Virtually the entire automotive sector took it on the chin today. Comparatively small names like Arrival (NASDAQ:ARVL) and Embark (NASDAQ:EMBK) and more familiar firms like Lucid Group (NASDAQ:LCID) and Faraday Future Intelligent (NASDAQ:FFIE) all took hits. Even Detroit’s finest, like Ford (NYSE:F) and General Motors (NYSE:GM) couldn’t dodge the impact altogether as the entire sector suffered.
What sent the car market careening today? A report from S&P Global spelled out some of the disasters to come. Start with a teetering worldwide economy that will drive down interest in purchasing cars, to begin with. Follow that up with ongoing troubles in raw materials, and the supply chain sorrow still running amok. Then toss in a decline in readily-available capital, issues in consumer lending, and even the still-going Russia/Ukraine war, and it all adds up to trouble for cars.
There’s also another supply/demand imbalance brewing, but this time in the wrong direction for automakers and car lots. Used car prices are in freefall, and supplies are coming back to car lots. But now, demand is plunging at a time when supply is packing lots full of cars that can’t be sold. Interestingly, Americans are increasingly willing to be patient. The S&P Global Mobility survey found that 56% of consumers would be willing to wait a month or more to take delivery of a vehicle, particularly if it came with all the features they wanted.
Overall, Embark, Ford, and General Motors are all considered Moderate Buys by analyst consensus. Meanwhile, analyst consensus calls Lucid and Arrival Holds. General Motors has the lowest upside potential at 20.35%. On the other hand, Embark has the most with 342.48% upside potential.