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Yep, Automakers May Be Your Best Bet

Alex Rosenberg, CNBC Producer
Friday, 8 Mar 2013 | 11:14 AM ET
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It's the one key economic number that's stubbornly lagging behind so many others: Motor Vehicle Sales.

The S&P 500 is at an five-year high, and so is household net worth.

But don't tell that to automakers — because monthly vehicle sales have lagged stubbornly behind the pack.

You'd expect that auto sales would track household worth pretty closely, but they've actually been left far behind. From 2002 to 2007, Americans were buying 16 or 17 million cars and light trucks each year. But only 15.3 million autos were sold in the year ending February 2013.

This is especially surprising when you consider the Federal Reserve-induced low interest rates. Unless you head up an international crime syndicate, you probably didn't buy your last car with cash — so the interest rate has a big impact on how much you'll end up paying for that automobile.

(Read More: Car Buyers Taking Out Bigger Loans, Set New Record)

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You've certainly seen low rates help home builders. In fact, over the past two years, you've actually seen car makers and home building stocks go in opposite directions:

So can this divergence really last, are should we expect to see a shift?

At the very least, ConverEx Chief Market Strategist Nicholas Colas thinks the auto recovery will continue. "Will we hit seventeen million cars sold this year? Probably not," Colas said. "We could expect to see a number in the mid-sixteen millions, though."

And Colas notes that automakers still have a big red lever to pull. "Leasing," Colas explains, "is about to become a more important arrow in the quiver of most domestic car companies." This increased emphasis on leasing could be good for an extra one or two million cars sold.

Not everyone, however, thinks that the auto recovery still has legs. Rod Lache, Deutsche Bank's automotive analyst, notes that when you compare the auto sales number with other key economic measures, "You might argue that from the bottom, the auto recovery has been even greater. After all, we saw such a sharp deterioration."

What it might ultimately come down to is Europe. As Colas notes about the auto sector, "Anyone with European operations has felt a world of pain. Some of the worst sales number seen in decades have come from Europe in the last six months." But he adds that there is hope, at least, for a European turnaround.

So will it be an improving Europe that helps auto stocks, or U.S. sales numbers that still have room to run? While no one knows what the future may bring, this much is clear: Investors can find a couple of good reasons to kick the tires on an American automaker or two.

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