It's been one of the few political and economic stories that was a pleasure to watch unfold. During the financial crisis just a few years ago, it was posed that three of the most iconic companies in U.S. history should be led to the slaughterhouse. It was a fierce political debate and became much more than a typical corporate rescue mission. But since the capital injections, the refurbished business models and vehicle lines, and a new group of managers, the American auto companies are showing strength not seen in decades. The latest sales numbers during August only confirm: Detroit is back.
Summer of love
The economic recovery, if it's happening or not, has been hotly debated all summer. With a presidential election on the horizon, we are shown more and more numbers that are supposed to tell us how we are doing as a nation and as a people. It's all very confusing, and in the real world it's hard to tell what any of it means. But while all of the bickering on the news has been taking place, the auto companies have been chugging along at a canter.
Ford (NYS: F) , General Motors (NYS: GM) , and Chrysler have all posted fantastic sales reports all summer. It wasn't any particular type of vehicle -- it seems that fuel-efficient cars and SUVs alike sold at double-digit rates. Though with rising prices at the pump, it does seem more and more consumers want to see a higher number on the miles-per-gallon sticker and may even be willing to consider a higher number on the bottom of the sticker to get that coveted mileage.
Ford saw U.S. sales rise 19% during August. Small and midsized SUV sales were as strong as they have been since pre-recession times, and in some cases in the vehicle type's history. Chrysler showed tremendous gains as well, with sales up 14% during August. Even truck sales were up 12%, while cars were even more impressive at 21%.
GM's Chevrolet and Cadillac sales were up 11% apiece, with Buicks up 12%. Since the company emerged out of bankruptcy, it slimmed down its redundant brands and streamlined back into its core autos. This has helped lead the company back into the spotlight along with its American counterparts. Ford was the only company not to enter bankruptcy during the financial crisis four years ago.
It's not that Ford, GM, and now Italian-owned Chrysler blew away the competition -- they didn't. But the numbers look favorable for the American car companies. They seem to yet again be competitive with Japanese and European automakers, which had taken over as the quality and sales leaders.
Toyota (NYS: TM) and Honda (NYS: HMC) posted staggeringly high gains in August sales, at multiples of what the Americans were able to sell. Honda sales were up nearly 60%, with its leading Accord model gaining nearly 90% over last year's numbers. These figures are, of course, skewed because the Japanese automakers are recovering from last year's manufacturing halts caused by the earthquake and tsunami tragedies. Both suffered an inability to meet demand and saw stock prices drop dramatically. This year is more a return to the norm than an exceptional period.
Back to the future
If the legacy automakers can stay on top of their game and not fall into their old habits of doing things like designing cars that look like toasters and creating financing divisions that seemingly exist for no other reason than to drain the coffers, then these guys might just be the best turnaround story from the recession. GM trades a hair cheaper than Ford, at only 5 times forward earnings (versus Ford's 6 times forward earnings ratio), but the company has struggled more than its competitor in its recovery. Ford may be a safer investment, but you have to pay up for the option of added security.
For more information regarding the quickly improving Ford, take a look at this premium report. In it, you will read the hurdles and opportunities that lie ahead for the legacy of one of America's most famous businessmen, Henry Ford.
The article American Autos Shine Once Again originally appeared on Fool.com.
Fool contributor Michael Lewis owns none of the stocks mentioned above. You can follow him on Twitter,@MikeyLewy. The Motley Fool owns shares of Ford.Motley Fool newsletter serviceshave recommended buying shares of Ford and General Motors and creating a synthetic long position in Ford. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
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