The automotive industry is expected to witness a solid recovery with the rising demand for zero-emission vehicles and government and private efforts to resolve the semiconductor shortage. So, established auto manufacturers Volkswagen (DE:VOWG_p) (VWAGY) and Ford (F) should benefit. But which of these two stocks is a better buy now? Read more to find out.Based in Wolfsburg, Germany, Volkswagen AG (OTC:VWAGY) manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific. The company operates in four segments: Passenger Cars and Light Commercial Vehicles; Commercial Vehicles; Power Engineering; and Financial Services. On the other hand, Ford Motor Company (NYSE:F) designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. It operates through three segments: Automotive; Mobility; and Ford Credit.
The global semiconductor shortage, supply chain disruption, and labor issues have negatively impacted the auto manufacturing industry. However, huge government and private investments to boost semiconductor production should address the concern and help auto manufacturers restart operations. This, along with the increasing demand for electric vehicles due to rising oil prices and climate change concerns, should drive the industry’s growth. Moreover, traditional automakers could benefit more because of 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 CAGR of 4.5% between 2021 and 2028. Therefore, both VWAGY and F should benefit.
F has gained 56.6% over the past nine months, while VWAGY has returned 13.4%. Also, F’s 114.2% gains over the past year are significantly higher than VWAGY’s 54.4% returns. Moreover, F is the clear winner with 125.4% gains versus VWAGY’s 42.3% returns in terms of year-to-date performance.