As BlindersOffResearch's Daniel Ruiz explains, the bull thesis is simple, as the new-vehicle-production mix shifts toward the very profitable truck segment and away from less profitable cars, automaker margins increase. To date, the bull case has been correct, and the shift in production mix has been so extreme that increased margins have been able to offset overall production declines.
In order to successfully invest in the automotive sector for the long-term, I believe one very important question must be answered correctly, Will future demand support the current production strategy in North America?
Judging by the latest headlines from CBS42 in Birmingham, Alabama, the answer is writ large and ominous...
Parking lots in parts of central and western Alabama are filling up with Mercedes SUVs, and it has some people wondering what's going on.