Benzinga - There's no question 2022 has been a brutal year for auto stock investors. Shares of General Motors Company (NYSE: NYSE:GM) and Ford Motor Company (NYSE: NYSE:F) are down more than 40% this year, while shares of Tesla Inc (NASDAQ: NASDAQ:TSLA) are down nearly 70%.
CFRA auto analyst Garrett Nelson recently released his 10 bold predictions for the auto industry in 2023, and he sees brighter skies ahead for some top automakers. Here's a summary of his predictions:
- Tesla will be the top performing auto stock in 2023. Nelson says 42% vehicle delivery growth for Tesla and federal EV tax credits will be bullish catalysts for the stock.
- Ford will outperform GM. Nelson says Ford will be rewarded for its more balanced approach to EV growth, while sales of new GM EVs may disappoint.
- There will be more EV startup bankruptcies in 2023. Nelson said Rivian Automotive Inc (NASDAQ: RIVN), Lucid Group Inc (NASDAQ: LCID) and Fisker Inc (NYSE: FSR) remain unprofitable and continue to burn through cash at a rate that "could threaten their viability."
- Auto retail will be the best-performing auto industry sub-group in 2023. Nelson said investor sentiment toward auto retailers and mentioned AutoNation Inc (NYSE: NYSE:AN) as his top stock pick.
- Despite concerns over rising EV competition, Tesla's Model Y and Model 3 will remain the best-selling U.S. EVs in 2023. Nelson said sales of most new EV models from Tesla's competitors have disappointed up to this point.
- There will be more restructuring and consolidation among major global auto manufacturers in 2023. Nelson said he wouldn't be surprised to see legacy automakers separating or spinning off their EV businesses or merging to reduce costs.
- New and used vehicle prices will decline in 2023. Nelson says new vehicle production will recover and inventories will rise in 2023, pressuring both new and used auto prices.
- The average U.S. vehicle age will hit a record high in 2023. Nelson says an aging vehicle fleet is good news for top auto parts stock picks, including O'Reilly (NASDAQ:ORLY) Automotive Inc (NASDAQ: ORLY) and Advance Auto Parts, Inc. (NYSE: AAP).
- Aptiv PLC (NYSE: APTV) will be the best-performing auto parts and equipment stock in 2023. Nelson says Aptiv's focus on fast-growing new mobility solutions, including smart vehicle and connected car technology, will help the stock outperform peers.
- Major automakers will announce layoffs in 2023. Nelson predicts GM, Ford or other automakers will reduce their workforces and even potentially idle or close plants in an effort to cut costs.
Benzinga's Take: Auto stock investors may not know what's coming in 2023, but many of them are probably thinking whatever is coming can't be much worse than what they endured in 2022. Tesla may face its first serious competition next year, while both legacy automakers and EV startups must prove their long-term strategies are viable.
Photo courtesy of Lucid Motors.
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