues be transformed by economic factors, outdated business models in the United States are being replace by more efficient and cost effective models.
| Learn how to profit from winner stocks
and protect yourself from loser stocks
Download free Trade Simulator now
Investing in the automotive industry could be very lucrative and also very risky. A prudent investor might consider stock options as a method for portfolio insurance. A married puts stock options strategy can provide safety for an investment and also provide upside potential. A married puts strategy can provide an investor a method for capital preservation. Investors searching for a trading system with reduced risk combined with income generation might consider a married put strategy combined with a covered call investing strategy. A married puts strategy consists of purchasing a stock investing position with a put option for protection. A covered call investing strategy consists of selling a call option for generating monthly income.
| Learn to trade like the pros
Signup for free Webinars now
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions’ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
PowerOptions’ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] bankruptcy, Chrysler, automobile parts suppliers, currencies appreciating, dollar, Asian, car manufacturers, Mercedes Benz, BMW, Nissan, Volkswagen, Kia, F, Ford Motor Co., GM, General Motors Corp., HMC, Honda Motor Co. Ltd. ADR, TM, Toyota Motor Corp. [/tags]