Eco-Friendly Investing: Are Americans Getting "Smarter" About Cars?
By Ann Sosnowski
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Eco-friendly consumers are already putting down deposits on Smart Cars available in the United States in 2008.
United Auto Group (UAG:NYSE) has already experienced success through its European car models.
This is a “buying on the dips” opportunity on UAG.
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Eco-Friendly Investing: Are Americans Getting “Smarter” About Cars?
The other day as I was rounding the exit ramp toward my pseudo-hippy/working class neighborhood in Baltimore City, a surprising vision struck my eye. There was a woman driving a Smart Car toward the freeway, half the size of my fuel-efficient Toyota Corolla. This was the first time in a while I’d seen any individual driving a Smart Car that wasn’t plastered with advertising for a business.
I get the same feeling when I see a Smart Car in Baltimore as I do when I see a Prius: It’s a happy kind of surge that makes me pull up and smile at the driver. Maybe give them a little wave.
While I’ve already promised myself at least 10 good years on my Corolla, I respect people who are able and willing to make eco-friendly buying decisions one step at a time that will change the roads of our cities… and their atmosphere.
You can understand my surprise when I read today that the lady in the Smart Car wasn’t the only one doing good for the environment, and for traffic congestion.
Eco-Friendly Investing: Smart Cars Receive Deposit Dollars In America
United Auto Group Inc. (UAG:NYSE) announced today that it has received 12,600 deposits of $99 over the last five weeks for DaimlerChrysler AG’s (DCX:NYSE) two-seater Smart “fortwo” mini car.
UAG owns the Smart USA operation of DaimlerChrysler’s Smart unit. Vice President of UAG says that these increased sales are spurred by growing demand for fuel-efficient cars and a “continued interest in unique cars.”
Over 750,000 smart cars have been sold in Europe… now it’s time for Americans to get in on the action. The Smart “fortwo” mini cars will be available for sale in the United States in 2008.
What’s most interesting is that these cars make 40 miles to the gallon (my Corolla gets 36 miles on the highwas) and they only cost $12,000, the same price as a “regular” car. They can hit speeds of up to 90 miles per hour, which is more than necessary on American roads. These are great, and smaller alternatives, than flex fuel cars or Prius’, which are currently retailing for a whopping $22,000 ($23,000 for the “touring” version).
Of course the deposits for the golf cart-sized vehicles aren’t a surefire sale. They are refundable if people decide not to purchase the cars after all. But the company is extremely optimistic that most of them will follow through with a purchase.
The deposit program has allowed the company to do consumer research, which shows them not only how many people are interested, but also what specific Smart Car models are the most popular.
(In my fantasy automobile game I played today, personally I like the Passion Cabrio model in red, but what about you? Check them out at www.smartusa.com.)
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Eco-Friendly Investing: Automaker Process Is Environmental from Start to Finish
The environmental impact of manufacturing and owning Smart Cars is a lot more eco-friendly than other automobile production. With DaimlerChrysler, Smart Cars manufacturing follows an “eco balance sheet” to preserve natural resources and to prevent an overabundance of waste on the backend. The cars are covered in powder rather than painted, which uses 40% less energy. Overspray of the powder is collected and 98% can be reused.
There are also some interesting things they do in their production facility…
The thermal insulation in the Smart facility reduces heat loss… excess heat is recycled to be used in the “powdering” process of the cars. They also ask that the parts they order from other places be shipped in returnable containers so they can be recycled with other part shipping.
Smart Cars also have 100% recyclable synthetic materials that make up its dashboards and wheel well covers. They also find ways to combine parts of the car. An example on it’s website of this is the 20 separate pieces that it molded into one complete piece for its dashboard air system.
What’s most interesting about UAG is that the stock has been on a tear since March 2003. It returned 342% at its high in February 2007… but now the stock is trading below its 200-day Moving Average.
There is hope for the stock nonetheless. Technically, it’s being braced by its 23.6% Fibonacci retracement. Currently, UAG is a great value at $20 per share. I would consider this a “buying on the dips” opportunity.
Most of the run-up on the stock since 2003 was based on sales in Europe. The next run up will be the acceptance of these cars, especially in metropolitan areas, across the United States, most likely on the East and West coasts.
Eco-Friendly Investing: Automaker Parts Company with Retrofit Engines
Fuel efficient, environmentally friendly and cost-effective alternatives are continuing to gain ground in the United States.
In fact, along this same vein, Diligent Investor MicroCap Hot Sheet readers are currently holding a position in a company that retrofits already existing vehicles, including trucks and vans, with hybrid and electric engines and motors.
This micro-cap stock is another vehicle alternative that’s up 35% in our portfolio, and is still priced low at $6.50 per share.
This company can’t lose in such a growing market. You can learn more about the stock and Diligent Investor MicroCap Hot Sheet here.
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Ann Sosnowski is a small and mid-cap stock analyst for Taipan Financial News. She is the editor of Diligent Investor, a monthly newsletter that balances conservative and moderately risky investments that pertain to current market trends. She is also the editor of Diligent Investor Micro-Cap Hot Sheet, a monthly newsletter that finds the hottest penny and micro-cap stocks on the market.
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Related Resources
Eco-Friendly Investing: Smart Car USA
Eco-Friendly Investing: United Auto Group’s Smart Car Deposits (courtesy of CNNMoney)
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