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2 Stocks to Avoid as US Auto Sales Forecast Plummets By StockNews

by Mike Robinson

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© Reuters. There are 2 stocks to avoid as US Auto Sales Forecast plummets

The global semiconductor shortage is expected to continue negatively affecting the automotive industry’s production and sales this year. Given the industry’s bleak growth expectation, it could be prudent to avoid stocks such as General Motors (GM) and Ford Motor Company (NYSE:), which are expected to see large sales declines in the third quarter.Auto manufacturing declined sharply, thanks to COVID-19 pandemic-induced restrictions and a decline in demand for new vehicles. Even though major economies have begun to return to pre-pandemic activity levels, auto manufacturing continues to be affected by the global shortage of semiconductor chips. Cox Automotive, Edmunds and J.D. Power/LMC Automotive estimates that vehicle sales in July-September were between 13% and 14% lower year-over-year.

The semiconductor shortage remains unresolved, so many players have been forced to temporarily reduce production and shut down plants. The global automotive market will suffer a $210 billion loss due to the shortage of semiconductor chips in 2021, according to projections.

General Motors Company (NYSE) and Ford Motor Company(F) will likely experience the biggest third-quarter sales drops, so avoid these stocks.

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