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Two Ways: Automaker Incentives Fall On Deaf Ears


Strengthen your portfolio in good times and bad.


The US automakers posted big declines in sales last month after attempting to lure consumers with large incentives. According to the Wall Street Journal, sales at General Motors (GM) plunged 49% during the month of January - more than analysts were expecting and by far to the worst level in almost half a year. Ford Motor (F) recorded a 40% drop in the same period. Both companies reported significant sales declines to rental car companies, typically a major source of revenue.

For its part, Toyota (TM) saw a 32% slump, while Honda (HMC) and Nissan (NSANY) recorded declines of 31% and 30% apiece.

Although attractive, the uptick in incentives failed to resonate with consumers. Toyota increased theirs 92% to an average savings of $1973 per vehicle. Industry-wide, they were up an average of 12% to $2714. Mysteriously, GM was the only automaker to lower their incentives - down 9.9% to an average of $2992 per vehicle.

For more trading context, see Toddo's Random Thoughts: Mr. Market Spites Piggies.

From the Bull Pen: The action in today's automaker stocks shows that negativity may be priced in. Consider Toyota. This stock could have legs if a rally's underway. A sell stop can be set below today's low, near $64.

From the Bear Cave: As far as a downside play, consider one Professor Jeff Macke is using: Ralph Lauren (RL). The company reports earnings tomorrow, so watch its behavior in the first part of the session before initiating any positions.

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No positions in stocks mentioned.

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