It's almost impossible to overstate the significance California has played in making Toyota Motor Corp. (ADR) (NYSE: TM) a U.S. success.
The Japanese firm set up its headquarters in Hollywood back in 1957. It used its surging popularity in this car-crazy, trendsetting state to become not just a major American nameplate but a dominant global brand.
No wonder California leaders were so shocked when they recently learned that Toyota is pulling up stakes in the Golden State. Toyota now plans to build a new North American headquarters in Plano, Texas, taking 3,000 jobs with it.
This surprise decision sparked an intense political debate here in California in which critics accuse the state's leaders of pursuing a political agenda that is clearly anti-business.
That may very well be true, but behind the scenes there is a much larger dynamic taking place – the rise of a truly global marketplace.
And it's giving us a beautiful, long-term, market-crushing opportunity…
Amidst Boom Times, Production and Profits Are Shifting
See, even the Sunbelt is losing its status as the auto industry's North American epicenter as more production is shifted to Mexico. Analysts say roughly 40% of all North American auto jobs are now in Mexico, up from 27% in 2000.
The Sunbelt accounts for another 30%, meaning two-thirds of all auto jobs (seen as a proxy for production) are now outside the industrial Midwest.
These trends are particularly important for technology investors because new cars and trucks have become showcases for such components as sensors, semiconductors, micro-controllers, and GPS, to name a few.
And make no mistake; we're in the midst of a major auto boom…
Double- and Triple-Digit Increases Mark the Trend
Consider that last month, U.S. sales rose 11% to 1.6 million vehicles. On an annualized basis, that amounts to a rate of 16.77 million cars and light trucks, according to market researcher Autodata Corp. Moreover, that's a 16% increase from the same month in 2012.
Here's the thing: Sales in China over the past two years are growing at twice that 16% rate, according to analysts at Scotiabank. They're projecting 2014 sales of 18.86 million vehicles, for a two-year gain of 39%.
And when you take the long view, the global market looks even more impressive. For instance, over the past quarter century, auto sales in Eastern Europe are up 245%. Over the same period, they've gained 190% in Latin America and 334% in Asia.
That's why I think investors would do well to take a look at the First Trust NASDAQ Global Auto Index Fund (Nasdaq: CARZ). This is an exchange-traded fund (ETF) that offers a broad play on the global auto industry.
Just take a look at what's happening with the nation's largest "domestic" automaker, General Motors Co. (NYSE: GM). It's one of the fund's largest holdings.
Among GM's top five global markets by volume, China and the United Kingdom posted the largest sales increases last year on a percentage basis. Each gained 11%.
GM's Cadillac brand did even better in China, growing sales some 67% to a record 50,005 vehicles. Cadillac broke ground on a new assembly plant there last year and plans to add one new model per year in the country through 2016.
Meanwhile, archrival Ford Motor Co. (NYSE: F) is another major CARZ holding with significant global sales. This year, it plans to open two plants in the Asia-Pacific region and one in Latin America.
Last year, Ford sold nearly a million wholesale vehicles in China, a 49% increase. In 2014, the company expects to launch more new vehicles globally than it has in more than a century. And it still makes the top-selling vehicle in the U.S. – the popular F150 pickup truck.
Global Exposure to a Surging Market
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.