General Motors vs. Toyota: Which Auto Manufacturing Stock is a Better Buy?

© Reuters. General Motors vs. Toyota: Which Auto Manufacturing Stock is a Better Buy?

The automotive industry is expected to witness a solid recovery with increasing demand for carbon-neutral vehicles and a gradual lessening of the global semiconductor shortage. So, we think shares of established auto manufacturers Toyota Motor (NYSE:TM) and General Motors (GM) should benefit. But which of these two stocks is a better buy now? Read more to find out.Headquartered in Toyota, Japan, Toyota Motor Corporation (TM) designs, manufactures, assembles, and sells passenger vehicles, minivans and commercial vehicles, and related parts and accessories. It operates in Automotive; Financial Services; and All Other segments. In comparison, General Motors Company (NYSE:GM) in Detroit, Mich., designs, builds and sells cars, trucks, crossovers, and automobile parts worldwide. The company operates through GM North America; GM International; Cruise; and GM Financial segments.

Even though the global semiconductor shortage and supply chain crisis have been affecting the auto manufacturing industry, massive government and private investments to boost semiconductor production should gradually ease the problem and help auto manufacturers resume production. Furthermore, traditional automakers might be more beneficial based on their broad portfolio of vehicles and market dominance. According to a report by Market Research Future, the automotive industry is expected to grow at a 4.5% CAGR between 2021 - 2028. Therefore, both TM and GM should benefit.

TM has gained 20.1% in price over the past six months, while GM has returned 17.9%. However, GM’s 7.5% gains over the past month are higher than GM’s 4.1% returns. And GM is the clear winner with 16.1% gains versus TM’s 1.9% returns in terms of their past three months’ performance.

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