If you are a value investor, you might want to divert your attention away from stocks for awhile and check out the bargains in the showrooms of the nations car dealers. Thanks to one of severest recessions in decades, car sales are in free fall and car makers/dealers are responding with substantial sales incentives.
The pressure to discount prices has only intensified in recent weeks as uncertainty over the future of General Motors and Chrysler scares away even more customers. In April, as the Financial Times of London reports, GM sales dropped -34% on a year-over-year basis, while those at Chrysler dived by -48%. Ford, unencumbered by insolvency fears, had better sales andmay not be as hungry to generate sales.
Other car makers are suffering too — for different reasons. Toyotas sales tumbled -42% due, in part, to a collapse in demand for the Prius hybrid (hit by the slide in gas price). Other weak spots (where good deals may surface) include BMW cars (-38%), Nissans Infiniti (-48%), Toyotas Lexus -39%), and Daimler Smart car (-50%).
After you buy your new car and return to focusing on stocks, you might want to zero in on auto stocks. Pent-up demand is building for cars and the recent steep declines in auto sales puts more pressure on legislators to introduce incentiveslike auto trade-in rebates.