The Disciplined Investor: Untold Auto Industry Woes

I don't care if the TARP funds General Motors (GM - commentary - Cramer's Take) and Chrysler or if a massive bailout program is put in place and so on and so forth, we are not going to see a surge in car buyers stomping through showrooms eager to purchase the latest of anything Detroit has to offer, even if financing were readily available. Similar to the housing industry, the auto industry will have to return to sane lending standards, meaning fewer qualified buyers, lower ASPs and lower annual volume of sales. They might as well start the layoffs and plant closings now because the changes are going to be permanent.

Because of this little-discussed phenomenon, I am very bearish on the autos. I think all the U.S. players pass through bankruptcy, Chrysler probably doesn't survive as a standalone, and most of the foreign OEMs shrink meaningfully. The "great unwind" continues.

Gary T. Dvorchak, CFA, is a managing partner at Aviance Capital Management, a Sarasota, Fla.-based institutional investment manager. Gary is the portfolio manager of the Landmark Capital Disciplined Growth Fund, ticker LCDGX. The portfolio is posted on Stockpickr.com under Aviance Disciplined Growth in the Professional Portfolios section. Gary's column, The Disciplined Investor, appears regularly on RealMoney.

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Know What You Own: General Motors operates in the auto manufacturers industry, and some of the other stocks in its field include Toyota Motor (TM - commentary - Cramer's Take), Honda Motor (HMC - commentary - Cramer's Take), Daimler (DAI - commentary - Cramer's Take), Ford (F - commentary - Cramer's Take), Tata Motors (TTM - commentary - Cramer's Take) and SORL Auto Parts (SORL - commentary - Cramer's Take). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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At the time of publication, Dvorchakhad no positions in the stocks mentioned, although positions can change at any time.

Gary Dvorchak is a managing partner of Aviance Capital Management, a Sarasota, Fla.-based institutional asset manager that manages $200 million in growth and value equities and fixed income. Dvorchak holds a master's degree in business administration from Northwestern University and a bachelor's degree in computer science from the University of Iowa.