Why are truck sales so important to automakers like Ford?

Trucks and SUVs are significantly more profitable for automakers than smaller vehicles. For companies like Ford, the F-Series trucks generate much higher profit margins - sometimes $10,000 or more per vehicle compared to a few thousand for smaller cars. This means even modest increases in truck sales can dramatically boost a company's bottom line. When Ford reports a 14.2% sales increase driven primarily by trucks, it signals not just higher revenue but substantially higher profits.

What does "high-margin" mean when talking about vehicles?

"High-margin" refers to products that generate a larger profit percentage on each sale. For automakers, trucks and large SUVs typically have profit margins of 15-20% or more, compared to smaller vehicles that might only have 3-5% margins. This means if a truck sells for $50,000, the company might make $7,500-$10,000 in profit, while a $25,000 sedan might only generate $750-$1,250 in profit. This explains why automakers are so focused on selling more trucks and SUVs.

How do parts suppliers benefit from increased auto sales?

When vehicle sales increase, automakers must increase production to meet demand. This creates a ripple effect where they order more components from suppliers like Cummins (engines), AXL (drivetrains), and FOXF (suspension parts). These suppliers then see their own sales volumes grow. Additionally, as more vehicles hit the road, aftermarket parts suppliers like Dorman and LKQ benefit from increased service and repair work in the years following. This creates both immediate and long-term revenue opportunities throughout the supply chain.

What's the difference between an automaker and an auto retailer?

Automakers (like Ford, GM, and Toyota) design and manufacture vehicles in their factories. They sell these vehicles wholesale to auto retailers (like Penske Automotive Group and Group 1 Automotive), which are the dealerships that sell directly to consumers. Auto retailers make money not just on the initial vehicle sale but also through financing, insurance, extended warranties, service departments, and parts sales. When auto sales surge, both groups benefit, but in different ways - manufacturers from increased production volume and retailers from higher customer traffic and service opportunities.

What does "Projected Profit %" mean for these stocks?

"Projected Profit %" refers to the estimated percentage increase in a company's profits in the coming year. Analysts forecast this based on factors like sales trends, market conditions, and company guidance. For auto industry stocks, strong vehicle sales often lead to higher projected profit percentages as increased volume flows through to the bottom line. This metric helps investors understand not just if a company is growing, but how much that growth might improve profitability - a key driver of stock performance.

14 handpicked stocks

American Auto Surge

Tap into the unexpected strength of America's auto industry. This collection features carefully selected automakers, parts suppliers, and retailers benefiting from Ford's impressive 14.2% sales jump and robust consumer spending on vehicles.

Han Tan | Market Analyst

Published on July 2

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Ford Motor Co.

Current price

$12.22

As the company at the center of the headline, Ford is the primary beneficiary of its 14.2% sales surge, particularly from its popular F-Series trucks.

General Motors Co.

Current price

$59.36

A direct competitor that also reported a 7% sales increase, General Motors benefits from the overall strength and consumer resilience in the U.S. auto...

A direct competitor that also reported a 7% sales increase, General Motors benefits from the overall strength and consumer resilience in the U.S. auto market.

Toyota Motor Corporation

Current price

$190.52

Toyota's 7.2% increase in Q2 deliveries demonstrates that the auto sales surge is broad-based, benefiting multiple major manufacturers.

PACCAR Inc.

PCAR

Current price

$98.19

Cummins Inc.

CMI

Current price

$432.59

American Axle & Manufacturing Holdings I

AXL

Current price

$6.08

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+16.77%

≈

About This Group of Stocks

Our Expert Thinking

Ford's surprising 14.2% sales increase signals remarkable resilience in consumer spending on vehicles, especially high-margin trucks. This strength is creating a ripple effect throughout the auto industry, from manufacturers to parts suppliers to retailers – all positioned to benefit from this momentum.

What You Need to Know

This collection offers exposure across the entire automotive value chain. It includes major manufacturers like Ford and Toyota, critical parts suppliers such as Cummins and Dorman, and retailers like Penske. This diversity lets you capture growth at multiple points in the industry.

Why These Stocks

These companies were selected because they stand to directly benefit from increased vehicle production and sales. Each plays a specific role in the automotive ecosystem – from building the vehicles to supplying crucial components to selling and servicing them for consumers.

Group Performance Snapshot

16.77%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 16.77% over the next year.

11 of 14

Stocks Rated Buy by Analysts

11 of 14 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

🚗

Trucks Are Rolling Off Lots

High-margin trucks and SUVs are driving record sales, with Ford's F-Series alone seeing double-digit growth. This surge is putting cash in automakers' pockets when many expected a slowdown.

💰

Consumer Spending Defies Expectations

Despite inflation concerns, Americans are still buying big-ticket vehicles. This unexpected resilience signals potential upside for the entire auto ecosystem that analysts may not have fully priced in yet.

🔄

The Ripple Effect Is Just Starting

Higher production volumes are now cascading through the supply chain. As manufacturers ramp up to meet demand, parts suppliers and retailers stand to benefit from this momentum for quarters to come.

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