July 12, 2024

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3 Auto Parts Stocks to Buy With Increasing Production in 2022 By StockNews


© Reuters. 3 Auto Parts Stocks to Buy With Increasing Production in 2022

September may have marked the low when it came to auto production. This is good news for the global economy and auto parts stocks which will see a spike in revenue as auto production returns to full capacity.One of the major challenges currently facing the global economy is the shortage of semiconductors. These chips are used in all sorts of products beyond laptops, tablets, and smartphones. They are now essential for products such as refrigerators, washing machines, and automobiles. Due to these shortages, there are negative, secondary effects for the companies that manufacture the other components used in these products.

Auto parts companies are maybe the best example. These companies are seeing revenue reductions as original equipment manufacturers (OEM) are placing smaller orders. However, there is a silver lining as many auto manufacturers noted in their earnings calls that the semiconductor shortage improved in Q3 compared to the previous quarter. Another constructive data point is that the number of new cars produced in October is estimated to be 13 million, an increase from 12 million in September.

This is the first sequential improvement in new car production since March when we peaked at 18 million new cars produced. This is also consistent with other data points such as shipping rates and the number of ships waiting off of ports declining, indicating that September may have been the “bottom” when it came to supply chain issues. Given that production should keep improving in 2022, 3 auto parts stocks that investors should consider buying are Meritor (NYSE:), Genuine Parts Company (NYSE:), and Goodyear Tire & Rubber Company (GT).

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