Autos Retailers To Continue Outperforming?

Despite the poor year-to-date performance of autos equities in the US, we note that autos retailers, such as AutoNation (new and used cars) and AutoZone (auto parts), have outperformed the overall sector, which is down by 28% since January. US-based, global autos equities such as Ford (-32%) and General Motors (-36%) have been weighed down in 2011 by a surge in global risk aversion in recent months, but also by rising raw material costs and still-high debt loads due to CapEx, which have been eating into margins. In contrast, we note that AutoNation and AutoZone are up by 31% and 22% respectively.

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