The US automobile manufacturing industry has a market size of $83 billion. There are 144 businesses in the industry with over 67,000 employees. It’s no wonder investors are paying close attention to automobile stocks.
Automotive stock analysis has proven the industry’s strength whether in a bull market or bear market. Have you considered investing in either US or global auto-manufacturing stocks?
The following guide will explain 5 compelling reasons to start investing in automobile stocks. Read on and learn how this thriving industry can help boost your portfolio.
- Automobile Demand Is High
The consumer demand for cars is currently very strong. In fact, higher used and new car prices show that the demand outweighs the supply. Many analysts expect the built-up demand to support car sales well into the future.
Many industry experts predict vehicle production increase during 2022. Supply chain problems are starting to ease which will enhance production.
- Semiconductors Are Coming
New semiconductor capacity takes a while to come online, but it is coming very soon. The biggest producers of automotive chips are preparing to invest more money to increase production in 2022.
Investments by chip makers that increase the auto-chip supply will also increase vehicle production. Then, manufacturers will create more revenue. Use sites like monexsecurities.com.au to compare different manufacturers.
- Electric Vehicles
Electric vehicle stocks are a great way to invest in the ever-growing EV market. The clean transportation market is still new but there are already enough moving parts to generate a healthy industry.
Manufacturers like Tesla usually come to mind when thinking about EV stocks. But it’s important to consider battery manufacturers and different charging networks as investment opportunities, too.
- Rental Cars
Half of the American population is fully vaccinated and people are starting to vacation again. More travelers mean a higher demand for rental cars. The low supply of new vehicles also leads to rental car shortages and higher prices.
Avis is currently the only major rental car company available to trade on major exchanges. However, Hertz recently avoided bankruptcy and looks poised for a rebound. Both companies are worth a look in 2022 and beyond.
- Potential Growth
Investors can potentially see big gains fast with automotive stocks. For example, Ford and GM grew by more than 120 percent during 2021.
India’s Tata grew by close to 300 percent last year. Italy’s Ferrari and Germany’s BMW were also impressive, growing by 20 and 40 percent.
Tesla was in a growth league of its own compiling a 700% gain. Although, it’s important to remember that Tesla’s stock fluctuates frequently based on the actions of Elon Musk. Pullbacks often follow big gains so timing is important.
Ready to Invest in Automobile Stocks?
Now you know a few great reasons to invest in automobile stocks. Of course, there are no guarantees when investing but the future certainly looks bright for the automotive industry.
We hope you’ve found this article helpful and always remember to invest wisely. Check out the rest of our blog for more great finance tips and other fascinating articles.
