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4 Domestic Auto Biggies Poised to Benefit From Industry Resilience
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The Zacks Domestic Auto industry is showing resilience despite a challenging economic backdrop. New-vehicle sales remain relatively healthy as affluent consumers continue to support demand, while the EV market is experiencing a more uneven recovery following the expiration of federal tax incentives. At the same time, potential tax refunds and new deductions on qualifying auto-loan interest could provide some near-term support for vehicle purchases. To capitalize on the favorable industry outlook, established auto companies like General Motors (GM - Free Report) , PACCAR (PCAR - Free Report) , Ford (F - Free Report) and Harley-Davidson (HOG - Free Report) are worth watching.
About the Industry
The Zacks Domestic Auto industry includes companies involved in the design, manufacturing and sale of vehicles worldwide. These range from passenger cars and crossover vehicles to sport utility vehicles, trucks, vans, motorcycles and electric vehicles. The industry is highly cyclical and closely tied to consumer spending, while also supporting a large employment base. At the same time, it is undergoing a major transformation as automakers invest heavily in new technologies. The role of software, electrification and digital connectivity is reshaping how vehicles are developed and sold. Many companies also operate engine and transmission plants and invest in research, development and testing of electric and autonomous vehicles.
Key Themes Shaping the Industry
Vehicle Demand Remains Resilient: U.S. vehicle demand has remained resilient despite economic uncertainty, elevated energy costs and weak consumer confidence. New-vehicle sales reached 1.36 million units in July, keeping the seasonally adjusted annualized rate (SAAR) at 16.3 million. The resilience suggests that higher borrowing and ownership costs have not yet significantly weakened demand. However, the buyer mix is important. More affluent consumers account for a larger share of current purchases and may be better positioned to absorb inflation and higher vehicle prices. This could help support sales in the near term, although broader consumer weakness remains a risk.
EV Demand Is Showing Mixed Signals:The U.S. EV market remains in a transition phase, with July data offering both positive and negative signals. New EV sales rose 3.2% from June, but were still 41.5% below the year-ago level. EVs represented 5.6% of total new-vehicle sales, indicating that adoption remains relatively modest after demand was pulled forward ahead of the expiration of the federal EV tax credit. Meanwhile, used EV sales increased 7.9% month over month and 10.1% year over year, helped by greater availability from lease returns and trade-ins. This suggests the used market could provide an important support for broader EV adoption.
Tax Benefits Could Provide Demand Boost:Tax-related savings could offer some support to vehicle demand in the coming months. The One Big Beautiful Bill Act, enacted in 2025, is expected to result in larger tax refunds for some households, potentially leaving consumers with more money for discretionary purchases such as vehicles. The legislation also introduced a deduction of up to $10,000 annually on interest paid on qualifying auto loans. While these measures are unlikely to fundamentally change the industry's demand trajectory, they could provide a modest lift to purchases. The additional savings may also help consumers absorb higher vehicle costs, including price pressures associated with import tariffs.
Zacks Industry Rank Solid
The Zacks Automotive – Domestic industry is part of the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #67, which places it in the top 27% of more than 240 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates strong near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.
We will present a few stocks that you might consider adding to your watchlist. Before that, let us discuss the industry’s recent stock market performance and valuation picture.
Industry Tops Sector, Lags S&P 500
The Domestic Auto industry has outperformed the auto sector and underperformed the Zacks S&P 500 composite over the past year. The industry has returned 14% compared with the sector and S&P 500’s growth of 3% and 20%, respectively.
One-Year Price Performance
Industry's Current Valuation
Since automotive companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/Earnings before Interest Tax Depreciation and Amortization) ratio. On the basis of the trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 42.99X compared with the S&P 500’s 17.9X and the sector’s 24.69X. Over the past five years, the industry has traded as high as 69.8X, as low as 10.28X and at a median of 30.66X, as the chart below shows.
EV/EBITDA Ratio (Past Five Years)
4 Stocks to Watch Now
General Motors: The company benefits from its U.S. market leadership, disciplined incentives and a profitable mix of trucks and SUVs that support margins, while the next-generation pickup cycle and added full-size SUV capacity offer earnings potential. GM is steadily transforming its software business into a meaningful profit driver. OnStar subscriptions continue to grow, while Super Cruise adoption is increasing across more vehicle models.
The company’s restructuring efforts in China are also paying off well. Strong cash generation supports continued buybacks and dividends. GM ended second-quarter of 2026 with automotive cash of $19.7 billion. Its raised outlook reflects better execution and supports greater overall confidence in the core business. It raised full-year adjusted free cash flow guidance to $9.5-$11.5 billion from the prior guidance of $9-$11 billion.
GM stock currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for General Motors’ 2026 and 2027 EPS implies year-over-year growth of 25% and 11%, respectively.
PACCAR: The trucking giant is benefiting from a recovering North American truck market, rising freight activity and improving fleet replacement demand. Its high-margin Parts business continues to provide stable earnings, supported by growing truck utilization and an extensive aftermarket network.Management now expects full-year 2026 Parts sales growth of 3% to 5%, with faster growth in the second half as utilization and freight activity rise.
Disciplined cost control, local-for-local manufacturing and a strong balance sheet provide financial flexibility to invest in future technologies and return capital to shareholders.As of June 30, 2026, the company held $8.67 billion of cash and marketable securities and stockholders’ equity of $20.32 billion. PACCAR’s A+/A1 credit ratings support funding access.
PACCAR stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for PACCAR’s 2026 and 2027 EPS implies year-over-year growth of 18% and 20%, respectively.
Price & Consensus: PCAR
Ford: It is strengthening its long-term earnings profile through the continued expansion of Ford Pro, where commercial vehicles, software subscriptions and services provide recurring, higher-margin revenues. Ford is concentrating resources on trucks, large utilities, off-road models and richer trims that support pricing and margins. A favorable mix of trucks, utilities and hybrids, along with an affordable EV strategy, growing Ford Energy opportunities and solid liquidity support future growth.
Ford Energy adds a new revenue stream beyond vehicle sales by applying Ford’s battery manufacturing, service and monitoring capabilities to energy storage.Ford ended the second quarter of 2026 with $22.3 billion in cash and $43.4 billion in liquidity. The company generated $2.1 billion of adjusted free cash flow and raised its 2026 outlook to $6-$7 billion from $5-$6 billion.
F stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for Ford’s 2026 and 2027 EPS implies year-over-year growth of 70% and 4%, respectively.
Price & Consensus: F
Harley-Davidson: The company is taking steps to strengthen its business by aligning wholesale shipments with retail demand and improving dealer inventory. Its partnership with KKR and PIMCO has also shifted HDFS toward a more capital-light and lower-risk model. Meanwhile, the company’s restructuring and efficiency efforts remain key to its earnings recovery, with management targeting $150 million in fixed-cost savings and at least $350 million of HDMC adjusted EBITDA by 2027.
Product momentum is another positive, as the Super Glide launch exceeded expectations. Deadwood is entering dealerships and Sprint and Sportster remain in the pipeline. The Back to the Bricks initiative aims to boost rider engagement and dealer economics. With about $1.9 billion in cash, Harley-Davidson also retains financial flexibility to support growth.
HOG stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for Harley-Davidson’s 2027 EPS implies year-over-year growth of 199% from projected 2026 levels.
View the Zacks #1 Rank List
Image: Bigstock
4 Domestic Auto Biggies Poised to Benefit From Industry Resilience
The Zacks Domestic Auto industry is showing resilience despite a challenging economic backdrop. New-vehicle sales remain relatively healthy as affluent consumers continue to support demand, while the EV market is experiencing a more uneven recovery following the expiration of federal tax incentives. At the same time, potential tax refunds and new deductions on qualifying auto-loan interest could provide some near-term support for vehicle purchases. To capitalize on the favorable industry outlook, established auto companies like General Motors (GM - Free Report) , PACCAR (PCAR - Free Report) , Ford (F - Free Report) and Harley-Davidson (HOG - Free Report) are worth watching.
About the Industry
The Zacks Domestic Auto industry includes companies involved in the design, manufacturing and sale of vehicles worldwide. These range from passenger cars and crossover vehicles to sport utility vehicles, trucks, vans, motorcycles and electric vehicles. The industry is highly cyclical and closely tied to consumer spending, while also supporting a large employment base. At the same time, it is undergoing a major transformation as automakers invest heavily in new technologies. The role of software, electrification and digital connectivity is reshaping how vehicles are developed and sold. Many companies also operate engine and transmission plants and invest in research, development and testing of electric and autonomous vehicles.
Key Themes Shaping the Industry
Vehicle Demand Remains Resilient: U.S. vehicle demand has remained resilient despite economic uncertainty, elevated energy costs and weak consumer confidence. New-vehicle sales reached 1.36 million units in July, keeping the seasonally adjusted annualized rate (SAAR) at 16.3 million. The resilience suggests that higher borrowing and ownership costs have not yet significantly weakened demand. However, the buyer mix is important. More affluent consumers account for a larger share of current purchases and may be better positioned to absorb inflation and higher vehicle prices. This could help support sales in the near term, although broader consumer weakness remains a risk.
EV Demand Is Showing Mixed Signals:The U.S. EV market remains in a transition phase, with July data offering both positive and negative signals. New EV sales rose 3.2% from June, but were still 41.5% below the year-ago level. EVs represented 5.6% of total new-vehicle sales, indicating that adoption remains relatively modest after demand was pulled forward ahead of the expiration of the federal EV tax credit. Meanwhile, used EV sales increased 7.9% month over month and 10.1% year over year, helped by greater availability from lease returns and trade-ins. This suggests the used market could provide an important support for broader EV adoption.
Tax Benefits Could Provide Demand Boost:Tax-related savings could offer some support to vehicle demand in the coming months. The One Big Beautiful Bill Act, enacted in 2025, is expected to result in larger tax refunds for some households, potentially leaving consumers with more money for discretionary purchases such as vehicles. The legislation also introduced a deduction of up to $10,000 annually on interest paid on qualifying auto loans. While these measures are unlikely to fundamentally change the industry's demand trajectory, they could provide a modest lift to purchases. The additional savings may also help consumers absorb higher vehicle costs, including price pressures associated with import tariffs.
Zacks Industry Rank Solid
The Zacks Automotive – Domestic industry is part of the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #67, which places it in the top 27% of more than 240 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates strong near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.
We will present a few stocks that you might consider adding to your watchlist. Before that, let us discuss the industry’s recent stock market performance and valuation picture.
Industry Tops Sector, Lags S&P 500
The Domestic Auto industry has outperformed the auto sector and underperformed the Zacks S&P 500 composite over the past year. The industry has returned 14% compared with the sector and S&P 500’s growth of 3% and 20%, respectively.
One-Year Price Performance
Industry's Current Valuation
Since automotive companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/Earnings before Interest Tax Depreciation and Amortization) ratio. On the basis of the trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 42.99X compared with the S&P 500’s 17.9X and the sector’s 24.69X. Over the past five years, the industry has traded as high as 69.8X, as low as 10.28X and at a median of 30.66X, as the chart below shows.
EV/EBITDA Ratio (Past Five Years)
4 Stocks to Watch Now
General Motors: The company benefits from its U.S. market leadership, disciplined incentives and a profitable mix of trucks and SUVs that support margins, while the next-generation pickup cycle and added full-size SUV capacity offer earnings potential. GM is steadily transforming its software business into a meaningful profit driver. OnStar subscriptions continue to grow, while Super Cruise adoption is increasing across more vehicle models.
The company’s restructuring efforts in China are also paying off well. Strong cash generation supports continued buybacks and dividends. GM ended second-quarter of 2026 with automotive cash of $19.7 billion. Its raised outlook reflects better execution and supports greater overall confidence in the core business. It raised full-year adjusted free cash flow guidance to $9.5-$11.5 billion from the prior guidance of $9-$11 billion.
GM stock currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for General Motors’ 2026 and 2027 EPS implies year-over-year growth of 25% and 11%, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: GM
PACCAR: The trucking giant is benefiting from a recovering North American truck market, rising freight activity and improving fleet replacement demand. Its high-margin Parts business continues to provide stable earnings, supported by growing truck utilization and an extensive aftermarket network.Management now expects full-year 2026 Parts sales growth of 3% to 5%, with faster growth in the second half as utilization and freight activity rise.
Disciplined cost control, local-for-local manufacturing and a strong balance sheet provide financial flexibility to invest in future technologies and return capital to shareholders.As of June 30, 2026, the company held $8.67 billion of cash and marketable securities and stockholders’ equity of $20.32 billion. PACCAR’s A+/A1 credit ratings support funding access.
PACCAR stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for PACCAR’s 2026 and 2027 EPS implies year-over-year growth of 18% and 20%, respectively.
Price & Consensus: PCAR
Ford: It is strengthening its long-term earnings profile through the continued expansion of Ford Pro, where commercial vehicles, software subscriptions and services provide recurring, higher-margin revenues. Ford is concentrating resources on trucks, large utilities, off-road models and richer trims that support pricing and margins. A favorable mix of trucks, utilities and hybrids, along with an affordable EV strategy, growing Ford Energy opportunities and solid liquidity support future growth.
Ford Energy adds a new revenue stream beyond vehicle sales by applying Ford’s battery manufacturing, service and monitoring capabilities to energy storage.Ford ended the second quarter of 2026 with $22.3 billion in cash and $43.4 billion in liquidity. The company generated $2.1 billion of adjusted free cash flow and raised its 2026 outlook to $6-$7 billion from $5-$6 billion.
F stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for Ford’s 2026 and 2027 EPS implies year-over-year growth of 70% and 4%, respectively.
Price & Consensus: F
Harley-Davidson: The company is taking steps to strengthen its business by aligning wholesale shipments with retail demand and improving dealer inventory. Its partnership with KKR and PIMCO has also shifted HDFS toward a more capital-light and lower-risk model. Meanwhile, the company’s restructuring and efficiency efforts remain key to its earnings recovery, with management targeting $150 million in fixed-cost savings and at least $350 million of HDMC adjusted EBITDA by 2027.
Product momentum is another positive, as the Super Glide launch exceeded expectations. Deadwood is entering dealerships and Sprint and Sportster remain in the pipeline. The Back to the Bricks initiative aims to boost rider engagement and dealer economics. With about $1.9 billion in cash, Harley-Davidson also retains financial flexibility to support growth.
HOG stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for Harley-Davidson’s 2027 EPS implies year-over-year growth of 199% from projected 2026 levels.
Price & Consensus: HOG