The Auto Sector's Revival Takes a Strange Turn

The automotive sector is as confusing as ever. Gasoline prices are spiking through the roof and February's auto sales signaled that the auto sector couldn't be stronger. Outside of heavy-duty truck sales, which generally do suffer with higher fuel prices, total car sales spiked 23.9% and truck sales rose 7.6%.

Individually in February, Ford's (NYSE: F  ) total vehicle sales spiked 14.3%, Chrysler's rose by 40.4%, Toyota Motors' (NYSE: TM  ) jumped 12.4%, and General Motors (NYSE: GM  ) eked out a 1.1% rise in total vehicle sales. Mitsubishi was the only major brand to lose traction in February.

Everyone has their theory as to why car sales are coming back. To some, the car sector is rebounding right alongside the economy. For others, the move to smaller, more fuel-efficient vehicles seems to be swaying a cost-conscious public. As for me, I think those theories have some merit, but I don't think it's the real reason why car sales are improving so dramatically.

The automotive sector is attempting something that, as far as I can tell, wouldn't work in any other sector -- it's reliving its past. There are not very many people out there that are yearning for a redone 8-track or waiting for bell-bottom jeans to resurface. On the other hand, if you tell the American public that you're going to bring back a car that hasn't been seen in a decade or four, suddenly the public's interest is piqued.

Ford rejuvenated the muscle car market with the redesign of the Mustang, allowing Chrysler's Dodge to follow up with the Challenger and GM's Chevy with the Camaro. Then we had news from Nissan (OTC: NSANY) over the weekend that it's considering bringing back its iconic Datsun brand. This comes just months after Motor Trend noted that Toyota was in the process of reviving the Supra which was discontinued in 1998.

I don't want to scare anyone, but it's almost as if the car companies are listening to what the American car buyer wants! It's an amazing concept that worked well in the 1960s and 1990s, but failed miserably last decade when car companies attempted to outdo each other with larger and larger SUVs.

Unlike most of our purchases, a car can evoke emotions that you simply won't get when you purchase a camera or a new pair of shoes. Car companies have been playing consumers' heartstrings like a fiddle with muscle car redesigns and retired brand reintroductions. Until the auto industry runs out of cars to reproduce, I'd consider this a trend that's likely to continue in the near future.

Disagree with me? Share your opinion (or your love for bell-bottoms) in the comments section below with your fellow Fools and consider adding these car companies to your free and personalized watchlist.

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Fool contributor Sean Williams has no material interest in any of the companies mentioned in this article. He is madly in love with the 2013 Shelby GT 500. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong

The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor and General Motors, as well as creating a synthetic long position in Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's more finesse than muscle.


Read/Post Comments (6) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 05, 2012, at 5:42 PM, mcGuess wrote:

    Not sure the real point here. The retro models are directed to niche markets and draw in lookers. Ford has made great strides with Fusion and improved engines. GM is leaning on Volt, small Chevrolet models and a resurgent Cadillac marque. There may be a muscle car in the window, but the future is the large inventory of family cars.

  • Report this Comment On March 05, 2012, at 6:49 PM, safari69 wrote:

    To really understand what's going on you would have to look at market demographics. Who's buying the "Retro" cars---Maybe Baby Boomers going into retirement? Who's buying the fuel efficient cars---Maybe commuters and young families? Either way there is a large pent up demand waiting to hit the market. Inquiring minds are just wondering when?

  • Report this Comment On March 05, 2012, at 7:44 PM, seattle1115 wrote:

    All I know is that my Fuji Heavy Industries position has been performing quite nicely lately.

  • Report this Comment On March 05, 2012, at 8:48 PM, 48ozhalfgallons wrote:

    Ford retroed a nice version of the mid '50's T bird..... at twice what it was worth.

  • Report this Comment On March 05, 2012, at 9:22 PM, baldheadeddork wrote:

    Hit it, Perry.

    http://www.youtube.com/watch?v=WrjwaqZfjIY

    During recessions and recoveries, auto sales track almost perfectly with consumer confidence. There is a surge in sales following a recession because of suppressed demand during the downturn, but people don't sign on for 60 (or 72) new payments until they're feeling pretty good about their own economic outlook.

    The Challenger has been a flop, The Camaro is a qualified success, the retro-to-nothing Cruze outsells it 3:1 in any given month. The same ratio applies to the equally non-retro Focus and the Mustang.

    Nissan, Toyota and Honda appear to be reaching back to their glory days in an attempt to get some of their mojo back. Maybe it works, but it's the kind of move Detroit would have tried a decade ago. Now the most exciting GM product is arguably the Chevy Cruze, and that's a really good thing because the excitement comes from it being clearly better than the Corolla, Civic or Sentra. Ford has a 200MPH Mustang this year, but the real excitement is around the new Fusion because it looks like it could really knock the Camry right on its ass.

    I'm an enthusiast. I love the Mustang and the Miata and everything else that's fun to drive. But for the first time in my adult life, the US automakers are just as good as anything from Japan with all of the cars that really matter. That is pretty cool.

  • Report this Comment On March 06, 2012, at 3:24 PM, DJDynamicNC wrote:

    Neat article, but I have to agree with Mr. Bald in the comment above. This is the first time in my life that I can remember seeing hype around American sedans and commuter cars at the same level (or higher) than Japanese cars. Ford and GM are showing real chops and a good understanding of their market for the first time that I can remember. It's more than the usual "buy American" patriotic pablum, it's real excitement.

    That is, indeed, pretty cool. And reassuring for this Ford shareholder.

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