The 3 Best Car Stocks to Buy for Potential Profits in 2023

Over the past year, the automotive industry has faced challenges such as shortages of chips, high inflation, and rising interest rates. Total new vehicle sales in the United States declined 8% year-over-year in 2022, registering its worst performance in over a decade.

However, the sale of electric vehicles (EVs) rose 65% year-over-year, increasing almost two-thirds compared to 2021. In 2022, EVs accounted for 5.8% of all new car sales in the United States, up from 3.1% in 2021. With more manufacturers launching EVs, the automotive industry is expected to witness strong demand in the long term.

Additionally, car manufacturers are expected to benefit from the CHIPS and Science Act as it is anticipated to enhance their production capabilities by reducing their dependence on foreign chip suppliers.

According to S&P Global Mobility, U.S. new vehicle sales in 2023 are expected to be 14.80 million, while Cox Automotive forecasts sales of 14.10 million units, coming in higher than the 13.90 million units sold last year.

Toyota Motor North America’s executive VP Jack Hollis said, “We’re cautiously optimistic about the future. In 2023, there will be an uptick not quite as high as we would love it to be but going in the right direction.”

Therefore, it could be wise for investors to buy fundamentally strong car stocks General Motors Company (GM), Honda Motor Co., Ltd. (HMC), and Subaru Corporation (FUJHY).

General Motors Company (GM)

GM designs, builds, and sells trucks, crossovers, cars, and automobile parts and accessories worldwide. The company operates through GM North America; GM International; Cruise; and GM Financial segments.

In terms of forward non-GAAP P/E, GM’s 5.10x is 65.1% lower than the 14.59x industry average. Likewise, its 10.46x forward EV/EBIT is 22.4% lower than the 13.49x industry average.

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