Analysts are expecting the U.S. auto industry to grow between 4% and 9% this year. Will pent-up demand for cars send related shares and exchange traded funds higher?
“We see an exceptionally competitive market because there are now eight major manufacturers vying for market share,” Tom Libby, senior analyst at Polk automotive consulting firm, said. [ETF Chart of the Day: Global Auto Sector Funds]
The only reason analysts are not more bullish toward the U.S. auto industry is due to the ongoing sovereign debt crisis in Europe, reports Laurence Frost for Reuters.
Although the three major U.S. automakers gained market share this year on domestic turf, foreign rivals will be tough competition. U.S. automakers can expect Japanese car makers to rebound.
U.S. auto sales are positioned for another year of growth after hitting 30-year lows in 2009. The access to easier credit and lending, low interest rates and pent-up demand for new cars bode well.The sales of more cars will also translate into more jobs, more factory shifts and growth for the domestic market.
Investors will be watching for U.S. auto sales reports on Wednesday, with new car sales expected to be around 12.7 million, up from 11.5 million in 2010. For 2012, sales could reach up to 13.8 million, close to the 14 million earmark that analysts consider healthy. [Global X Spins Its Own Auto ETF]
Global X Auto ETF (NYSEArca: VROM) and First Trust Nasdaq Global Auto Index fund (NYSEArca: CARZ) are the sector ETFs.
Global X Auto ETF
Tisha Guerrero contributed to this article.