6 Cars With 300-Plus Horsepower That You Can Still Buy for Under $30,000http://www.fool.com/investing/general/2014/03/23/6-cars-with-300-horsepower-that-you-can-still-buy.aspx Sean Williams
March 23, 2014
The end of the prior decade brought an odd wind of change to the auto industry, with consumers demanding simpler cars and better fuel efficiency from the gas-guzzling SUVs and large sedans that they'd been used to driving before the Great Recession. Now, five years removed from that recession, it appears that consumer sentiment has shifted once again.
What we're seeing today in the auto industry is a drastic bifurcation with eco-friendly and fuel-efficient vehicles in one corner (i.e., diesel-powered engines, hybrids, and electric vehicles), and high-performance and/or muscle cars in the other. With the unemployment rate falling, the U.S. economy continuing to improve, and home values rising once again, the U.S. consumer is out in full force searching for ways to enjoy the fruits of their hard work -- and the high-performance vehicles have been one avenue that automakers have turned to in an attempt to boost sales.
With automakers catering these high performance machines to both younger crowds that are all about 0-to-60 times, and older crowds that can relive the history of their childhood through redesigned muscle cars, these domestic and overseas manufacturers have uncovered a possible rapid growth opportunity.
Of course, muscle cars and high-performance vehicles aren't for everyone. Even if you want one, affording one can sometimes feel as if it costs an arm and a leg. The majority of high-performance vehicles that put out over 300 horsepower or more will start well into the $30,000 or $40,000 price bracket and head higher, pricing a number of would-be consumers out of the market. But that isn't the case for all models. In fact, there are six cars the need-for-speed enthusiast can buy right now that will give you at least 300 HP and can be purchased for less than $30,000 MSRP -- and they just might offer a unique opportunity for investors depending on the brand.
Today we'll take a closer look at those models, because they obviously hold a comparative pricing advantage over their peers, which these manufacturers may be able to exploit in order to boost their own profits. For the sake of argument, I left trucks, SUVs, and crossovers off this list and decided to strictly stick with cars because it represents the best apples-to-apples comparison of muscle cars then (i.e., from the 1960s/1970s) and now. We'll also only be considering new cars for 2014 for this discussion.
Here are the six cars you can buy for less than $30,000 that will put out 300 or more HP.
Ford Mustang: 305 HP, MSRP from $22,510
But not all hope is lost for Ford's 300-plus horsepower beast. Pound for pound, there's simply not a cheaper car based on MSRP that you buy and get 300 horsepower from. This gives the Mustang an advantage that could sit well with younger car buyers and help push sales higher. In addition, Ford's styling across its product line, coupled with its improved fuel-efficiency in a majority of its vehicles, helped push total company unit sales up 11% last year. Ford's Mustang may be in a funk now, but a recently introduced next-generation model, which Fool auto analyst John Rosevear witnessed the unveiling of firsthand, could be the spark that fuels a surge in sales.
Dodge Challenger SXT: 305 HP, MSRP from $26,295
Despite impressive gains from Dodge as a whole, which improved sales by 14% for the full year in 2013, the Challenger has remained well behind both the Camaro and Mustang for years in total sales. Of the three, it does offer the highest base model price and the worst gas mileage, so that combination could be putting off the on-the-fence muscle-car buyer. However, I'd also point to a strong trend of sales improvement in the Challenger since 2011 and its rapid growth in Mexico as a reason it's going to play in an integral role in Chrysler Group and Fiat's overall success moving forward.
Chevy Camaro: 323 HP, MSRP from $23,555
In terms of unbridled Detroit power, the Camaro is king with its 323 HP, and it's likely this extra power under the hood, along with its sleek styling, that's helping to push sales consistently above that of the Mustang -- at least over the past four years. Yet what really may be driving Americans back to the Camaro is General Motors' plans to move the Camaro's production back to the U.S., as it expects to lower its capital investment costs and improve production efficiencies. Put plainly, producing the Camaro in the U.S. may lead to quicker production and lower costs, which should result in beefier margins for GM. Only time will tell if this is the case, but as of now the Camaro looks like an unstoppable beast, and auto-savvy investors should take notice.
Dodge Charger SXT: 300 HP, MSRP from $29,925
Although the Charger SXT barely squeaks onto this list with exactly 300 horsepower, it could offer even greater sales growth potential than the Challenger. The reason is that the Charger has a more subdued styling compared with the Challenger, which I believe will help it appeal to a broader audience and ultimately boost its sales. Although sales of the Charger began the year sluggishly, right alongside the Challenger, Fool John Rosevear reminds us that this beginning-of-the-year weakness isn't too surprising, since rear-wheel-drive vehicles are difficult to move off dealership lots in the winter. Looking forward, though, it's quite possible the Charger can reclaim the 100,000 unit mark in 2014 and provide added muscle to Chrysler and Fiat's bottom line.
Hyundai Genesis 3.8 R-Spec: 348 HP, MSRP from $29,350
Introduced onto the market in 2008, sales of the Genesis (all models) soared through 2011 but have generally stalled since.
I believe there are three possible explanations for this lag in sales. First, I suspect that Americans, deep down, still prefer to purchase American-made over foreign cars when it comes to high-performance vehicles. Second, a rebounding economy is putting more money in consumers' pockets and allowing them to trade up to high-performance models well in excess of a $30,000 price tag. Finally, Hyundai really isn't known for producing cars with a lot of horsepower, so consumers may be having a hard time making that distinction.
Still, the Genesis fills a void that had previously been missing in Hyundai's lineup, and the diversity it provides could help reinvigorate its bottom line, which has been hampered by weaker sales in its home country of South Korea and by a stronger currency (the won). Expected to only see its U.S. market share tick higher by 0.1%, Hyundai could see the Genesis playing a key role in Hyundai's making a run toward 5% of the U.S. market.