The automotive industry is huge and very visible. Almost everyone is familiar with automotive brands, and most people have an opinion about the best new cars and trucks on the market. Because of this visibility, automotive stocks have gotten lots of interest from investors for decades. We'll take a closer look at automotive stocks and explore the best ways to invest in them.
Top car stocks of 2025
Some of the best-known automotive stocks are:
Automotive company | Market Cap | About |
|---|---|---|
Ford Motor Company (NYSE:F) | $45.5 billion | Ford is a long-time market leader in pickup trucks and commercial vehicles, with operations worldwide. Ford is now investing in electric and automated vehicles to help it maintain that lead. However, relatively high interest rates have held EV growth back in recent years, and Ford is focusing on reducing costs and increasing EV capacity to make its EVs profitable. |
Ferrari NV (NYSE:RACE) | $80.4 billion | This Italian automaker is known for its expensive sports cars and years of racing success. Ferrari's strong brand and its long waiting list give it great pricing power and luxury-level profit margins. |
Tesla (NASDAQ:TSLA) | $1.1 trillion | The pioneering maker of "premium electric vehicles" has grown to be the world's most profitable EV automaker, and it dominates the U.S. EV market. Investors clearly expect great things from CEO Elon Musk and his team, and that includes ongoing EV sales, Robotaxis, and full self-driving (FSD) technology. |
Stellantis (NYSE:STLA) | $28.1 billion | Formed in 2021 through the merger of Fiat Chrysler and Peugeot, this automaker's brands include Jeep, Ram, Dodge, Opel, Vauxhall, and Peugeot. It also owns the Fiat, Alfa Romeo, and Maserati brands and has strong operations in Europe, South America, and the U.S. |
Volkswagen (OTC:VWAGY) | $57.7 billion | Volkswagen is one of the best-selling automakers outside the U.S. Its portfolio of brands includes VW, Skoda, and SEAT, plus the Audi, Lamborghini, Porsche, and Bentley luxury brands. |
Toyota Motor (NYSE:TM) | $253.6 billion | Established in 1937, the Japanese automotive giant's portfolio of brands includes Toyota, Lexus, Daihatsu, and Hino. The power of its brand and its global footprint make Toyota the largest car brand in the world in terms of sales. |
General Motors (NYSE:GM) | $52.9 billion | Owner of the GMC, Buick, Chevrolet, and Cadillac brands, GM is the largest car company in the U.S. in terms of sales. |
The auto industry
You'll find the following types of stocks within the automotive industry group:
- Automakers, which manufacture cars, trucks, and sport utility vehicles, including electric vehicles (EVs)
- Suppliers of auto parts, from seats and spark plugs to complex electronic systems, tires, and batteries for electric cars
- Auto dealer groups
- Auto parts retailers
How do you evaluate an automotive stock?
Automotive stocks are part of the consumer durables sector. This sector includes companies that manufacture products intended to last for more than a few years, such as washing machines, dishwashers, furniture -- and vehicles.
Before investing in automotive stocks, it's essential to understand how economic cycles affect automotive companies and how these companies work to maximize profits and stay competitive during good and bad economic times.
Understanding the auto sales cycle
Automakers and their suppliers are cyclical stocks, meaning their profits rise and fall with consumer confidence. It's easy to see why: When businesses and consumers are worried about the economy, they postpone buying new vehicles. Auto sales' cyclicality matters to investors because:
- Automakers have high fixed costs, which include factories, tooling, logistics networks, and labor contracts. These bills have to be paid no matter how many cars are sold.
- Automakers and suppliers also need to invest in product development to make sure they have a steady stream of competitive new products.
- High costs and steady spending mean profit margins in the automotive industry tend to be low, even during good economic times.
- When sales slump, such as during a recession, automotive companies' profits fall sharply, putting future product spending and future competitiveness at risk.
One way to avoid the cyclicality of the sector is to buy stocks exposed to the replacement market, such as auto parts retailers or manufacturers that sell primarily to the secondary market.
How do you understand car companies' financial statements?
For the most part, automotive companies' financial statements aren't too hard to decipher. Here are three things to know:
- Auto investors tend to look at operating income or EBIT (earnings before interest and taxes), as well as operating or EBIT margins (calculated by dividing profits by total revenue) and cash flow to track an automotive company's financial performance.
- Automakers will often provide adjusted figures that exclude the impact of one-time charges and gains, such as write-offs and tax windfalls, which are useful for understanding the business's underlying performance.
- Many automakers have subsidiaries that are finance companies, which offer loans and leases to customers and dealers. They can make automotive financial statements confusing for investors. To help, most automakers provide debt and cash-flow figures specific to their core automaking businesses, often called "automotive" or "industrial" numbers.
Competition in the car industry
Generally speaking, the automaker with the newest products will get the highest prices and the biggest profits. Automakers must continually invest to be sure they have a steady flow of new products in the pipeline.
Virtually all automakers and many parts suppliers are also making significant investments in future technologies such as EVs, extra safety features, and autonomous driving systems. Most experts believe that these technologies will be necessary for automakers to remain competitive in the not-too-distant future.
Electric vehicles
Some exciting opportunities in the next few years will involve manufacturers of electric and hybrid electric vehicles. These are new and different, and most analysts expect them to eventually displace internal-combustion cars.
EV companies might see high growth, which is also exciting for investors. But it's important to remember that the processes involved in developing and manufacturing EVs aren't all that different from those used by traditional internal-combustion vehicle manufacturers. That means EV manufacturers face high costs, just like traditional automakers.
It's also important to remember that all the major traditional automakers are introducing their own electric vehicles. The competition in this segment of the market is fierce.
That competition has intensified as relatively high interest rates have slowed demand growth at a time when many carmakers have released new EV and hybrid models. As such, the primary focus over the last year or so has been on cutting costs and reducing capacity where necessary.
The future of the auto industry
The future of the industry lies in EV and autonomous vehicles, with an increasing part of the value in the car coming from its software component. In addition, many believe ride sharing, notably via robotaxis, is where the industry is headed.
Many of the major automakers have invested heavily in EVs, autonomous vehicles, and robotaxis, but the undisputed leader in terms of commercializing these opportunities is Tesla.
Its robotaxi rollout and its aim of having unsupervised full self-driving (FSD) available (so Tesla drivers can transform their vehicles into robotaxis, and Tesla can launch its dedicated robotaxi, the Cybercab) are not risk-free events. Still, if Tesla can get it right, the upside potential for the stock is significant.
Related investing topics
Are automotive stocks for you?
Automotive stocks can be important contributors to your investment portfolio. And because they rise and fall with consumer confidence, they can be useful indicators that economic trouble -- or a recovery -- may be on the way.
In addition, investing in an automotive manufacturer means taking a positive view of the company's long-term hybrid and electric vehicle strategy. That's become harder to judge as relatively high interest rates have slowed the growth rate of EV unit sales, dropped pricing, and intensified competition.
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