Jeffrey Gundlach is bearish on automakers over the long-term due to the growth of companies offering ride-sharing services such as Uber Technologies. Gundlach is the chief investment officer and CEO of DoubleLine Capital
Reason why Gundlach hates automakers
In an interview with Mary Childs of Bloomberg, Gundlach explained that people will eventually reduce the frequency of driving their own cars in the future. He made that conclusion based on his own experience of changing his own driving habits.
Gundlach emphasized that a car is parked at an average of 23 hours a day, which he considers “wildly inefficient,” which makes sales vulnerable. That’s the main reason behind his bearish outlook on the prospects of automakers. He said, “I hate the automakers – hate. I hate the car companies longer-term.”
According to Gundlach, he realized the changes in the automobile use when a DoubleLine employee told him that he took an Uber trip to work because he “didn’t feel like driving.”
The statement of that employee opened his eyes. Gundlach said, “I can’t believe I didn’t think of this sooner, because it’s so great.” According to him, he is saving days a week by being able to go through hundreds of e-mails before he even arrives at work.
Ride-sharing service providers, Uber Technologies and Lyft are confident that they can reduce the number of cars on the road.
Ford, GM shares will not drop over the near-term
Gundlach said the stock prices of Ford and General Motors, the two largest automakers in the United States will unlikely decline over the near-time citing the reason that both companies have attractive dividend yields.
GM spokesman Jim Cain commented that the auto industry is “full of buyers and sellers, and that’s why it works.”
On the other hand, Susan Krusel, a spokeswoman for Ford stated that the automaker is driving innovation in every aspect of its business as part of its profitable growth plans to create value.
Krusel said Ford ‘s initiatives include a number of global experiments look look beyond traditional vehicle ownership such as car and ride sharing, parking solutions and new on-demand services.”
The top six automakers in the United States reported the highest sales performance in January in nine months. The automakers’ car deliveries rose more than 11%, bringing the adjusted annual sales rate to $16.7 million vehicles.
Automakers are expected to sell 16.9 million vehicles in 2015 based on the estimate of analysts polled by Bloomberg.
