November turned out to be a standout month for car sales, as Cox Automotive reported an unexpected surge in new car purchases that surpassed industry predictions. This spike may be caused by buyers acting ahead of potential policy changes under the incoming Trump administration by shifting from a “wait-and-see” approach to a “better buy now” mindset, according to Cox’s chief economist, Jonathan Smoke.
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The uncertainty surrounding policies like EV tax credits, tariffs on vehicles from Mexico and Canada, and leasing loopholes has created a sense of urgency among consumers. Cox projects a seasonally adjusted annual sales rate (SAAR) of 16.5 million for November, higher than the earlier estimate of 16 million. Similar forecasts from J.D. Power and GlobalData anticipate a 6.7% year-over-year sales increase, which can be supported by strong numbers from Ford (F), Honda (HMC), and Toyota (TM).
Nevertheless, there are other factors like pent-up demand, improved financing options, and better inventory levels that are also driving retail sales momentum. Cox’s senior economist, Charlie Chesbrough, highlighted these catalysts and expects continued strength in consumer demand in the coming months. However, not all analysts believe that individual carmakers will benefit from this trend.
Ford Gets Downgraded by Wolfe Research
There is no denying that Ford had a strong November, with sales during the month growing by 14% year-over-year to 166,373 units. Nevertheless, Wolfe Research, led by analyst Emmanuel Rosner, downgraded Ford to Underperform from Peer Perform with a price target of $8. The firm believes 2025 will be tough for all automakers but sees Ford facing the biggest risks.
Wolfe pointed to issues like falling vehicle prices and expects the automaker to no longer benefit from dealers restocking their inventories. To make matters worse, Ford built up a larger-than-necessary amount of inventory in the fourth quarter. As a result, Wolfe believes that Wall Street’s estimates don’t account for these challenges and predicts that its 2025 guidance will likely disappoint investors.
Which Auto Stock Is the Best to Buy?
Turning to Wall Street, analysts think that LCID stock is the auto stock that has the most room to run. In fact, its price target of $2.91 per share implies almost 36% upside potential.
