Encouraged by the semblance of a deal on tax rates between President Barack Obama and congressional Republicans, traders rushed into shares of General Motors and gave a boost to Ford, Toyota and Delphi. All four stocks reached 52-week highs during day trading.
GM stock, still riding high after the U.S. government outlined its plan to sell the rest of its shares, gained 3.5% to close at $28.83 Monday. Shares of Ford crossed the $13 barrier during the day for the first time since July 2011, settling at $12.95, up 0.7%. Toyota shares hit a 52-week high, as well, rising 1.2% to $93.13.
Although automakers are careful not to outline specific policy objectives in the fiscal cliff debate, they are surely pleased that Washington is apparently set to avoid tax increases on middle-income families.
About 84% of new-vehicle buyers in 2011 had household income of less than $150,000, Edmunds.com economist Lacey Plache said.
GM spokesman Jim Cain said a resolution of the fiscal cliff would have a direct effect on 2013 auto sales.
"What we've said all along is that the markets hate uncertainty, and coming up with a solution that addresses long-term deficits and protects the credit rating of the country is going to remove an impediment to growth," Cain said. "How much growth we can expect next year depends on what the final solution is, so we're eager to see what that is."
Although a resolution of the fiscal cliff boosted stocks Monday, auto analysts have been arguing for months that GM, Ford and other auto stocks were undervalued.
Gains in GM's stock price would benefit the U.S. government, which plans to sell its remaining 300.1 million shares of GM gradually over the next 12 to 15 months. A higher price means the government's loss on its $49.5-billion bailout of GM in 2009 would be less than previously projected. The U.S. government would have to sell all its remaining shares at an average price of about $70 to break even, which is extremely unlikely.
Still, GM shares have soared 53.4% since a low close of $18.80 on July 25.
Ford stock hit a high of $13.08 Monday before closing at $12.95, an improvement of more than 25% since Oct. 17. Volume was heavy, with almost 86.8 million shares traded compared with the average of 47.8 million.
Some of the boost comes on the heels of Ford's disclosure that 2012 U.S. sales will be about 2.2 million vehicles, exceeding the 2-million mark for the second consecutive year.
The 7% increase would lag an expected 13% growth of the overall industry and reflects Ford's shortage of vehicles early in the year, before adding 400,000 units of additional capacity. Inventory shortages also have led to a drop in market share to 15.5% in November from 16.8% a year earlier.
Ford also said Polk new vehicle registration data shows the Focus tracking as the best-selling global nameplate. The total includes previous-generation compact cars still sold under the Focus name in many countries.
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