Uber Thriving Despite Auto Industry Decline
Is Uber to blame for auto stocks' underperformance? CNN Money's Paul La Monica offered a deep-dive look into the auto industry, which is declining at a time when Uber is growing.
According to La Monica's article for auto manufacturers, she reported a "lousy" May with evidence of declining sales at General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F), Toyota Motor Corp (ADR) (NYSE: TM) and Honda Motor Co Ltd (ADR) (NYSE: HMC). In fact, the auto industry has proven to be a "bright spot" for the economy but May's data is a "troubling sign."
Shares of GM have lost 11 percent this year, which is worse than Ford's 6 percent loss and the trend might not reverse now that gas prices are beginning to rise from multi-year lows.
La Monica suggested that consumers continue to shy away from buying cars and are opting to lease instead. He added that Uber could be the "only big customer left to buy cars" in mass quantities in the future, although they will be driverless variety.
Meanwhile, Saudi Arabia's sovereign foreign fund is bullish on Uber and recently invested $3.5 billion in the company, which now boasts a $62.5 billion valuation -- which is worth more than General Motors, Ford and Honda.
"Clearly, the auto business is in transition," La Monica wrote. "And that could mean that there are some good bargains for investors looking to sift through the rubble. But what makes investing in the auto industry so challenging right now is the fact that so much is changing."
So what should investors do? Simply put, La Monica concluded that picking the winners and losers in the fast changing industry "can be incredibly difficult."
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