Stock prices for publicly traded auto dealership groups are taking a pounding, bumping along near 52-week lows.
Analysts say that means investors expect the economy — and auto sales — to decline in 2008. Predictions for U.S. light-vehicle sales next year range from 15.5 million to 15.9 million, down from a projected 16.1 million this year.
Some investors are taking advantage of the retailers' low stock prices. Hedge fund manager Edward Lampert, already AutoNation's biggest investor, boosted his stake last week to 30 percent, up from 28.5 percent.
On Friday, Standard & Poor's Ratings Services lowered its outlook for AutoNation to negative, from stable. In her report, S&P credit analyst Nancy Messer predicted lower U.S. auto sales next year, "particularly in the company's crucial markets of California and Florida, where economic softening has been pronounced."
Investors are reacting to a drumbeat of sales forecasts that project slow sales in 2008. In a Friday, Nov. 30, note to investors, Morgan Stanley's Jonathan Steinmetz reported that General Motors CFO Fritz Henderson expects industry sales could dip to 15.7 million units next year. A GM spokesman said Friday that GM's publicly stated 2008 industry sales forecast in the low 16-million-unit range remains unchanged.