Eight Ways To Profit From The Global Auto Sector Rebound

Automobile production and sales is increasing in many countries. Passenger auto sales in the U.S. has picked up in the past few months with over 6.0 million units through October this year representing a rise of 18.9% from 2011. In Europe though auto sales has been lower this year due to the recession and fiscal crisis in some countries. In emerging markets such as Brazil, China, India and others auto production and sales is rising although at a slower pace than before.

The Top Ten Countries in Automobile Production in 2011 are listed below:

RankCountryCarsCommercial vehiclesTotal% change
1China14,485,3263,933,55018,418,8760.80%
2Japan7,158,5251,240,1298,398,654-12.80%
3Germany5,871,918439,4006,311,3186.90%
4South Korea4,221,617435,4774,657,0949.00%
5India3,038,332888,1853,926,51710.40%
6USA2,966,1335,687,4278,653,56011.50%
7Brazil2,534,534871,6163,406,1500.70%
8France1,931,030363,8592,294,8892.90%
9Spain1,819,453534,2292,353,682-1.40%
10Russia1,738,163249,8731,988,03641.70%

 

Source: International Organization of Motor Vehicle Manufacturers

In 2011 a total of 59,946,698 autos were produced globally representing an increase of 3.1% over 2010. It is interesting to note that China was ranked number one while the U.S. came in at number six behind India. The U.S. production figure represents 4.9% of the total world production and China’s production accounted for 24.2% of the world production.

A few other interesting facts about the global auto industry include:

Cars (or automobiles) make up approximately 74% of the total motor vehicle annual production in the world.

In 2012, for the first time in history, over 60 million cars passenger cars will be produced in a single year (or 165,000 new cars produced every day).

1 out of 4 cars produced in the world comes from China.

Furthermore, vehicle penetration in China still stands at only about 40 vehicles per 1,000 people, compared with approximately 700 vehicles per 1,000 people in the mature markets of the G7.

In the United States alone, 250,272,812 “highway” registered vehicles were counted in 2010, of which 190,202,782 passenger cars.

It is estimated that over 1 billion passenger cars travel the streets and roads of the world today.

Source: WorldOMeters

How to profit from the growth of the auto industry worldwide?

During the California gold rush of the 1800s most of the miners did not become rich. Instead the people  that sold shovels and other tools to the gold miners were the ones that became wealthy. This type of investment strategy is a better way to invest in the auto industry.Instead of investing in the auto makers, it is prudent to invest in the companies that sell the tools and accessories to the auto makers and also to consumers.So instead of investing directly in a Ford(F) or General Motors Company (GM) one can invest in the makers of oxygen sensors, tires, windshields, etc. that are used in the assembly of cars.

Eight foreign automobile parts manufactures are listed below together with their current dividend yields:

1.Company: Autoliv Inc (ALV)
Current Dividend Yield: 3.53%
Country: Sweden

2.Company:Magna International Inc (MGA)
Current Dividend Yield: 2.45%
Country: Canada

3.Company: Bridgestone Corp (BRDCY)
Current Dividend Yield: 1.54%
Country: Japan

4.Company: Compagnie Generale des Etablissements Michelin SCA (MGDDY)
Current Dividend Yield: 3.16%
Country: France

5.Company: Continental AG (CTTAY)
Current Dividend Yield:
Sector: 2.05%
Country: Germany

6.Company: Denso Corp (DNZOY)
Current Dividend Yield: 1.95%
Country: Japan

7.Company: Nokian Renkaat Oyj (NKRKY)
Current Dividend Yield: 4.01%
Country: Finland

8.Company: Valeo SA (VLEEY)
Current Dividend Yield: 4.22%
Country: France

Note: Dividend yields noted are as of Nov 12, 2012

Disclosure: Long VLEEY,DNZOY

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[...] industry as opposed to investing directly in the companies of the industry.Last week I wrote an article using the global auto industry as an example.In the energy industry for instance, the oil producers [...]

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