Automotive stocks to watch amid falling car sales

Things are pretty tough not only for those looking to buy a new car, but also for used car buyers. The global shortage of semiconductors has delayed the delivery of new vehicles as automakers scramble to meet demand. The chip shortage has strained production lines, stifling the supply of new vehicles. This, in turn, has led to a lack of used cars, as people stick with their cars longer.

Used car sales slowed in the quarter to the end of June. At 1.76million, the number of used cars sold in the UK was 14% below pre-pandemic levels. The number is 407,820, 19% lower than the highest recorded last year, as consumers rushed to the forecourts following the easing of COVID-19 restrictions.

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Notably, new car sales also fell sharply last month due to lack of semiconductors. July saw a 10% drop in new car sales amid supply chain disruptions, according to the Society of Motor Manufacturers and Traders (SMMT). It was the fifth consecutive month that sales declined. The industry body also cut its forecast for new car sales for the full year, citing a difficult first half of the year.

As a result of this information, Kalkine Media® is exploring certain auto-related stocks that may be impacted.

Auto Trader Group Plc (LON:AUTO)

Auto Trader Group is a new and used car dealership and conducts approximately 10 million transactions each year. It is listed on the benchmark FTSE 100 index and boasts a market capitalization of £6,066.53 million as of Wednesday. Its shares slid 0.53% and traded at 640.80 GBX as of 11:07 GMT+1 on August 10. Over the past year, the stock price has appreciated a meager 0.25%, while its year-to-date return has lagged -13.32%. Earnings per share are currently 0.26.

Pendragon Plc (LON: CEO)

Pendragon operates in the automotive retail business and sells cars, bicycles, trucks, vans, etc. new and used. It also provides after-sales and body repair services. PDG holds a market capitalization of £329.68 million and over the past year has returned over 32% to investors. Earnings per share is at -0.02. The stock was trading at GBX 23.20, down 1.70%, at 11:15 GMT+1 on Wednesday.

Vertu Motors Plc (LON:VTU)

Vertu Motors is another UK car dealer listed on the FTSE AIM All-Share. As of Thursday, it holds a market cap of £192.62m with earnings per share of 0.04. Investors have received a 17.41% return over the past year from the stock, but the year-to-date return is in negative territory at -21.45%. Shares of Vertu Motors were down 2.90% at GBX 53.60 at 11:21 GMT+1 on August 10.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental assessment or technical analysis. Any interest in stocks or sectors should be carefully assessed taking into account the associated risks.