Auto sector faces challenges with EV demand, but Fed's interest rate reduction may boost future demand.

From Nasdaq: 2024-12-23 09:15:00

The auto sector expected a surge in EV demand in 2024 due to positive customer sentiment. However, affordability concerns, high interest rates, and inadequate EV charging infrastructure led to inventory build-up. Manufacturers cut production and sales guidance as demand fell short of expectations, impacting the industry after substantial investments in EV technologies.

Despite challenges, the Fed’s reduction in benchmark interest rates in 2025 signals lower vehicle financing costs, potentially boosting future EV demand. Traditional internal combustion engines and hybrid vehicles saw resilient demand, with automakers reporting significant year-over-year growth in hybrid vehicle sales and maintaining healthy margins through cost management.

S&P Global Mobility projects global sales of new light vehicles to reach 89.6 million units in 2025, a 1.7% year-over-year growth. Five Zacks Rank #1 or 2 auto stocks with over 20% YTD price performance gains and a market cap exceeding $1 billion are well-positioned for continued momentum. These stocks benefit from a positive industry outlook, technological innovation, and cost optimization efforts.

Top performers in 2024 include Tesla, benefiting from its Energy Generation and Storage segment, and General Motors, the top-selling automaker in the U.S. Dorman Products and Blue Bird Corporation also reported strong sales growth. KAR, a technology-driven remarketing solution provider, is enhancing the wholesale used vehicle industry, while Blue Bird Corporation focuses on alternative fuel applications. These companies are poised for continued success in 2025.



Read more at Nasdaq: 5 Auto Stocks Poised to Continue Their Winning Streaks in 2025