Ford, GM Positioned to Grow in 2011

GM's Chevy Volt is where the IBM PC was 1981 -- an overpriced, bulky first step towards a new world.
By Ted Reed ,

DETROIT (

TheStreet

) -- Auto sales seem likely to rise in 2011, a positive sign for both the economy and the automakers, which should all benefit as a rising tide lifts all boats.

Estimates for 2011 light vehicle sales include 13 million by Morningstar analyst David Whiston and

15 million by Bank of America Merrill Lynch analyst John Murphy. Ford sales analyst George Pipas says 2011 sales "will be above 12 million and perhaps closer to 13 million," according to

The Detroit News,

, an increase from current year sales of about 11.5 to 11.6 million. Incidentally, Whiston puts 2012 sales at 18.5 million.

Whatever the exact numbers, the trend is obvious given 2009 sales of 10.4 million, the lowest total since 1970. Automakers may not be at the center of the U.S. economy, as they were a few decades ago, but it is clear that few economic indicators are more important than consumer decisions to spend tens of thousands of dollars to buy a new vehicle.

Among the automakers, the best positioned are probably

Ford

(F) - Get Report

,

General Motors

(GM) - Get Report

and Volkswagen, said Michael Yoshikami, chief investment strategist at Bay Area-based YCMNET Advisors, which manages about $1 billion in assets.

Yoshikami said reduced industry capacity is helping all the automakers, while Ford benefits from strong management, GM from reduced debt and a strong position in China, and Volkswagen from a "novel strategy in the U.S.," moving both upscale with the return of the Phaeton and downscale with the Jetta. He said

Honda

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and

Toyota

(TM) - Get Report

will "hold their own," but the momentum is with the U.S. companies and VW.

A principal advantage for U.S. automakers, he said, is that they have embraced the move to electric and hybrid cars, particularly in the way that GM has

developed the Volt.

"I see a sea change in the transition to alternative energy cars, not just to the Prius but also to the Leaf and the Volt," Yoshikami said. "The Volt is overpriced and bulky now, but it's not unlike the first PC."

IBM

(IBM) - Get Report

, which

helped to develop the Volt, brought out the first PC in 1981. "After that, we had

Dell

(DELL) - Get Report

come along and really help adaptation -- that is what's going to happen with these cars," Yoshikami said.

"Once we get done digesting the stimulus, economic growth is likely to be sluggish, so Americans will gravitate towards more efficient cars, towards energy efficient cars," he said. "If you can buy a hybrid SUV that looks like the Yukon and gets 30 miles a gallon, then everyone who drives one getting 15 miles a gallon will get rid of it. So there will be a huge product replacement cycle."

-- Written by Ted Reed in Charlotte, N.C.

.

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