Motor-car Shares
Last year was not a good one for the motor trade. After March last there was an abrupt halt to the strong upward trend in the sales of new vehicles. In fact, in the last three- quarters of the year these sales were 8 to 9 per cent below the level of the previous year. The total for the year was 3 per cent down against increases of 20 per cent in 1964 and 19 per cent in 1963. On the other hand, sales of second- hand motor vehicles were well maintained. BMC has paid the same interim of 74 per cent for the year ending July, but whether they will pay the same final of 121 per cent remains in doubt. The 5s. shares at the present price of 13s., to yield 7.7 per cent, express the market's scepticism. On the other hand, I find one firm of brokers recommending strongly a purchase of ROVER and JAGUAR. They think that Jaguar has at last digested its major acquisitions— Daimler, Coventry Climax Motors and Guy Motors. They see an early resumption of an upward trend in profits and they think that in the current year these could reach £3,500,000, to give a prospective price/earnings ratio of only 7. At the present price of 30s. 71d., the 'A' shares yield about 2.8 per cent. Rover's increase in profits has been due to the success of the model 2000. but in the current year profit margins may be less. At a price of I3s. 3d., the yield is 5.6 per cent and the price/earnings ratio 11.
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