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3 Auto Market Trends You Should Be Buying Right Now
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The auto industry has been up against some pretty hard times in the last couple of years. In addition to the supply chain issues, particularly the shortage in semiconductor chips that increased pressure on the supply side, record high inflation squeezed consumer budgets and made it harder to buy a new car, thus increasing pressure on the demand side.
According to ABI Research, overall vehicle sales will “inch closer to a rebound in 2023.” Despite macroeconomic concerns, the research firm is projecting a 5.1% increase in volume this year to 85.5 million units. North America is expected to grow 6%, Europe 6.2% and Asia/Pacific 4.3%. Sales are expected to increase 3.3% in 2024 and reach the previous high of more than 90 million units in 2025.
The longer-term outlook for the industry is also extremely bright, as the industry is undergoing a major transformation, driven by factors such as the rise of electric vehicles, the growth of autonomous driving and the increasing popularity of ride-hailing services.
The rise of electric vehicles is one of the most significant trends in the auto industry. Electric vehicles offer a number of advantages over gasoline-powered cars, including lower emissions, lower operating costs and improved performance. As a result, electric vehicles are becoming increasingly popular, and the global market for electric vehicles is expected to grow significantly in the coming years.
According to the International Energy Agency’s (IEA) annual Global Electric Vehicle Outlook, more than 10 million electric cars were sold worldwide in 2022. Sales are expected to grow by another 35% this year to reach 14 million. This explosive growth means that electric cars' share of the overall car market has risen from around 4% in 2020 to 14% in 2022 and is set to increase further to 18% this year. This growth is being driven by emerging markets like China, India and Thailand, mainly because of government incentives, falling battery prices and increasing consumer awareness of the environmental benefits.
The main stumbling blocks for adoption are range, affordability (including of the batteries) and the charging infrastructure and all these elements are a matter of focus for world leaders and car makers alike. The current momentum and strong competition is pushing automakers to increase investment in the category, further helping the market. The IEA estimates that electric cars could account for up to 30% of global car sales by 2030, which would reduce global oil demand by 2 million barrels per day.
The growth ofadvanced driver assistance systems (ADAS) and autonomous driving (AD) is another major trend that is expected to have a significant impact on the auto industry. According to McKinsey & Company, the global market for ADAS and AD is expected to grow from $22.4 billion in 2020 to $120.7 billion by 2027. North America is expected to be the largest market for ADAS and AD, followed by Europe and Asia Pacific.
China is expected to be the fastest-growing market for ADAS and AD, due to its large population and growing economy. This growth is being driven by a number of factors, including the increasing demand for safety features in cars and the development of new technologies that make AD possible.
Autonomous vehicles have the potential to make driving safer, more efficient and more convenient. Some of the challenges that need to be overcome before autonomous driving can become mainstream however, are the need for better sensors and software, as well as the need for regulatory approval.
The increasing popularity of ride-hailing services is another trend that is having a significant impact on the auto industry. Ride-hailing services, such as Uber and Lyft, offer a convenient and affordable alternative to owning a car.
As a result, the popularity of ride-hailing services is growing. The global market for ride-hailing services is expected to grow from $56.4 billion in 2020 to $132.8 billion by 2027. AD and ADAS in passenger cars are expected to generate 300-400 billion in revenue by 2035.
The popularity of the model is leading suppliers to think about new business models, such as subscription-based car ownership and car sharing. While this could be having a negative impact on new car sales, demand in the longer term will be supported by an expansion of the ride hailing market, increased car sharing and government mandates to upgrade ride-hailing fleets to EVs and other environment-friendly options.
The auto industry is constantly evolving, and it will be interesting to see how these trends play out in the coming years. The industry is facing a number of challenges, but it also has a number of opportunities. Automakers that are able to adapt to the changing landscape will be well-positioned to succeed in the future. Today’s picks are:
Beijing, PRC-based Li Auto designs, develops, manufactures and sells new energy vehicles in China. The company provides Li ONE and Li L series smart electric vehicles. It also offers sales and after sales management, and technology development and corporate management services, as well as purchases manufacturing equipment. The company offers its products through online and offline channels.
Analysts expect revenue growth of 131% in 2023 and 49.4% in 2024 and earnings growth of 2400% and 1332%, respectively in the two years. In the last 60 days, the Zacks Consensus Estimate for 2023 has increased 78.6%. For 2024, it has increased 251%. The shares carry a Zacks Rank #1 (Strong Buy).
Based in Hoofddorp, the Netherlands, Stellantis is involved in the design, engineering, manufacturing, distribution and sale of automobiles and light commercial vehicles with global operations. The company offers a diverse range of vehicles, including luxury and premium passenger vehicles, pickup trucks, SUVs and commercial vehicles under well-known brand names such as Alfa Romeo, Chrysler, Citroën, Dodge, Fiat, Jeep, Maserati, Opel, Peugeot and more. Stellantis also provides parts, services, and financing options.
Revenue is expected to increase 13.4% in 2023 and 0.7% in 2024. Earnings are expected to remain soft. However, the Zacks Consensus Estimate has increased significantly in the last 60 days: for 2023 it is up 5.8% and for 2024 it’s up 11.2%. So if the trend continues, we may actually see positive growth. The shares carry a Zacks Rank #1.
Detroit, MI-based General Motors designs, manufactures and sells trucks, crossovers, cars and automobile parts. Its popular brand names are Buick, Cadillac, Chevrolet, GMC, Baojun and Wuling. General Motors sells its products through retail dealers, distributors and fleet customers. In addition to vehicle sales, the company provides after-sale services, safety and security services, connected services, automotive financing, insurance services and software-enabled services.
The Zacks Rank #1 company is expected to generate revenue growth of 4.5% in 2023 and 1.3% in 2024 although earnings are expected to decline in both years. What’s encouraging however is the estimate revisions: for 2023, estimates are up 10.8% and for 2024, up 7.5%. The shares carry a Zacks Rank #1.
Lightning eMotors, Inc.
Loveland, CO-based Lightning eMotors designs, manufactures and sells zero-emission commercial fleet vehicles and powertrains to commercial fleets, large enterprises, original equipment manufacturers, and governments in the U.S. It offers zero-emission class 3 to 7 commercial electric and fuel cell vehicles including cargo and passenger vehicles, school buses, ambulances, shuttle buses, work trucks, transit buses and motorcoaches. It also offers charging systems and charging infrastructure solutions.
Zacks #2 (Buy) ranked Lightning Motors is expected to see revenue growth of 52.2% in 2023, which will not however be accompanied by earnings growth this year. Things are expected to improve a lot next year when revenues will have another great year, growing 155.7% and driving earnings growth of 75.6%. In the last 30 days, analysts took their 2023 estimate up 3 cents and their 2024 estimate up $5.20.
Torrance, CA-based Canoo is a mobility technology company that designs, engineers, develops and manufactures electric vehicles, mainly delivery vehicles and pickups, for commercial and consumer markets in the U.S. It also provides multi-purpose platform architecture that is a self-contained, fully functional rolling chassis that directly houses the critical components for operation of an EV.
#2 ranked Canoo is expected to grow its revenue 621.7% in 2024 (2023 estimates aren’t available). The loss-making company will however see improvements of 62.3% and 28.2% in 2023 and 2024, respectively. The loss estimate for 2023 has gone from -$1.33 to -$0.72 in the last 60 days. The 2024 estimate moved up from -$0.82 to -$0.52.
One-Month Price Performance
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3 Auto Market Trends You Should Be Buying Right Now
The auto industry has been up against some pretty hard times in the last couple of years. In addition to the supply chain issues, particularly the shortage in semiconductor chips that increased pressure on the supply side, record high inflation squeezed consumer budgets and made it harder to buy a new car, thus increasing pressure on the demand side.
According to ABI Research, overall vehicle sales will “inch closer to a rebound in 2023.” Despite macroeconomic concerns, the research firm is projecting a 5.1% increase in volume this year to 85.5 million units. North America is expected to grow 6%, Europe 6.2% and Asia/Pacific 4.3%. Sales are expected to increase 3.3% in 2024 and reach the previous high of more than 90 million units in 2025.
The longer-term outlook for the industry is also extremely bright, as the industry is undergoing a major transformation, driven by factors such as the rise of electric vehicles, the growth of autonomous driving and the increasing popularity of ride-hailing services.
The rise of electric vehicles is one of the most significant trends in the auto industry. Electric vehicles offer a number of advantages over gasoline-powered cars, including lower emissions, lower operating costs and improved performance. As a result, electric vehicles are becoming increasingly popular, and the global market for electric vehicles is expected to grow significantly in the coming years.
According to the International Energy Agency’s (IEA) annual Global Electric Vehicle Outlook, more than 10 million electric cars were sold worldwide in 2022. Sales are expected to grow by another 35% this year to reach 14 million. This explosive growth means that electric cars' share of the overall car market has risen from around 4% in 2020 to 14% in 2022 and is set to increase further to 18% this year. This growth is being driven by emerging markets like China, India and Thailand, mainly because of government incentives, falling battery prices and increasing consumer awareness of the environmental benefits.
The main stumbling blocks for adoption are range, affordability (including of the batteries) and the charging infrastructure and all these elements are a matter of focus for world leaders and car makers alike. The current momentum and strong competition is pushing automakers to increase investment in the category, further helping the market. The IEA estimates that electric cars could account for up to 30% of global car sales by 2030, which would reduce global oil demand by 2 million barrels per day.
The growth of advanced driver assistance systems (ADAS) and autonomous driving (AD) is another major trend that is expected to have a significant impact on the auto industry. According to McKinsey & Company, the global market for ADAS and AD is expected to grow from $22.4 billion in 2020 to $120.7 billion by 2027. North America is expected to be the largest market for ADAS and AD, followed by Europe and Asia Pacific.
China is expected to be the fastest-growing market for ADAS and AD, due to its large population and growing economy. This growth is being driven by a number of factors, including the increasing demand for safety features in cars and the development of new technologies that make AD possible.
Autonomous vehicles have the potential to make driving safer, more efficient and more convenient. Some of the challenges that need to be overcome before autonomous driving can become mainstream however, are the need for better sensors and software, as well as the need for regulatory approval.
The increasing popularity of ride-hailing services is another trend that is having a significant impact on the auto industry. Ride-hailing services, such as Uber and Lyft, offer a convenient and affordable alternative to owning a car.
As a result, the popularity of ride-hailing services is growing. The global market for ride-hailing services is expected to grow from $56.4 billion in 2020 to $132.8 billion by 2027. AD and ADAS in passenger cars are expected to generate 300-400 billion in revenue by 2035.
The popularity of the model is leading suppliers to think about new business models, such as subscription-based car ownership and car sharing. While this could be having a negative impact on new car sales, demand in the longer term will be supported by an expansion of the ride hailing market, increased car sharing and government mandates to upgrade ride-hailing fleets to EVs and other environment-friendly options.
The auto industry is constantly evolving, and it will be interesting to see how these trends play out in the coming years. The industry is facing a number of challenges, but it also has a number of opportunities. Automakers that are able to adapt to the changing landscape will be well-positioned to succeed in the future. Today’s picks are:
Li Auto Inc. (LI - Free Report)
Beijing, PRC-based Li Auto designs, develops, manufactures and sells new energy vehicles in China. The company provides Li ONE and Li L series smart electric vehicles. It also offers sales and after sales management, and technology development and corporate management services, as well as purchases manufacturing equipment. The company offers its products through online and offline channels.
Analysts expect revenue growth of 131% in 2023 and 49.4% in 2024 and earnings growth of 2400% and 1332%, respectively in the two years. In the last 60 days, the Zacks Consensus Estimate for 2023 has increased 78.6%. For 2024, it has increased 251%. The shares carry a Zacks Rank #1 (Strong Buy).
Stellantis N.V. (STLA - Free Report)
Based in Hoofddorp, the Netherlands, Stellantis is involved in the design, engineering, manufacturing, distribution and sale of automobiles and light commercial vehicles with global operations. The company offers a diverse range of vehicles, including luxury and premium passenger vehicles, pickup trucks, SUVs and commercial vehicles under well-known brand names such as Alfa Romeo, Chrysler, Citroën, Dodge, Fiat, Jeep, Maserati, Opel, Peugeot and more. Stellantis also provides parts, services, and financing options.
Revenue is expected to increase 13.4% in 2023 and 0.7% in 2024. Earnings are expected to remain soft. However, the Zacks Consensus Estimate has increased significantly in the last 60 days: for 2023 it is up 5.8% and for 2024 it’s up 11.2%. So if the trend continues, we may actually see positive growth. The shares carry a Zacks Rank #1.
General Motors Company (GM - Free Report)
Detroit, MI-based General Motors designs, manufactures and sells trucks, crossovers, cars and automobile parts. Its popular brand names are Buick, Cadillac, Chevrolet, GMC, Baojun and Wuling. General Motors sells its products through retail dealers, distributors and fleet customers. In addition to vehicle sales, the company provides after-sale services, safety and security services, connected services, automotive financing, insurance services and software-enabled services.
The Zacks Rank #1 company is expected to generate revenue growth of 4.5% in 2023 and 1.3% in 2024 although earnings are expected to decline in both years. What’s encouraging however is the estimate revisions: for 2023, estimates are up 10.8% and for 2024, up 7.5%. The shares carry a Zacks Rank #1.
Lightning eMotors, Inc.
Loveland, CO-based Lightning eMotors designs, manufactures and sells zero-emission commercial fleet vehicles and powertrains to commercial fleets, large enterprises, original equipment manufacturers, and governments in the U.S. It offers zero-emission class 3 to 7 commercial electric and fuel cell vehicles including cargo and passenger vehicles, school buses, ambulances, shuttle buses, work trucks, transit buses and motorcoaches. It also offers charging systems and charging infrastructure solutions.
Zacks #2 (Buy) ranked Lightning Motors is expected to see revenue growth of 52.2% in 2023, which will not however be accompanied by earnings growth this year. Things are expected to improve a lot next year when revenues will have another great year, growing 155.7% and driving earnings growth of 75.6%. In the last 30 days, analysts took their 2023 estimate up 3 cents and their 2024 estimate up $5.20.
Canoo Inc. (GOEV - Free Report)
Torrance, CA-based Canoo is a mobility technology company that designs, engineers, develops and manufactures electric vehicles, mainly delivery vehicles and pickups, for commercial and consumer markets in the U.S. It also provides multi-purpose platform architecture that is a self-contained, fully functional rolling chassis that directly houses the critical components for operation of an EV.
#2 ranked Canoo is expected to grow its revenue 621.7% in 2024 (2023 estimates aren’t available). The loss-making company will however see improvements of 62.3% and 28.2% in 2023 and 2024, respectively. The loss estimate for 2023 has gone from -$1.33 to -$0.72 in the last 60 days. The 2024 estimate moved up from -$0.82 to -$0.52.
One-Month Price Performance
Image Source: Zacks Investment Research