Auto Sales Jump In Q1: ETF & Stocks To Ride On

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After the worst plunge last year since the 1970s, the U.S. auto industry bounced back strongly in the first quarter of 2021. This is especially true as car sales soared 11% in the first quarter of 2021 buoyed by the waning signs of COVID-19 crisis and concerns over potential vehicle shortages.

The rapid vaccinations, unprecedented stimulus, and reopening of the economies boosted demand for everyday travel, resulting in spike in auto sales. According to figures compiled by Edmunds.com, automakers sold more than 3.9 million vehicles during the first quarter with several major companies reporting March sales that nearly doubled the levels recorded in the same month a year earlier.

Of the six major American and Japanese automakers, Toyota Motor (TM - Free Report) was the biggest winner, registering a 21.6% surge in sales. This was followed by 16.2% increases for Honda Motors (HMC - Free Report), 10.8% for Nissan (NSANY - Free Report), 4% for General Motors (GM - Free Report), and 1% for Ford Motor (F - Free Report). Stellantis (STLA - Free Report) — formed after the merger of Fiat Chrysler and PSA Group — also witnessed a 5% rise in car sales for the first quarter.

The solid trend is likely to continue this year given the robust demand backed by rising consumer confidence and spending. The Fed pledged to keep rates at lower levels until the end of 2023. Consistent lower interest rates will encourage new-car buying, pushing more consumers to avail loans. Further, with continued acceleration in digitalization, the auto industry will get a boost as automakers are propelling their online services.

However, global chip shortage could derail the car production in the coming months that might slow down the recovery in the industry, which just started to see an uptick in sales.

Below we highlight the pure-play auto ETF and a few stocks that could be attractive picks for 2021:

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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