Three ASX automotive shares could be buys in 2023 according to Citi analysts.
The three shares are Bapcor Ltd (ASX: BAP), ARB Corporation Limited (ASX: ARB) and GUD Holdings Limited (ASX: GUD).
Let's take a look at the outlook for ASX 200 automotive shares in more detail.
What's the outlook?
Citi recommends multiple ASX 200 automotive shares amid a rise in new car sales.
Data from the Federal Chamber of Automotive Industries (FCAI) showed a 31.9% lift in SUV vehicle sales in November. New vehicle sales lifted 17.9% compared to November 2021. Passenger vehicles fell 0.8%. Toyota was the market leader during the month, with Mazda and Ford following next.
Citi analyst Sam Teeger, quoted in The Australian, said "consumer demand for new cars appears to be holding up" but remains cautious amid higher interest rates and cost of living pressures.
Bapcor is Citi's "top pick" in small-cap auto. This is due to its "relatively less-discretionary product offering" and potentially "conservative fiscal 2025 consensus earnings".
The analyst also rates ARB Corporation as a buy given its strong balance sheet, while GUD also gained a mention. In a note to clients cited by the publication, Teeger added:
While both ARB and GUD should benefit as (car manufacturer) supply recovers, we see ARB relatively better positioned due to its export growth potential and a stronger balance sheet.
Given ARB's long-term growth prospects appear unchanged, we see the current
weakness as temporary and as an opportunity to get set in a quality long-term
growth story
ARB Corporation designs, manufactures and distributes four-wheel-drive and light commercial vehicle accessories. The company reported $52.7 million of net cash holdings in its FY22 results. Bapcor specialises in automotive aftermarket spare parts and accessories in Australia, New Zealand and Asia. GUD also manufactures, imports and distributes automotive products.
New December stats from the FCAI released yesterday show a 12.1% lift in new vehicle sales compared to December 2021. Passenger vehicles lifted by 3.1%, with Toyota again the market leader.
Share price snapshot
The Bapcor share price has slid 5% in the last year.
The ARB Corporation share price has slid 48% in the past 52 weeks.
The GUD Holdings share price has fallen 32% in the last year.
