Update on Ford Motors (F) and General Motors (GM)

5 Oct 2021 _ 10:00 AM EDT

Yesterday Ford Motor (F) reported that its U.S. sales in September fell 17.7% year over year to 156,614 vehicles, but its retail sales climbed 34.3% month over month. Sticking with a year over year comparison:

• Truck sales fell 22.6% year over year to 83,554 units

• Car sales plummeted 80.3% year over year to 2,800 units

• SUVs rose 3.7% year over year to 70,260 units.

• In terms of retail sales for the month, total September retail sales fell 20.8% year over year (Truck -29.7%, Cars -79.5% and SUV +3.7%).

In addition to sharing its EV sales rose more than 90% to 9,150 vehicles, Ford also announced that it has received 150,000 reservations for its upcoming F-150 Lightening pickup that will enter production next year.

Despite the challenging auto chip shortage reflected in the numbers, market actually cheered the stock, ending yesterday up around 1% while the market was in sell-off mode. We think the sentiment in Ford has officially shifted, the market is starting to price in what Ford can do in 2022, rather than focusing on the chip shortage. Ford continues to gain ground and as the chip shortage eases and production levels return to more normalized levels, the company is poised to realize greater benefits from management's turnaround efforts. No question, the company's business will continued to be hampered by the chip shortage, but turnaround efforts like these are not measured in a quarter or three. Also too, electric vehicle company Rivian Automotive has filed to go public and Ford owns a stake of more than 5%. Altogether, we believe we'll look to revisit the $17 price target by the end of this year.

On a slightly related note, General Motors (GM) will hold an investor event tomorrow. We expect the company to discuss the current chip shortage and its impact on production levels, and provide an update on the company's EV efforts and investments. On the second point, there are chatters about how GM may lay out plans for expanding revenue, increasing earnings opportunities. If true, this will be an incredible catalyst driving the stock through a P/E - multiple re-rating to the upside. Watch this space.