The Nation's Best Car Company Is Not in Detroit

It’s a little bewildering that taxpayers have been forced to shuffle billions of dollars into Chrysler and General Motors (GM: 1.14*, +0.00, +0.00%) when there are profitable, innovative and successful car companies out there — ones that don’t simply make better investments but also better cars.

With a market capitalization of $50 billion dollars, roughly 50 times the size of GM, I believe the best car maker — and car stock — is undoubtedly Honda (HMC: 29.11*, +0.57, +1.99%), whose Accord was the top-selling U.S. vehicle in April.

Before the flag wavers start griping about the importance of “buying American,” consider that Honda was the first Japanese firm to build cars in the U.S. starting 50 years ago. The impact has been overwhelmingly positive: According to a study from the Center for Automotive Research, more than 367,000 private sector jobs and $17 billion in annual wages are generated thanks to Honda’s U.S. operations.

Nobody makes a fuss about buying televisions made in Korea or coats sewn in Mexico. And if you lament the decline of the big three domestic auto makers, remember that, like Wal-Mart, it's American consumers who’ve made Honda a success in America. The automotive space is extremely competitive. Honda’s success is based on the company’s brand, high-quality production and diversity of products, precisely why there’s a good chance one of them is sitting in your driveway right now. Of course, Honda’s business is bigger than cars. The company also makes motorcycles, engines, robots…and even airplanes.

That’s why the president’s recent suggestion that, “If you are considering buying a car, I hope it will be an American car,” misses the wholly-beneficial reality of free trade. Honda’s success in selling cars in America has enriched the Honda Corporation but also the consumers who’ve bought them, employees who’ve made them and shareholders who’ve invested in them. Unlike a bailout or subsidy, trade is not a zero-sum game.

Last year, the company broadcast an inspiring, first-of-a-kind three minute advertisement on British television that showed a skydiving team forming the letters “H-O-N-D-A” live as they plummeted over Spain.

Just months later, Chrysler was reduced to taking out stark, black, full-page ads in major newspapers thanking America for its “investment” (read: involuntary bailout) in the company, which, as we pointed out last week, is essentially already gone.

An innovative and outstanding company, Honda’s soaring success should be commended. And for a long-term investor looking a few years out, I consider the stock an unequivocal “buy.”

Source;
http://www.smartmoney.com/Investing/Stocks/The-Nations-Best-Car-Company-Its-not-in-Detroit/