Wall Street Advisor: Used Rocks, Domestics Are Done

Edward Niedermeyer
by Edward Niedermeyer
wall street advisor used rocks domestics are done

Analyst Todd Sullivan over at seekingalpha reckons it's a good time to invest in the auto sector. Operating under the principle that Americans need cars for their economic survival, Sullivan says motorists will still be in the market– just shopping at a different stores. Sullivan points to Warren Buffet's recently acquired 13.98m share stake in CarMax and Sears Holding's big investment in AutoNation and AutoZone as proof that there's gold in them thar' pre-owned autos and car parts. Sullivan also tempts investors with the fact that all of these companies are "hovering around 52-week lows." Meanwhile, Sullivan counsels investors to avoid Detroit's domestic manufacturers' shares like the proverbial plague. "It should be noted that this is NOT an endorsement of the US auto industry via Ford or GM as these are just terrible businesses due to legacy union costs," Sullivan opines. "They are stuck in a cost structure that dooms them. It is probably the only business the airlines can look at and say "at least we are not them."

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  • Andy D Andy D on Mar 18, 2008

    I have resorted to a "professional" mechanic only once in the last decade. Most repairs are done in my driveway with basic hand tools. My cars dont break down either. 1 tow in the last decade.

  • Red dawg Red dawg on Mar 18, 2008

    BuckD : March 18th, 2008 at 1:50 pm I’ve been numbed by triple-digit “GM Death Watch” entries, but Sullivan’s advice is like a bucket of ice water to the groin. We are so screwed. And so are the domestic 2.8 as long as they are being managed ( or should i say mis-managed???) the way they are now!!!!!!!! Ford is being "sorta" run by a man from the aviation industry (who takes his orders from the Ford family and board of directors - who are both mis-management stories in and of themselves.....just look at Ford's financial loses month after month after month for proof!!!!!), GM has car guys in control but they seem to have their heads either in the sand or up their ass (or my guess: BOTH !!!) and Chrysler is being run by bankers and financial advisers. I say the only hope for the 2.8 is to get someone in the CEO's office of each company that knows how to run an automobile business in the 21st. century instead of being run like they were in the first 60 years of the last century when they had no worries from the Japanese, Korean and European comptition.

  • Joeaverage Joeaverage on Mar 19, 2008

    The Navy had Auto Hobby Shops as late as 1996 when I returned to the civilian world. Anybody got a date more recent than that? Answered my own question: http://www.nasjax.navy.mil/mwr/mwrnasjax/mwrauto.htm One example. Google Images has alot of pics of various auto hobby shops.

  • Jthorner Jthorner on Mar 19, 2008

    I'm a long time DIY person and the auto parts stores I go in seem to have a strong business. Here in Nor. Cal. much of the customer base is indeed Spanish speaking. There is a large segment of society which does it's own car work out of economic necessity if nothing else. These aren't the people living in gated communities and shopping at Nordstroms, but they are the people who make up the working backbone of the world. Some years ago I was at a dinner with other executives from my then employer. The CFO lived in the same neighborhood as I did and commented that he thought he saw me changing the oil on my company provided Cadillac STS that past weekend. I confirmed that he did indeed see me doing just that and he was befuddled. "You know, you can pay people to do that sort of thing." I told him that I had been changing oil myself since I was 13 years old and wasn't about to stop because I enjoyed it, and that it took me less time to do myself then it would to drive to the dealer and wait around for them to do the job. Not long after that I pulled the ejection cord on that job. I'm much happier putzing around with my car then I ever was jetting off to meetings here there and everywhere. Most routine maintenance work on modern cars really isn't any harder than for the old stuff. Thanks to our fleet and the friends I help out I frequently work on cars ranging from the 1940s up through modern stuff. Recently I tackled CV joint boot replacements on a 2001 Volvo S70 and the job was really no more difficult than is changing out the master cylinder on a 1948 Plymouth. However, electrical issues on modern stuff can be very hard to sort out!

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