General Motors (GM) stock is sinking Tuesday despite the auto company beating top- and bottom-line expectations for its fourth quarter and issuing a better-than-expected profit forecast for 2025.

In the three months ending December 31, GM's revenue increased 11% year over year to $47.7 billion. Its earnings per share (EPS) surged 54.8% to $1.92.

"We grew full-year revenue 9%, once again we led the U.S. market in total, retail, and fleet deliveries, we grew our market share, and we distanced ourselves from the industry's pricing, incentive, and inventory pressures," wrote General Motors CEO Mary Barra in her Q4 Letter to Shareholders. "We doubled our electric vehicle market share over the course of the year as we scaled production, and our portfolio became variable profit positive in the fourth quarter."

The results topped analysts' expectations. Wall Street was anticipating revenue of $43.6 billion and earnings of $1.84 per share, according to Yahoo Finance.

For the full fiscal year, General Motors said it expects to achieve earnings in the range of $11 to $12 per share, representing growth of 3.8% to 13.2% from the $10.60 it earned in 2024. The forecast also came in well ahead of analysts' expectations for earnings of $10.76 per share.

"As we look to the year ahead, we will continue to allocate capital consistently and in a balanced manner, and our vehicle portfolio will continue to get stronger," Barra said. "For example, we will offer three stunning new Cadillac EVs – the ESCALADE IQ, OPTIQ and VISTIQ – and we're targeting further improvements in EV profitability as we continue to scale.”

Despite General Motors' strong results, the stock could be selling off today on concerns over President Donald Trump's recent commentary on potentially imposing blanket 25% tariffs on Canada and Mexico.

Is General Motors stock a buy, sell or hold?

General Motors has outperformed the broad market over the past 12 months, up 58% on a total return basis (price change plus dividends) vs the S&P 500's 25% gain. And Wall Street thinks the consumer discretionary stock has more room to run.

According to S&P Global Market Intelligence, the average analyst target price for GM stock is $60.01, representing implied upside of nearly 20% to current levels. Additionally, the consensus recommendation is Buy.

Financial services firm CFRA Research raised its rating on GM stock to Hold from Sell and its price target to $55 from $45 following Tuesday's earnings release.

CFRA Research analyst Garrett Nelson notes that this was General Motors' 10th straight bottom-line beat and came "despite concerns that GM's year-over-year comparisons should be much more difficult in 2025 and the company could lose market share in the near- and intermediate-term due to its lack of hybrid vehicle offerings

However, he warns that "GM's automotive free cash flow should be about $2 billion lower in 2025, as capex remains significant."

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We may not be in a recession, but the economy still faces several threats in the coming months, which together figure to act as a drag on growth. How much of a slowdown we get depends largely on how these looming issues play out. To help you understand what is going on with the U.S. economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest… 

First up — the autoworkers strike at the Detroit Big Three: General Motors, Ford and Stellantis. The UAW has struck three production
plants (one from each company) and 38 parts distribution centers for GM and Stellantis so far, and the two sides remain divided on a new wage deal, with the carmakers’ latest offer not enough for the United Auto Workers’ leader. But we know that consumers will suffer when factories go dark. Vehicle inventories were just recovering this year after COVID-era shortages.

The strike at all three firms will seriously crimp auto supplies if it continues. If that happens, look for new car prices to shoot up by 5% or so, and used-car prices to rise even faster, by about 10%. Owners may not be able to service their vehicles at dealers once parts shortages occur.

In the event that a strike lasts for 40 days — as happened at GM in 2019 when workers went out — GDP growth would suffer a bit, about 0.3%. A longer strike may actually cause a recession. If the two sides do reach a last-minute deal it’ll take some hefty pay increases for workers. The economy would dodge a bullet, but already-high car prices would rise even more.

Then, there’s the threat of a government shutdown starting October 1. Congress is nowhere near passing spending bills to fund federal agencies in the new fiscal year. Some House Republicans want sizable spending cuts and say they’ll force a shutdown if they don’t get them. Senate Democrats are saying “No way.” How this gets resolved isn’t clear as of now. Lawmakers might kick the can and OK a temporary funding bill. But that might merely defer an eventual shutdown and a resulting hit to GDP growth.

Following a possible shutdown is the resumption of student loan repayments, which is slated for October. Not every borrower is likely to start repaying, given the order the White House issued that nonpayment can’t be reported to credit rating bureaus. And some borrowers will use income-based plans that limit how much they must pay each month.

Still, the net result will be more people devoting some of their income to debt service after a long hiatus, which means less discretionary spending money. The most serious risk to growth is also a pretty good bet to come to pass: A pullback in consumer spending. Folks are using up pandemic-era savings that built up when the economy was partially shut down and there were fewer things to spend money on, such as travel and dining. Consumers aren’t tapped out just yet. But the average savings rate is down to 3.5%, from a pre-COVID range of 7%-9%.

Low-income borrowers are falling behind on debt payments. Higher-income households are likely to tighten up as their own savings dwindle. Retailers will have to cope with weaker demand. 

All this points to a slower economy as 2024 gets underway.

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As negotiations between major unions and employers stall, a potential strike could have far-reaching consequences. To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...

Keep an eye on these labor disputes with big potential ramifications.

First, union United Auto Workers (UAW) is taking a more aggressive approach to contract negotiations with the Big Three automakers under President Shawn Fain than in previous years. Talks began earlier this month with the goal of reaching a deal before the current one with Ford, GM and Chrysler parent Stellantis expires in September.

Among the union’s demands: increasing wages, ending tiered structures for wages and benefits and reinstating annual cost-of-living adjustments for workers. More important is how the union aims to achieve them.

Under Fain, UAW, which represents 150,000 hourly workers at the Big Three automakers, has refused to name a single automaker on which to initially focus negotiations. Instead, the union has hinted at taking on Ford, GM and Stellantis simultaneously. UAW also says it’s not afraid of a prolonged fight, with $825 million in its strike fund.

During the last round of bargaining in 2019, a breakdown in talks between automakers and the union resulted in a 40-day strike against GM. The automaker claims the strike cost it $3.6 billion that year.

Meanwhile, the Teamsters and UPS averted a possible strike, for now, when they reached a tentative agreement on July 25. Union members need to vote to approve the new contract. Failure to ratify the tentative agreement, which addresses disputes about wages and benefits for part-time employees, could mean another strike threat looms. 

If a strike were to occur, you could expect parcel shipping rates to jump by 10%, as capacity is strained at FedEx and other parcel delivery companies. LTL, or less than truckload, companies should also benefit. They carry smaller freight than traditional truckload companies. Also poised to profit: Intermodal rail, a shift that is already happening as shippers schedule alternatives to UPS. 

Absent a strike, shipping rates will continue at their current low level.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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As the popularity of electric vehicles grows, will the gas engine become an endangered species? 

The short answer is no, or at least not in the next couple of decades. There are just too many gas-engine cars on the road, with after-market suppliers and local garages supporting the repair of internal combustion engines. 

Even so, your next new car could be an EV. You may be wondering, is now the time to buy an electric vehicle? Fiat Chrysler gave motorheads a stir in mid August when it announced that it will shut down production of its gas-powered Dodge Charger and Challenger at the end of 2023—and hopes to produce its electric muscle car, the Dodge Charger Daytona SRT Concept. General Motors announced last year that it plans to offer a fully electric fleet by 2035. And Ford, the last of the Big Three automakers, has pledged that 40% of its global sales will be EVs by 2030. 

Recent regulation out of California is also spelling impending doom of the IC engine. The California Air Resources Board approved a plan to reduce air pollution by requiring 100% of new cars sold in 2035 to be zero-emissions vehicles, including plug-in hybrids. The regulation will take effect in phases, so starting in 2026, for example, only 35% of new vehicles must be considered zero-emission, with this percentage increasing to 68% by 2030 and 100% by 2035. However, the key language in the CARB regulation is the phrase “including plug-in hybrids,” meaning the IC engine still has road to run. 

A plug-in hybrid has a battery and an electric motor, but it also has an internal combustion drivetrain. Once you drive past the vehicle’s electric range of, say, 30 miles, the gas engine kicks in. So even in California—and a number of other states that are likely to adopt its emission rules—you could buy a brand-new car that has an internal combustion engine in it in 2036.

Karl Brauer, executive analyst at iSeeCars.com, also cites the limits on precious metals needed for batteries. “There simply isn’t enough lithium out there, which suggests we are going to run out. It’s the same conversation of oil being a finite resource,” he says. But a battery breakthrough is possible. The World Economic Forum says EV-battery recycling could help cover the lithium demand, as could better extracting methods. Scientists are also working on alternatives such as sodium-ion batteries.

Stocks closed lower Monday in a choppy session noticeably light on volume. A lack of economic news – and the fact that the bond market was closed in observance of Columbus Day and Indigenous Peoples Day – helped make for a quiet day of trading. 

Still, heightened anxiety over central bank tightening, a rising dollar and a dour outlook for the automotive industry made further declines the path of least resistance for equities. Shares in General Motors (GM, -4.0%) and Ford Motor (F, -6.8%) sold off after Wall Street analysts predicted both carmakers would suffer steep earnings declines next year. 

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The bottom line? U.S. stocks kicked off the week with a fourth straight day of losses. The blue-chip Dow Jones Industrial Average fell 0.3% to close at 29,202 while the broader S&P 500 slipped 0.8% to 3,612. The tech-heavy Nasdaq Composite lost -1.0% to settle at 10,542.

Other news in the stock market today:

• The small-cap Russell 2000 shed 0.6% to 1,691.
• U.S. crude futures declined 1.9% to $90.87 per barrel.
• Gold futures fell 2.0% to $1,675 an ounce.
• Bitcoin slipped 1.3% to $19,216. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)

AI's Top Stock Picks

October is supposed to be the "bear market killer," but we've yet to see evidence of the 10th month coming to the rescue in 2022. An uncomfortably robust September jobs report did nothing to dissuade the Federal Reserve from sticking to its hawkish stance on inflation. And just when consumers were starting to see some relief from rising energy prices, OPEC and its allies decided to slash production of crude oil. Although the move creates opportunities for investors in some of the best oil stocks, it was decidedly bad news on both a personal finance and macroeconomic level. 

With the market off to one of its worst starts in history, it's clear that do-it-yourself investors need all the help they can get. Happily, a stock-picking platform driven by artificial intelligence has been sharp in the past – and it's open to retail investors. Danelfin's AI system not only identifies stocks with the highest probability of beating the market over the next 30 to 90 trading days, it also selects for names with the lowest risk profiles. Read on to learn about the fintech's top stock picks for Q4.

“Gobsmacked” best describes the mood among congressional Democrats and environmental advocates yesterday. After months of difficult negotiations with Sen. Joe Manchin (D.-W.Va), a small group of senators secured his support for a $369 billion climate package that is part of the Inflation Reduction Act of 2022.

The bill still faces some obstacles. All fifty Senate Democrats must vote in favor of the bill next week, and that means showing up in person at a time when lawmakers have been sidelined by COVID. Plus, Sen. Kyrsten Sinema (D-Ariz.) still has not given her approval; the word is that she bristled at being left out of the negotiations. Plus, it will have to pass the House, where the Democrats’ margin is thin.

But for companies that prioritize environmental, social and corporate governance, the bill has substantial promise – and could give their shares a boost. Here’s why.

Electric vehicles (EVs) are flying off dealer lots, but they still typically cost more upfront than gas-powered cars. The climate package would extend and modify the tax credits that have been available to offset these higher costs. From an investors’ point of view, the most significant change is that a popular tax credit (extended to the car buyer) of up to $7,500 on new EVs would again be available on some models. Because Tesla (TSLA) and General Motors (GM) had already exhausted their allotted tax credits, this renewal would allow some buyers to potentially claim the $7,500 tax credit. For example, the base price of a new Model 3 Tesla would drop from about $47,000 to $39,500. Expect Tesla and GM’s sales performance to benefit as well, assuming the auto companies can secure the battery components and semiconductor chips necessary to keep up with demand. Note also that the new bill would impose income limits ($150,000 adjusted gross income for singles, $300,000 for couples) on claiming that credit, plus impose caps on the cost of the vehicle itself ($80,000 MSRP for trucks, $55,000 MSRP for cars).

Homeowners can receive up to $1,200 per year for insulation projects, $2,000 for installing heat pumps (which provide highly efficient heating and cooling) and $600 per year for efficient windows. U.S. heat pump manufacturers like Carrier Control (CARR) may also receive tax incentives. And homeowners at risk from coastal flooding or wildfires could benefit from the bill’s grants to protect coastal communities and create fire-resilient forests.

The renewable energy power sector would enjoy tax credits that could be applied to any type of low- or zero-carbon technology, such as wind or solar projects. Unlike past incentives that expired every couple of years, often undermining the industry’s ability to plan and grow, these tax incentives would last for ten years.

Domestic manufacturing of energy transition products, like solar panels, EV batteries, and wind turbines, would also benefit. First Solar (FSLR) said it would consider expanding US manufacturing if the deal passes.

Overall, investors with a focus on a transition to a low-carbon economy should enjoy a boost if the Inflation Reduction Act passes. After being trounced by high fossil fuel prices and piled on by critics over the past few months, ESG investors may shortly have their day in the sun.

Chip stocks are garnering their fair share of attention in 2021, as a global semiconductor shortage affects all aspects of our daily lives.

The reality is that our modern world runs on chips, and they provide the backbone to everything we do – from working on computers to talking on phones and, increasingly, to driving our cars.

Today's newer cars, from electric vehicles (EVs) to hybrids to traditional combustion engine cars, have more technology in them than autos of the past. And technology such as lidar (light detection and ranging) for parking assistance or rudimentary systems for driver assistance requires more semiconductor chips to power it.

Due to the global chip shortage, car companies from General Motors (GM) to Ford (F) to Volkswagen (VWAGY) are temporarily shutting down facilities, lacking the chips they need to manufacture more vehicles.

Even amid this slowdown in production, demand for automobiles remains high. And more importantly, the longer-term trend of vehicles becoming even more technology-reliant is here to stay, which means continued and growing demand for chips – great news for semiconductor stocks.

Here are five "auto chip" stocks to watch. Each of these semiconductor companies is exposed to the automotive sector. Thus, they have room to benefit in the months and years ahead as manufacturers work through the supply shortage and their products become ever more integral to the world's vehicle fleet.

Data is as of Oct. 25. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analysts' average long-term growth rate expectations represents the estimated average rate of earnings growth for the next three to five years, and is courtesy of S&P Global Market Intelligence.

• Market value: $24.0 billion
• Dividend: N/A
• Analysts' average long-term (LT) earnings growth rate: 9.8%

When it comes to auto chip stocks, Renesas Electronics (RNECY, $6.16) is one that often flies under the radar, even though 52% of its revenues are strictly from the automotive sector. That's likely in part because RNECY is a Japanese company and its stock trades "over-the-counter" in the U.S.

But in the age of a global auto chip shortage, and amid an explosion in growth for chip-heavy vehicles, Renesas could become a more popular name.

Renesas Electronics is a global player not only in automotive semiconductors, but also in microcontrollers and processors. This combination of digital and analog products creates a one-stop solution for automakers looking for the technology to back their vehicles.

Its chips already power camera and battery systems for companies in the key German and Chinese markets. More applications for the technology are being developed – including creating higher-resolution rear-view cameras at a lower cost – which should expand RNECY's product portfolio in the next few years.

It's also a company that has been able to grow in the past year as many other companies facing supply shortages have started to falter. In its most recently reported quarter, adjusted earnings per share surged nearly 88% from the year prior. That has provided a lift to RNECY shares, which are up almost 40% in the past 12 months.

Those shares remain attractively valued, however, at 20 times forward earnings – considerably lower than the 25 forward P/E of the broader tech sector, according to Yardeni Research data.

• Market value: $6.3 billion
• Dividend: N/A
• Analysts' average LT earnings growth rate: 11.5%

II-VI (IIVI, $59.07) is a play on the rise of laser technologies. Today's lasers are integrated onto semiconductor chips, and where automobiles are involved, are a key part of lidar and other object-detection technology.

The company is currently putting the finishing touches on its roughly $7 billion merger with Coherent (COHR). The final deal is expected to create massive scale, which should help the combined entity better compete in the laser market.

"With COHR's laser capabilities, IIVI is among the most diversified companies in its space, with wide-reaching capabilities across end-markets that are only just beginning to benefit from long-term secular growth cycles," say Stifel analysts, which rate the stock at Buy.

They add that "higher expenses and the pending COHR merger will likely limit upside in shares over the near term" – indeed, shares are off 10% since the merger was announced in late March – but they "remain positive on the long-term outlook."

Translation: While this M&A event is impacting the stock now, it also might be presenting a buying opportunity for patient investors willing to wait out the turbulence.

And the company's role in the growing automotive space could make this a potential gem among chip stocks in the years ahead.

• Market value: $53.1 billion
• Dividend: 1.1%
• Analysts' average LT earnings growth rate: 28.4%

Headquartered in the Netherlands, NXP Semiconductors (NXPI, $200.29) manufactures a number of different products. Among them are application processors, communication processors and wireless and Bluetooth solutions.

As a global giant, it's no surprise that this is one of the key players for the tech trends of the next decade, including the increased technology going into automobiles. In fact, it's already noted as one of the largest auto chip stocks, with a double-digit percentage market share.

On the charts, NXPI has pulled back from its late-August highs. Weighing on the shares was insider selling by some company executives, as well as broad-market headwinds. Nevertheless, this selloff has created an opportunity to pick up a high-quality name at a discount. Adding to the argument for an attractive valuation: shares are currently trading at less than 18 times forward earnings.

The general consensus among analysts is that NXPI is a Buy – and with fairly high conviction, at that. Of the 29 pros following the stock that are tracked by S&P Global Market Intelligence, 13 say it's a Strong Buy, six call it a Buy, nine deem it a Hold and just one rates it at Sell.

For investors with a long-term outlook, this is also an appealing company thanks to the firm's growing dividend. While the yield is low at 1.1%, NXPI's dividend growth – it has more than doubled its payout since 2018 – could pay off for patient investors in the years ahead.

So while supply chain issues may impact some technologies, NXP's diversity will truly be its strength in the months and years ahead.

• Market value: $184.8 billion
• Dividend: 2.3%
• Analysts' average LT earnings growth rate: 11.1%

The company behind your high school graphing calculator has a lot more tricks up its sleeve. It's also one of the largest players in the automotive semiconductor industry. Texas Instruments (TXN, $200.20) plays a big role and looks set to continue being a leader among auto chip stocks.

Thanks to the rise of more technologically complex products from cars to calculators, the company has been on a tear. And a new report on the Machine Vision market that showcases the growth of machines like robots that need vision-guidance – a precursor to self-driving vehicles – highlights Texas Instruments as a notable player.

Another impressive feat? TXN has a fat 40% profit margin, the kind of margin that comes more from a software developer rather than a company that engages in physical manufacturing. These hefty profit margins combined with future growth trends from all tech, including automotive, should lead to years of outsized growth.

As with other big-name semiconductor companies, TXN can reward investors with dividend hikes over time. Shares currently yield 2.3% – a decent starting point for future growth.

And Wall Street pros are generally bullish toward Texas Instruments. According to S&P Global Market Intelligence, 31 analysts cover the stock, with an average rating of Buy.

• Market value: $59.1 billion
• Dividend yield: 0.6%
• Analysts' average LT earnings growth rate: 33.0%

Infineon Technologies (IFNNY, $45.42) is based out of Germany and makes chips for a number of automotive firms, including big European players like Volkswagen. And like other large, global semiconductor firms, the company's role goes far beyond just automotive chips.

Surging cases of the Delta variant of COVID-19 in Asia led many chipmakers – including IFNNY – to suspend some production. Yes, that is bad for the company's operations in the short term, but Infineon is still faring well on a long-term basis. Specifically, in its fiscal third quarter, the company reported a 25% year-over-year jump in revenues.

And while the share price declined alongside the broader market in September, it is up nearly 10% since its early October lows.

In the meantime, the two analysts following the U.S.-listed shares of IFNNY are steadfastly bullish on the chip stock, with both maintaining a Strong Buy rating. Plus, the average price target of $54.50 represents expected upside of 20% over the next 12 months or so.

Shares don't pay a huge dividend, but given the company's leading position in the European automotive market and the region's leadership in rising EV technology, this could be a surprising winner for U.S. investors in the years ahead.

In 2019, Terry Smith, of Jacksonville, Fla., traded in his 2019 Corvette Grand Sport for a same-model-year Chevrolet Silverado pickup. But shortly after he purchased the truck, it started running rough, and certain parts needed immediate replacement. It had transmission, climate control and traction issues, says Smith. He reached out to a friend—a lawyer—who advised him to complain to General Motors before pur­suing legal action (see below for details on lemon laws).

Smith called GM and described the truck’s problems. He told the company that he could pursue legal action but would rather not. GM agreed to take a look at the truck but found that it was operating as designed. Even so, Smith’s lawyer friend advised him to call again and be persistent. After three months of calling and complaining, GM agreed to pay him $5,000.

This past May, after prices for used cars and trucks spiked, Smith decided to sell the Silverado. He had it appraised by CarMax, which offered him $1,000 more than he had initially paid for it. “In the end, I essentially got paid to drive it for a year and a half,” says Smith.

Dealing with a defective product or bad service can be frustrating. But by using time-tested strategies for complaining effectively, you’ll have a good chance of getting satisfaction. Above all, remain calm and be polite—and be prepared to be persistent. Confronting a business can be time-consuming and often takes patience.

Keep your cool

Before you pick up the phone or go online, take some time to prepare your case. And whenever you need to make a complaint, first take your emotions out of the conversation. Essentially, be nice, says customer service consultant Barbara Khozam. That’s because an angry customer may put a customer service rep on the defensive.

The more precisely you can describe the details of your situation, the more likely you are to get results, says Khozam. But while it is important to provide context and give the whole picture, be careful not to overwhelm the company with unnecessary information. “Make sure that when you submit a complaint, you only mention the facts,” says Michaela McDonald, a certified financial planner in New York City. If you purchased a faulty product, take pictures and attach them to an e-mail or social media post. If you’re complaining about a service, it may be worthwhile to review the service description and point out what was left out or altered in your case, says McDonald. You could even copy and paste the service description into your message to the company.

Also, if you have called a company repeatedly about inept service and been ignored, explain how many times you have called and when. If you are a loyal customer, you might also mention how long you have been patronizing the company and what you like about the business.

Aim for the top

In any event, speaking with a human is often your best bet. So if you don’t get results by submitting an online form or using an automated online chat system or an automated attendant via phone, see if you can reach a customer service representative. Sometimes, that’s not easy—phone menus and websites may not provide a way to reach a representative directly—and you may have to look outside of the company’s resources to find out how to get in touch with an actual person.

Doing a little of your own research may go a long way. Try visiting www.gethuman.com, which has phone numbers and shortcuts for how to reach a real person at a number of companies. You can also often find the names and contact information of company CEOs and C-suite employees via LinkedIn or at websites such as www.ceoemail.com.

An owner or manager is more likely to be able to help you than most other company employees, says Khozam. “And if you communicate your situation in a calm and detailed manner, an owner or a manager can likely do something,” she says.

Social media’s role in consumer complaints has grown substantially in recent years. “Reviews on social media can make or break a business,” says Khozam, and a good business with a good owner will be on top of its social media presence. Sometimes a company will even have someone reviewing its social media. But while leaving a review online or commenting on a business’s social media page may be an effective way to get their attention quickly, Khozam recommends using social media as a last resort.

Contacting a consumer agency or government bureau can help. But be sure you understand its role; some organizations mediate between the consumer and the business, while others simply collect complaints to detect patterns. In many cases, the Better Business Bureau (www.bbb.org) will forward your complaint to a company and work with both parties to resolve the problem. For a list of groups that may help you out—as well as sample letters and more tips on effective complaining—go to www.consumer-action.org for a “How to Complain” manual, which is available in three languages.

If your bank or any kind of financial service provider makes a mistake at your expense, you could file a complaint with the Consumer Financial Protection Bureau. The CFPB has processed more than half a million complaints from consumers this past year, says Scott Steckel, stakeholder engagement program manager for consumer response at the CFPB. The most common complaints recently have been issues with credit reporting, debt collection, or checking and savings accounts. But the CFPB sees “the whole waterfall of consumer complaints in consumer financial services,” Steckel says. You can reach out to the CFPB for help regarding transactions with a bank or with a broker, an insurer or any other financial service provider. The agency also deals with problems with car loans and payday loans.

If you have a complaint, file it at the CFPB website (www.consumerfinance.gov) or by phone (855-411-2372) in more than 180 languages. You can also write a letter or send a fax. Ultimately, each complaint is assigned a case number and put into the Consumer Complaint Database, a searchable resource available to the public and updated nightly.

The vast majority of complaints come via the agency website, says Steckel. Identify the product or service, state the issue that you have with it, name the financial company and express your desired resolution, and the CFPB will ensure that the company contacts you within 15 days. You must also certify that your complaint is true and correct, but you don’t have to reach out to the company first. “We say always try to go to the company first, but it’s not required,” says Steckel. “If you have an issue with a financial product or service, then we are here for you,” he says.

Keep expectations in check

Consider some preventive strategies to avoid disappointment. One is the 24-hour rule, says McDonald. If you are thinking about making a major purchase, give yourself at least 24 hours to think it over. If you have time to do research, read consumer reviews and check out a company before you patronize it. The Better Business Bureau’s website has reviews and complaints about member businesses. You can also share your complaint about a company on its public BBB complaints page; many companies will respond and engage with consumers there. Simply search for the company on the BBB website, select its page, scroll to the section labeled “Customer Complaints” and click “File a Complaint” to write a complaint of your own. You’ll also be able to see whether other consumers have had similar issues and how the company responded to those complaints.

Your rights when you buy a lemon

If you recently purchased a new or used car that has not met your expectations, you may have legal options. “Lemon laws,” which protect buyers of so-called lemon cars, vary by state. State lemon laws generally refer to a lemon as a vehicle purchased or leased recently (usually within the past year or two) with defects that the manufacturer or dealer cannot correct within a reasonable amount of time.

All 50 states have some kind of new car lemon law. Under most state laws you are entitled to a full refund for a new car that qualifies as a lemon.

Six states—Hawaii, Massachusetts, Minnesota, New Jersey, New York and Rhode Island—have used car lemon laws as well. The laws have multiple vehicle classifications for coverage, meaning any compensation depends on the age of the vehicle and how many miles it has been driven.

Seven other states have certain protections for used vehicle buyers. Arizona and New Mexico require used car dealers to provide a warranty for a minimum of the first 15 days following the sale or the first 500 miles. Connecticut and Nevada also require some form of warranty, with various limitations. In Maine, a vehicle must first pass a safety inspection. And in Pennsylvania and Illinois, dealers have limitations on the flexibility of the warranty they provide for used cars. A federal law also ensures that manufacturers honor their warranties; if your state’s lemon law doesn’t provide enough protection, then you’re able to pursue relief through the Magnusson-Moss Warranty Act.

You can review detailed information on lemon laws for every state at the Better Business Bureau’s Auto Line (https://bbbprograms.org/programs/all-programs/bbb-autoline/lemon-laws-by-state).

When I was 9, my grandfather gave me a present: my first share of stock. It was a gorgeous, embossed certificate issued by the Ford Motor (F), which had just gone public on January 18, 1956, at $64.50 a share.

In 1988, I decided to sell my share, which after splits had become many shares worth $828. Selling at the time turned out to be a good idea. Ford shares peaked in 1999.

But don’t count Ford out. The drop in revenues from the pandemic was not as bad as expected, and over the past 12 months, the stock has returned 143%; General Motors (GM) has returned 162%.

Ford and GM, two stodgy companies that have been selling pretty much the same product for more than a century, have felt the shock of an earthshaking disruption of their industry. It's a case of respond or die, and the two companies have responded, though a bit late.

Disruptive innovation is a term coined in 1995 by Harvard Business School professor Clayton Christensen. Most people use the shorthand disruption to mean a general shake-up in an industry. But Christensen, who died last year, had a more precise definition: "a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses."

While the incumbents are focused on gradually improving their products to satisfy traditional customers, disrupters target "overlooked segments, gaining a foothold," Christensen wrote.

Incumbents ignore disrupters because those segments are small or unprofitable. The disrupters then expand their offerings, "delivering the performance that incumbents' mainstream customers require, while preserving the advantages that drove their early success." When mainstream customers start adopting the disrupters' products "in volume," you've got real disruption.

Tesla: A Model Disrupter

A model disrupter. An upstart called Tesla Motors, now just Tesla (TSLA), fits the Christensen model. The company was launched in 2003, released its first plug-in electric car five years later, and went public two years after that. Elon Musk took his earnings as cofounder of PayPal Holdings (PYPL) and became an early investor in Tesla; in 2008, he became CEO.

In 2015, when Christensen’s article from which I'm quoting appeared in the Harvard Business Review, Tesla had two models and it sold 50,000 cars. Sales doubled in two years and reached 500,000 in 2020; this year, the forecast is 800,000 vehicles.

Tesla is by far the largest global electric vehicle maker, manufacturing four models, including one with a list price of only $40,120. It's working on a beautiful long-haul truck. Holding Tesla back from even more sales this year is a pandemic-induced shortage of micro­chips, which should be temporary.

The incumbents have responded. Last year, Ford said it would invest $11.5 billion in electric vehicles through 2022, producing a zero-emissions Mustang and F-150 truck. In January, GM announced it would phase out petroleum-fueled vehicles and sell only cars and trucks that produce zero emissions.

I was not a Tesla believer years ago, but I am now. Tesla is still small ($32 billion in revenues last year, compared with GM's $122 billion) and unprofitable. An investment in Bitcoin and sales of regulatory credits to internal-combustion-engine carmakers saved Tesla from showing a loss in the most recent quarter.

Stocks, however, are priced according to expectations, not history, and Tesla's future looks spectacular. In late 2019, Teslas started rolling out of a $2 billion factory in Shanghai, and in April the company announced a $1 billion factory in Austin, Texas.

Musk forecasts that Tesla's U.S. market share will rise from 2% today to 10% in 2025, and analysts at Morgan Stanley project that the company's manufacturing capacity will reach 5.5 million vehicles by 2030. That compares favorably with GM's 6.8 million in 2020.

Tesla's stock price has become more attractive lately, dropping more than 20% from its January peak, partly because of the chip shortage. Its market capitalization (shares outstanding times price) is $647 billion, or nearly twice as much as GM, Ford and Toyota Motor (TM) combined. In fact, Tesla is the seventh-largest U.S. company by market cap, after five tech giants and Berkshire Hathaway (BRK.B); it's bigger than Walmart (WMT) and JPMorgan Chase (JPM).

Is this crazy?

I don't think so. The global auto market is estimated to grow to $9 trillion by 2030.

11 More Automotive Innovators

Tech is the ignition. Tesla is not the only vehicle disrupter. Technology is front and center in the sector. Small, innovative companies abound, most of them still private. But there are good stocks to buy. One of the largest is the dominant ride-hailing company, Uber (UBER), with a market cap of about $90 billion.

Veoneer (VNE) is a Swedish company that makes automobile-mounted cameras, systems that assist night driving and other navigation electronics. Sales were hit last year by the pandemic, and the stock trades at less than half its 2018 high.

Another attractive Swedish firm, Autoliv (ALV), makes auto-safety systems for the global auto industry. Autoliv has been consistently profitable, with a stock that's up by more than half this year. Aptiv (APTV), an Irish maker of sophisticated vehicle electronics, is also highly profitable, with a $38 billion market cap.

Another company with substantial sales and earnings and a commitment to EVs is BYD (BYDDY), based in Shenzhen, China, with a market cap of $60 billion. BYD (an acronym for “Build Your Dreams”) started as a battery maker and now manufactures electric and internal-combustion vehicles; some of its EVs sell for as little as $9,000. Nearly all of Shenzhen’s 20,000 taxis are BYDs. Part of the appeal of BYD: The stock is down 46% since February, despite consistently rising revenues.

China is the largest market for EVs, with 1.2 million sales last year. Two other Chinese manufacturers to note are Li Auto (LI), whose niche is SUVs, and the larger XPeng (XPEV), which makes SUVs and a four-door sport sedan; Xpeng is also in the ride-hailing business. Both stocks are well priced, having fallen by half in less than six months.

More risky but worth consideration are some early-stage auto-tech firms. Luminar Technologies (LAZR) makes sensors and software that enable autonomous driving. Luminar had only $14 million in sales last year, but its prospects have earned it a market cap of $7 billion.

QuantumScape (QS) is a lithium-ion battery maker with no sales in 2020 but a market cap of $12 billion. Beam Global (BEEM), with a market cap of just $276 million, specializes in clean-energy charging equipment for EVs; one of its products uses solar power.

If you prefer a traditional automaker stock, my top choice is Volkswagen (VWAGY), with a dozen brands from seven European countries, including Audi, Bentley and Porsche, plus the truck and bus companies Scania and MAN. VW sold only half as many EVs as Tesla last year, but the demand in Europe is intense, as it will soon be in the U.S.

Faced with the demand to invest in upgrades needed to sell electric cars, a group of Cadillac dealers recently decided the economic uncertainty outweighed the likely future benefits. About 150 of GM’s 880 U.S. Cadillac dealerships instead took the company’s offer of a buyout of their franchises for the luxury brand.

It’s a decision that many small-business owners can relate to right now.

After a decade of relatively good times, the past year has been a rough financial and emotional ride for owners of thousands of privately owned businesses across a whole range of industries. Roughly one in five small businesses had closed as of last October, and many more are limping along with revenues at a fraction of their pre-pandemic levels.

Why a Sale May Make Sense Right About Now

Many owners have been in survival mode for a year now, taking as much support as possible from government aid programs while scrambling to adapt their staffing and business model to the pandemic world. But as the smoke clears and the longer-term outlook becomes clearer, the option of selling the business and moving on is likely to be the most attractive and viable option for many owners.

That decision may partly stem from life-stage or health reasons. One in three U.S. small-business owners are over 65, and may understandably feel like they don’t have the time or energy to put into the post-COVID-19 recovery.

Some, like those Cadillac dealers, may be unwilling or ill-equipped to adapt to the wave of technological advances and shifting consumer behavior that have been accelerated by the pandemic and which are transforming industries across the board.

Anyone in the movie theater business should be worried not only about the plunge in revenues due to pandemic restrictions but about a more permanent shift by movie studios and consumers to online video platforms. Small brick-and-mortar retailers face an even bigger struggle to survive as the Amazon juggernaut has picked up pace during the pandemic.

While some small businesses will be able to ride out the crisis by adapting to these trends, many others run the risk of turning into zombie companies and facing bankruptcy. Unlike big public companies, their reliance on small groups of investors and bank lending usually doesn’t give them the luxury of capital to reinvent themselves.

Personal Hurdles Can Stand in the Way

A sale often makes the most sense, yet owners commonly struggle to adopt the right mindset to make that decision and follow through with it in a way that maximizes the return. Owners often have a lot of emotion and family identity tied up their business, making it hard to let go. If the business has been in a family for generations, it can be tough for an owner to accept the loss of control on his watch.

Emotion also tends to be a major obstacle when it comes to pricing a sale. Owners will often find it hard to accept a price that they don’t feel takes into account how well revenues were doing a year or two ago or how much family sweat equity has gone into the business over the years.

When this happens, it’s important for owners to take off their family hat and be as dispassionate as possible. The reality is that they can either sell at a time when they have some leverage or risk getting to the point where the terms are being imposed on them in the face of bankruptcy.

A Couple of Points in Sellers’ Favor

Rather than seeing the glass as half empty, there are grounds for seeing it as half full. The good news is that this isn’t 2008. There is plenty of capital out there looking for deals, which can put owners in a strong position if they approach the sale with the right mindset.

Consumer demand remains strong in many areas, and private equity firms are sitting on “a ton of dry powder” worth of capital they are keen to deploy in 2021. PE buyers are generally looking for businesses that they can scale up, make accretive relative to EBITDA and penetrate new markets.

To Get the Best Price, What Sellers Should Think About

Owners have options to appeal to what PE buyers want and walk away with the best deal possible.

• One way of doing that is to clean house before looking for a sale, picking the low-hanging fruit that will create some of the efficiencies that a buyer would implement anyway. That might involve replacing underperforming staff or closing unprofitable locations. The subsequent improvement in profitability can be annualized and result in a higher multiple for the sale.
• Or an owner could command a higher price by committing to help implement the buyer’s goals post-sale, perhaps by leveraging his or her extensive customer contacts or following through on a plan for costs cuts.

By putting themselves in the buyer’s shoes like this and letting go of their emotional baggage, owners can better leverage the value of their business and make the best of what may be a difficult situation.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The coronavirus outbreak has taken its toll on yet another publicly traded company's cash distribution. General Motors (GM, $21.95) announced early April 27 that it was suspending its dividend – the company's second such move in 12 years.

GM stock, which also was forced to suspend its dividend during the Great Recession, put the pause on its 38-cent-per-share quarterly payout as one of several steps meant to fortify the company's balance sheet. General Motors also extended $3.6 billion of its three-year revolving credit agreement to April 2022, which comes roughly a week after it renewed a $1.95 billion 364-day revolving facility for use by its GM Capital arm.

GM also suspended its share repurchase program and has taken "other significant austerity measures.

"We continue to enhance our liquidity to help navigate the uncertainties in the global market created by this pandemic," GM Chief Financial Officer Dhivya Suryadevara said in a statement. "Fortifying our cash position and strengthening our balance sheet will position the company to create value for all our stakeholders through this cycle."

General Motors' announcement comes amid a host of other dividend cuts and suspensions prompted by the COVID-19 outbreak. That includes Ford (F), which halted its dividend in mid-March.

The automotive industry in general is feeling an acute pinch from the coronavirus. During the final week of March, U.S. retail auto sales plunged 59% from J.D. Power's pre-pandemic forecast. The figure has been stabilizing – to 55%, 51% and 48% drops over the next few weeks – but still bodes poorly for automakers.

Meanwhile, General Motors and other automakers' North American plants have been shuttered since late March, with the exception of a few recent reopenings to manufacture ventilators. While they're trying to determine a plan and timetable for reopening for automaking purposes, they'll do so into an uncertain demand climate.

At current prices, GM stock would have yielded 6.9%.

For most of the past decade, investors have embraced the idea that companies should pay them first—via fat dividend checks or stock buybacks that bump up investors’ share of company profits—rather than funneling cash back into the business.

But investors are starting to get jazzed about capital spending, too, whether it’s the opening of a new data center, the retooling of an aging manufacturing plant, or increased spending on tech to boost competitiveness and help a business grow. Since the start of 2016, a basket of stocks of companies investing the most for growth—which includes capital expenditures (or “capex”), and research and development, have gained a cumulative 63%, compared with just 34% for firms that are returning cash to shareholders, according to Goldman Sachs data through early July.

Capital expenditures are on the upswing as many companies take advantage of savings from a lower tax rate and a more favorable depreciation schedule. The increase is not surprising, considering that the average age of corporate “fixed” assets—buildings, equipment, office furniture and the like—is now 16.3 years old, according to Strategas Securities. The last time assets were that old was back in the 1960s.

For 2018, capex spending by S&P 500 companies could climb to an estimated $690 billion, up 10% from 2017 and the highest dollar amount since 2014, predicts Goldman Sachs. That makes it a good time to buy into companies that are investing in themselves, like these six firms

Prices and other data are as of August 31.

Today’s General Motors (symbol GM, $34.38) isn’t your father’s GM. The 110-year-old Detroit-based automaker is positioning itself as a leader in new growth areas, such as electric cars and driverless vehicles. And its investments to do so are sizable. In the second quarter of 2018, GM’s capital spending outlays totaled nearly $6.7 billion, which ranked first among companies in the S&P 500. Among other things, the money is going toward developing faster-charging batteries for electric cars and funding Cruise Automation, GM’s driverless-car unit. GM has promised to launch a self-driving car with no steering wheel, pedals or manual controls by 2019.

JPMorgan Chase auto analyst Ryan Brinkman says the rollout schedule gives GM “a significant first-mover advantage” in the market for autonomous cars. Despite a recent downdraft in the stock due to auto-tariff headwinds, he believes GM’s shares could trade at $58 by the end of the year, which represents a nearly 70% increase from its recent close.

Most investors still equate this tech giant with its Xbox gaming console, Office software suite or Outlook e-mail program, but today’s Microsoft (MSFT, $108.74) is focused on cloud computing. Microsoft’s most recent earnings report shows that for the quarter ending June 30, the company’s Intelligent Cloud unit—which includes Azure, it’s publicly accessible cloud service—posted a 23% jump in revenues, to $9.6 billion, accounting for nearly 32% of Microsoft’s total sales of $30.1 billion.

It takes money to build sales and market share. Microsoft spent $4 billion on capex in the three months that ended in June—up 74.3% from a year ago, according to S&P Global Market Intelligence. In June, the company announced plans to build two new cloud data centers in Norway, and it began testing one on the sea floor off the coast of Scotland that will deliver Internet and cloud services to coastal cities.

Microsoft made a sizable investment in its gaming business, too, with the goal of creating more games exclusively for its Xbox One console. The company is also working on a subscription-based game-streaming service in a bid to become the “Netflix of gaming,” says Morgan Stanley analyst Keith Weiss, who says the stock, with a current market value of more than $860 billion, could reach $1 trillion in market value by March 2019.

Drillers in the capital-intensive business of energy exploration like nothing better than rising oil prices, which are up 167% from a low in 2016. But acquisitions made when oil prices were sinking and the industry was floundering have set up Noble Energy (NBL, $29.34) nicely for future growth, says Welles Fitzpatrick, an analyst at SunTrust Robinson Humphrey. Noble bought Rosetta Resources in 2015 and Clayton Williams Energy last year “on the cheap,” says Fitzpatrick, adding 4,200 U.S. drilling sites with the deals. “The conviction to buy oil assets in those dark times really speaks to the company’s long-term vision,” he says.

Noble plans to plow $2.7 billion to $2.9 billion into the business this year. Nearly 70% of the investment will be spent on onshore U.S. assets, and about 25% will be allocated overseas, primarily for the development of its Leviathan offshore natural gas field off the coast of Israel. Noble expects Leviathan to account for 25% of 2020 production.

“Leviathan will be the highest-return-generating asset in Noble’s portfolio,” says Norm MacDonald, portfolio manager at Invesco Energy Fund. After tumbling more than 23% in 2017, Nobel’s shares are up nearly 3% this year, but they have more room to run, say the bulls.

Royal Caribbean (RCL, $124.04) recently spent more than $1 billion to build the biggest cruise ship ever. The 228,081-ton Symphony of the Seas (pictured here) set sail on its maiden voyage in April from Barcelona. The palace-at-sea features glow-in-the-dark laser tag, a surfing simulator, and a one-of-a-kind, two-story family suite with its own private 3-D cinema. The jumbo purchase boosted the world's second-biggest cruise company's capex spending to $1.72 billion in 2018’s first quarter alone, a 1,301% increase from a year ago. The firm spent another $493 million in the second quarter, a 231% jump from last year's April–June quarter.

In all, Royal Caribbean will roll out four new ships this year. And Spectrum of the Seas, the largest, most expensive ship in Asia, is slated to set sail in June 2019. The spending spree comes at a time when U.S. consumers are feeling better about their finances. There are few, if any, signs of a recession, and the U.S. unemployment rate is at an 18-year low. As a result, bookings are tracking ahead of last year, and passengers are paying higher rates for tickets, as well as spending more on booze, food and on-board activities. And yet the stock is a bargain, trading at 12 times estimated 2019 earnings of $10.08 per share, compared with a price-earnings ratio of 16 for the S&P 500.

The world leader in delivering small packages is known for its brown trucks, efficiency and reliability. But as online shopping increases and Amazon.com’s digital sales soar, United Parcel Service (UPS, $123.70) is modernizing its facilities to keep up with demand. Big Brown kicked off a three-year spending plan in 2018, bringing capex investment to $20 billion in the 2018–20 period, analysts say.

The money will be used to open or upgrade 18 facilities, including new regional hubs in Salt Lake City and Atlanta, as well as in London and Paris. In all, UPS is adding 5 million square feet of package-sorting capacity. In February, UPS announced an order for 14 Boeing 747-800 cargo jets and four 767 aircraft. The goal: to earn more profit on each package and reduce the bottlenecks that plagued UPS during the past holiday season, when delivery requests outstripped forecasts. “UPS has seemingly put its execution issues behind it,” says Jim Corridore, of Wall Street research firm CFRA, who recommends the stock.

Perhaps no sector of the economy burns through more cash to drive future growth than health care—especially companies in the business of developing new drugs and getting them to market. Biotech firm Regeneron (REGN, $397.93) has a history of success with medicines such as Eylea, which treats macular degeneration, and has prospects that could emerge as name-brand drugs with big profit potential. Six are currently in the Food and Drug Administration’s third and final trial phase, including a drug that targets respiratory viruses and another for osteoarthritis-related pain. Regeneron has a total of 25 drugs in its pipeline.

Shepherding medicines from the testing lab to patients is expensive. Regeneron spent $1.03 billion in the first six months of 2018 on research and development, up slightly from the same period last year. The firm expects to spend $1.2 billion to $1.3 billion for the full year. Still, the biotech’s profitability is solid. CFRA analyst Jeffrey Loo, who has a “buy” rating on the shares, estimates earnings per share of $19.95 this year, or roughly double 2017 profits, and forecasts 10% profit growth in 2019.

The 25% tariff that the United States imposed on July 16 on $34 billion of imports from China (with $16 billion more to come, likely in August) touches nearly every corner of American consumers’ lives. Why? Because it’s effectively a tax that represents a cost to U.S. producers, wholesalers and retailers. Sooner or later, it gets passed on to consumers in the form of higher sticker prices for everything from an X-ray to a new car. The only real question is how quickly it happens.

Companies that import their products have limited choices: absorb the extra cost of the tariff, increase selling prices immediately, shift production to other countries or do some combination of the three.

Initially, expect a relatively limited impact on consumers because companies will hold the line on prices while they monitor what action competitors take. Plus, the Trump administration excluded some higher-volume goods when it was drawing up lists of Chinese products to target with tariffs. For example, it left off some high-profile consumer goods such as flat-screen TVs, so they shouldn’t go up in price.

Don’t expect the pain of higher prices to be over quickly. There’s another round of tariffs — 10% this time — coming on thousands more imported items from China. They won’t take effect for another two months. But when they do, they’ll affect a huge range of goods that consumers and retailers buy and use on a near-daily basis, from automobile tires, spark plugs and windshield wipers to handbags, batteries and furniture. So brace for successive rounds of price rises on a steadily growing range of imported goods, for much of the rest of the year.

Here are eight product categories that soon may put a bigger dent in your budget:

Anything made with steel and aluminum will cost more because of the 25% tariff on imported steel and the 10% tariff on aluminum.

Relatively few cars are imported from China, but General Motors does import the Buick Envision crossover from there. GM will likely raise the consumer price but isn’t yet saying by how much.

It will cost more to keep your car in top shape. A tariff of 10% is being added to Chinese-made parts, so expect to see auto parts stores impose an increase of about 10% for a new battery or spark plugs. Automobile dealers will pay more, too, so they’ll pass that on to car owners and tack some extra on top of it.

The most significant impact on car prices will occur if President Trump follows through on threats to impose 20%-25% tariffs on European Union-made vehicles because of the EU’s 10% tariff on American-made cars. A U.S. tariff would likely cause prices for imported brands such as Mercedes-Benz to go up by about $5,800, according to industry estimates.

Ford Motor Co. now substitutes greater amounts of aluminum for steel in its best-selling F-150 pickup, aiming for less weight and increased rust resistance, but don’t expect its sticker price to soar. Like all the automakers, Ford likely has aluminum stockpiled and prices negotiated well into the future. The longer a trade war lasts, though, the more inevitable it is that a price increase will show up on dealers’ lots.

Most aluminum used to make beverage cans is imported, and so is much of the tinplate steel in items like soup cans. The Beer Institute warns that the 10% aluminum tariff amounts to a $347-million tax. That likely means beer prices will go up, at least modestly, by something like 20-25 cents on a case of 24 cans. A similar scheme with soup and soda…a few cents per can.

Beermakers have raised much more vocal opposition to the tariffs than food producers — possibly because summer is a peak sales period.

Don’t forget that popular confectionery items like candy bars could also be affected. The Hershey Co. wraps its candy kisses in aluminum foil, for example, so soon enough you may pay another nickel on a candy bar.

For farmers, the tariffs are going to hurt…on multiple levels.

China is a significant producer of farm machinery, from dairy equipment to poultry incubators, which will go up in cost by something close to the 25% tariff. More significant, China’s retaliation for U.S. tariffs included penalizing imports of U.S. food crops, notably soybeans. Since China is the destination for more than half of the U.S. soybean crop, it means they are less competitive in China’s markets, and therefore sales are likely to fall off.

So American farmers are pinched on both ends — the products that they buy from China will go up in price, and their crops will likely be less in demand in Chinese markets. The U.S. Farm Bureau strongly opposed tariffs because of the adverse impact they already are having on commodity futures prices, an extra blow when farmers are facing the prospect of higher interest rates.

In the longer term, expect a modest hit to your grocery bill because farm operators will have to try to recover some of their lost income and rising costs. But it won’t happen immediately, and there may even be temporarily lower prices for a few items. For example, Mexico is imposing a 20% retaliatory tariff on U.S. pork exports, and that is likely to mean that sales to Mexico will suffer. If more pork stays in U.S. markets, prices will fall to move it. It’s a temporary gain, though, because the net result will almost certainly be reduced U.S. production — followed by rising prices on store shelves.

Many types of Chinese-made medical equipment have been targeted by the Trump administration for tariffs, including CT scanners, EKG machines and X-ray tubes. The result: Not only will purchase costs to American buyers go up, but potentially so will medical costs for U.S. consumers.

This is one area where the Trump administration compromised, however, by scaling back its original plans for the range of imports it is penalizing. Still, prices for pacemakers, ultrasound equipment and other gear will rise, and so will prices for associated services, likely by an amount close to the 25% tariff.

Several U.S. companies have factories in China that make orthopedic devices, such as those used in hip replacements. Those products shipped from China to the United States would face tariffs, which would likely end up pushing American recipients’ costs up (though it is hard to gauge by how much).

Last January, the Trump administration targeted South Korean-made washing machines for tariffs of 20% to 50%, and what has happened to their prices may be a guideline for products now being targeted for 25% penalties. Since the start of the year, an imported washing machine costs about 20% more than it did previously. Sellers have passed on a good chunk of the extra cost to consumers, but they’ve also absorbed a portion of it.

It’s a similar story for the solar industry, an early target for trade protection.

Tariff increases for Chinese-made solar panels — 30% in 2017 and lower rates over several more years — now add $500 to $1,000 to costs for a typical home installation project, which generally run around $16,000-$20,000, according to the Solar Energy Industries Association.

Unlike flat-screen TVs, items such as water coolers, minifridges, thermostats and air purifiers are on the tariffs list, and buyers should expect to see their prices go up as soon as this month — by as much as 25% if businesses pass on the full cost.

Need some new sneakers? You’re in luck — for the moment. The shoe industry was exempted from the latest round of tariffs, though that doesn’t necessarily leave industry participants breathing easy. China is the largest producer of footwear imported into the United States, so if the trade war escalates to include another round of tariffs, look out.

A likely reason for the exemption: The majority of the tariffs are aimed at higher-value-added industries in which China is considered to be pushing for dominance. Footwear is more labor-intensive, and in any case, major participants like Nike are increasingly shifting production to lower-cost Asian nations, including Vietnam.

Only time will tell whether a much-ballyhooed global trade war will end up becoming a reality. While President Donald Trump exempted Canada and Mexico from significant tariffs on steel and aluminum imports, he otherwise didn’t back down, at least setting the stage for a commerce-based battle.

Canada’s trade relationship with the United States still isn’t exactly on a firm footing following an accusation from Boeing (BA) that Canadian-based aircraft maker Bombardier dumped underpriced jets in the U.S. market. Meanwhile, the European Union has threatened to impose stiff tariffs on U.S.-made peanut butter and orange juice should the United States press the matter. Russia is less than pleased with trade sanctions levied against it in August of last year.

Perhaps the fiscal brouhaha is already underway ... just in a very veiled fashion.

Whatever the case, with a wave of populism sweeping over most of the world’s top country-based economies (Brexit was ultimately about money, and even China’s President Xi Jinping brings his own unique brand of populism to the communist state), trade wars on some level are at least a real possibility going forward.

That naturally could have a significant effect on several popular publicly traded companies. Here are 10 stocks that could be most vulnerable to a prolonged, trade-based conflict.

Data is as of March 12, 2018. Click on ticker-symbol links in each slide for current share prices and more.

One would think U.S. automakers like Ford (F, $10.81) and General Motors (GM) would be thrilled with higher tariffs on European-made vehicles coming into the United States, as well as higher steel and aluminum tariffs that make it more difficult/costly for Asian carmakers with production plants located in the U.S. Both domestic manufacturers pay a 25% tariff on the cars they deliver to China, making it difficult to compete in that growing market. The EU’s auto import tariff of 10% isn’t much friendlier. Turnabout is fair play.

The fact of the matter is, though, making it more difficult for China and Europe – especially China – to sell its goods in the U.S. could end up ruining an improving relationship between U.S. automakers and China’s import regulators. That current tariff was scheduled to be pared back over time, and moreover, China’s government looked like it was going to become a little more flexible with rules that require foreign (to it) carmakers to partner with China’s domestic automobile companies if they want to sidestep the tariff.

Rekindled trade tensions would prove particularly troubling for Ford, which is already underrepresented in the Chinese market. In November, the company announced plans to ship $10 billion worth of cars and auto parts to China over the course of the next three years, but China’s chiefs may be less keen in the idea if now U.S. automakers can proverbially be held hostage.

Europe could just as easily take direct aim at Ford, if a trade war escalates.

Despite their classic Americana look and feel, motorcycles made by Wisconsin-based Harley-Davidson (HOG, $44.82) are quite popular overseas, too ... particularly in Europe. The EU bought more than 16% of the bikes Harley made last year, making it the biggest foreign market the company addresses. Overseas sales also have been a growing piece of the Harley-Davidson’s revenue mix.

It’s a trend that could come to a screeching halt, however, if the EU follows through on an implied threat to impose tariffs on Harleys, cranberries, bourbon, peanut butter, Levi’s jeans and orange juice should the United States move ahead with its import-tax plan (which it did).

It seems like a strange and almost incongruous list of goods to target. But a closer look at the companies that would be hit the hardest reveals some commonality. The organizations that would suffer the most from Europe’s answer to Trump’s tariff plan are primarily based in the home states of several top GOP leaders, including House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell.

Speaking of targeted tariffs, Paul Varga, CEO of booze giant Brown-Forman (BF.B, $44.82), didn’t pull any punches when offering his view of the potential trade war on the horizon.

“I mean if (the steel tariff plan) comes to fruition, the irony I feel is that a company like Brown-Forman could be an unfortunate and unintended victim of the policy which in part is aimed at promoting ... long-term American manufacturing,” he told a crowd of analysts just a few days ago, adding that it “would obviously be kind of a negative thing for our particular company.”

This couldn’t have come at a worse time for Brown-Forman, which is the name behind Jack Daniel’s, Woodford Reserve and other well-known brands of bourbon. It and several other makers such as Japan’s Suntory (STBFY), which owns Jim Beam and Maker’s Mark, were just starting to turn European consumers on to bourbon. Sales of American whiskey in the EU were projected to grow from 2017’s $2.4 billion to more than $3 billion by 2021.

Bourbon and motorbikes aren’t the only oddly specific goods that could become victims of a trade war. Soybeans, and therefore soybean farmers, are at risk as well.

American Soybean Association President John Heisdorffer opined on the matter: “These tariffs are a disastrous course of action from the White House. They may lead to retaliation by one or more of our valuable trading partners, which in turn will kneecap demand for soybeans in a time when the farm economy is struggling. We have heard directly from the Chinese that U.S. soybeans are prime targets for retaliation.”

It’s a potential problem for a lot of small farmers, but it’s also a risk to the major agricultural outfits like Monsanto (MON, $123.15). In fact, the timing of a soybean battle couldn’t be much worse. Rivals BASF (BASFY) and DowDuPont (DWDP) have unveiled their own soybeans that will compete with those made by Monsanto at a time when Monsanto’s genetically modified versions of soybeans are proving less and less resistant to glyphosate weed killer – you’ve heard them described as “Roundup Ready.”

Electric-vehicle maker Tesla (TSLA, $345.51) is facing a risk similar to the ones GM and Ford are facing, but there’s an even bigger, more immediate risk than soured relations with the governors of the increasingly important Chinese market, where Tesla did more than $2 billion in business last year.

The risk: Tesla may find it more expensive to source materials including much-needed lithium – the core component of EV batteries – if tariffs start to materialize like two boxers just trading blows.

Michael Tanney, co-founder of NYC-based investment advisory Wanderlust Wealth, explains, “The company relies heavily on their ability to purchase and hedge the costs of raw materials for their batteries and cars. With the stock priced to perfection, any negative change in Tesla’s cost to build cars could prove lethal to the already questionable viability of the company.”

There is an irony to the matter, however. Tesla CEO Elon Musk actually supports President Trump’s idea of imposing steeper tariffs on the import of Asian-made cars into the United States. Although that would create a lose-lose scenario for all companies and consumers, Musk argues it would at least level the playing field and in turn force all involved parties to think about a more equitable tariff environment.

iPhone maker Apple (AAPL, $181.72) has thus far proven impervious to geopolitical tensions. Chinese consumers love Apple’s products. American consumers love them, too. And assembly factories in China love being able to make Apple’s devices.

That delicate balance could be upset, however, if China starts to squeeze Apple’s pressure points and/or the U.S. international trade overseers choose to get pull all the levers at their disposal.

Although Trump has spoken broadly about all possible import tariff scenarios, Apple’s business model is a nuanced one that has not been directly addressed. While its devices are assembled in China, they’re designed in the United States, and Apple largely does the sourcing and logistics work for its goods within the U.S. It’s also obviously a U.S.-based company. Ergo, the iPhone and iPad stretch the definition of “import” by most any standard, and therefore the case that it’s not a tariff-subject import is a good one.

If the White House chooses to broadly define an import as any good “made in China” and tax those, however, that could push Apple’s retail prices uncomfortably higher.

Back in 2016, Walmart (WMT, $88.07) warmly embraced the familiar “Made in the USA” mantra, vowing to source more American-made goods whenever it was possible. And, giving credit where it’s due, shoppers have seen more domestically made goods on the retailer’s shelves.

But there are only so many goods, and kinds of goods, that America makes. A huge swath of Walmart’s merchandise still is made overseas. If those goods cost the company more to buy, you can bet Walmart – which sports rather low profit margins already – will feel the pinch when it’s either forced to raise prices, take losses, stop carrying certain items or some combination of all three.

The suggested tariffs also would hit Walmart where it hurts the most, too. Electronics accounts for an estimated 16% of the company’s non-grocery sales, not counting video game sales (which account for another 6% of the retailer’s revenue). Yet, electronics seem to be one of the few areas where a new tariff seems almost inevitable. There just aren’t many U.S.-based electronics manufacturers that can provide alternatives; a whopping 39% of all goods imported into the United States are electronics.

If you want to know when the China/U.S. trade war started in earnest, go back to 2014. That’s when Chinese-made solar panels flooded the market, at what some say were below-cost prices ultimately offset by fiscal support from China’s government – an illegal practice known as “dumping.” The U.S. responded by imposing tariffs that made the effective prices of those panels more or less in line with panels made by U.S. companies.

The solar-panel wars have cooled off since then, somewhat because some of those tariffs are coming to an end, and somewhat because state-sponsored dumping isn't much of an issue anymore. But they may well become a centerpiece of geopolitical tension again in the wake of the current White House's newly-imposed tariffs of as much as 30% on all imported solar panels. These duties appear to have fewer loopholes than the prior duties did.

Higher prices on imported solar panels are good news for American makers. They’re bad news for installers of solar panel systems, however, such as Vivint Solar (VSLR, $3.25). American solar panel manufacturers just aren’t meeting the nation’s need. About 80% of the panels installed in the United States last year were imported, and a steep tariff could mean would-be solar panel system buyers forego an installation altogether.

Vivint Solar CEO David Bywater said of the potential tariffs war, “I’m worried, and not just for our company. Solar power is one of the few things that almost every American says, ‘Please do this. We support this.’ But it’s a fragile ecosystem. If the cost is increased, solar businesses will not be able to do what we do. The margins are thin.”

Wanderlust Wealth’s Michael Tanney also fears Procter & Gamble (PG, $79.86) could find itself on the losing end of any trade war that takes shape from here. He explains:

“Their Gillette business is already being squeezed by the delivery shave companies and must maintain a premium product at a closer price to compete. Without the flexibility to raise prices given the disrupters using less expensive outputs, Gillette will be in a severe bind if tariffs cause a rising price on their raw materials, such as the metal used for blades.”

It’s not just a one-way problem. Though P&G manufactures a fair amount of its goods sold in foreign markets in those markets – circumventing any existing tariffs – a good deal of its overseas revenue is driven by goods made in the United States. If it costs more to make them and also costs more to sell them, the bottom line may just get hit in a way investors aren’t ready to digest.

The kicker: It was only late last year China’s President Xi Jinping was looking to lower taxes on personal goods imported into the country. Those plans may be rethought soon.

Last but not least, athletic apparel company Nike (NKE, $66.82) could suffer from a trade war, but for a less-obvious reason.

Yes, like Apple, Nike relies on low-cost labor from Asia, though Vietnam is its key provider of footwear. Nearly half of its branded footwear is made there. The Trans-Pacific Partnership (TPP) would have ended the 20% tariff on footwear coming to the United States from Vietnam, but with the U.S. bowing out, that tariff not only still applies, but could increase. The company’s goods may simply be outpriced for U.S. consumers.

Worse, should the definition of “import” and “export” be widened to goods made for U.S. companies in another country shipped to yet a different country, Nike could miss out on the 18% sales growth in China it has enjoyed for the past couple of years.

To the extent tariffs don’t slow its overseas business down, boycotts could. Although Chinese consumers love Western products, they’re also loyalists and have stood up against U.S. companies (with some state-prompted encouragement) in the past. Nike would make for a relatively easy boycott target, as alternative athletic wear is abundant.

James Brumley was long F as of this writing.

We scoured the nation to identify the best stock in every state. General Motors (symbol GM) is the publicly traded company we picked in Michigan. The company headquarters is located in Detroit.

A word of caution: Since we selected a single stock from each state (plus one from D.C), and choices in some states are sparse, a few of our picks are best suited to investors comfortable with a higher degree of risk. This is not necessarily one of our 51 favorite stocks in the entire U.S., in other words.

General Motors by the Numbers

• Headquarters: Detroit
• Share price: $34.19
• Market value: $51.6 billion
• Price-earnings ratio: 6

(Prices and data are as of June 22, 2017)

Eight years after filing for bankruptcy protection, Motor City’s biggest automaker has a simple plan for success: Keep costs low and quality high.

GM has excellent earnings potential, says Morningstar analyst David Whiston, even though analysts expect U.S. light vehicle sales overall to stay flat or dip in upcoming years. The cars rolling off GM’s line boast the best quality and design in decades, he says. And the company has cut costs, reducing its North American division to just four brands, down from eight, for example, and negotiating benefit concessions with union workers. GM’s North American business needs to sell 10 million to 11 million cars per year to break even, Whiston says. Assuming average annual demand of about 17 million units, he believes the company’s new structure should allow it to break even during down economic cycles and realize solid earnings growth during upswings. Morningstar believes the stock is fairly valued at $51 a share, which would be up 49% from current levels. CFRA analyst Efraim Levy, who rates the stock a “strong buy,” assigns a more modest 12-month price target of $42 a share. With a yield of 4.4%, GM’s total return represents an attractive opportunity.

If you’re a diehard loyalist of one car brand, you may be a good candidate for an auto rewards card. Use cash back or points earned with the four cards below toward any model in the carmaker's product line (unless the dealership you visit has restrictions). None of the cards has an annual fee, and points are usually worth a penny each.

The BuyPower Card from Capital One (0% for 12 months, then 13.15% to 23.15%) offers the most appealing cash-back potential: 5% on the first $5,000 spent annually and 2% for the rest of the year. You can put earnings toward the purchase or lease of a new Buick, Cadillac, Chevrolet or GMC vehicle.

Toyota offers two cards: the Lexus Pursuits Visa and Toyota Rewards Visa (0% for six months, then 14.24% to 23.24%). Both provide five points per dollar spent at the dealership; two points on gas, dining and entertainment (such as event tickets); and one point on everything else. Redeem points for a new- or used-car purchase or lease; for service, parts and accessories; or for statement credits, gift cards and travel bookings. You can earn and redeem points interchangeably between the brands—say, by getting a discount on a Lexus with points earned with the Toyota Visa.

Also worth a look is the FCA MasterCard (0% for six months, then 17.24%), which pays three points per dollar on spending at FCA dealerships (brands include Chrysler, Dodge, Fiat, Jeep and Ram), two points on qualifying travel purchases and one point on everything else. Redeem points for a new- or used-car purchase or lease, or for service, parts and accessories at the dealership. Or trade points for statement credit, travel bookings and other options.

Cars in general have become more reliable over the years. Yet there are always some that just seem to keep rolling along, whistling right past the junkyard. Pinpointing exactly how many miles, on average, any given model has racked up is virtually impossible, but we've identified some with exceptional -- sometimes surprising -- endurance and value.

When you combine reliability and best-selling status you get ubiquity. Honda Accords of all years are everywhere, usually in tan, silver or white, like my friend Marcel's 1999 model. It's pushing 200,000 miles without any engine or transmission work, and relatively indifferent care. Sorry, Marcel. If you look up the Honda Accord in Consumer Reports you will see a sea of red dots in the rankings -- a sign that owners have darn few problems with these cars.

Now, the smaller Honda Civic shares the Accord's inherent quality but is more likely to be modified by its owners with spoilers, wings, loud exhausts, that kind of thing -- with maintenance simultaneously neglected. So the Accord gets our nod.

Of all the cars General Motors put out in the 1990s and early 2000s, it's the Buicks that got all the awards from the quality-ranking organization J.D. Power and Associates. And it's also the Buick LeSabre, along with Centuries, Regals and Park Avenues that live on, more so than their Chevrolet, Pontiac and Oldsmobile equivalents.

One reason these cars endure? They were popular with older drivers, who maintained them well and drove them gently. That makes them a great value to pick up used, which is what my co-worker Marc did with his 2004 LeSabre. He bought it with 74,000 miles and has put on another 84,000 with very little trouble. Check out that sweet cassette deck!

And this is a Geo Prizm. They last forever, too. A what, you ask? Here's the secret: Under the skin, it's actually a Toyota Corolla. So are a number of Chevy Novas, Chevy Prizms and Pontiac Vibes. Makes more sense now, right? It's a Corolla! All these cars were built on the same line in California, at a factory jointly owned by GM and Toyota. That technology-sharing project ended in 2010, but these cars, sometimes into their third decade, roll on. My boss uses the one you see here, a 1996 model, for his daily 46-mile commute. Sure, he could buy something fancier, but he loves his Prizm and its great gas mileage. He gets about 35 miles per gallon.

We have 12 more cars that refuse to die. Maybe you own one?

What's hot, what's not? As the 2007 models roll into dealers' showrooms, it's a mixed bag. Carmakers are hedging their bets, trying to appeal to as many niches as possible, with the more than 60 new or redesigned models for 2007 spread all over the size, shape and power spectrum. In this market, says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates, "there aren't really any significant standouts."

That's where our annual buyer's guide comes in. Featured in the December issue of Kiplinger's Personal Finance, it helps you zero in on the vehicle for you. We evaluated nearly 500 new models and selected winners in various price categories. We pulled together our top picks into an ONLINE GALLERY. You'll find sticker and dealer prices, projected resale values, plus what you'll pay to insure and service each of our favorite vehicles.

You'll also find Kelley Blue Book's new-car transaction price and estimated fuel costs. Our prediction for the year ahead -- barring a global catastrophe -- is based on an average of $2.40 a gallon for regular and $2.60 for premium.

Sizing up the market

Car prices are higher this year than last. A year ago the average transaction price for a new vehicle -- what you pay after rebates and haggling -- was $26,140. This year it's $26,930, reports Power Information Network. The $800 hike is a result of more Asian vehicles being sold without incentives and more sales of higher-priced vehicles, such as the Cadillac Escalade and Mercedes-Benz S-Class. It also reflects Detroit automakers' efforts to stop throwing cash rebates at customers to clear inventory. GM, in particular, has promoted "value pricing," reducing the sticker prices of many models so they're closer to the transaction prices.

Even so, as end-of-model-year inventory piled up, incentives grew. In the latest tally, the average cash rebate offered by Detroit carmakers topped $2,600. For European vehicles, it was $2,100, and for Asian vehicles, less than $1,800. Detroit was offering up to $6,000 cash back on 2006 large SUVs and pickups. The most popular incentive as the '07 models roll in is 0% financing, being offered mostly on Detroit vehicles that have been slow to leave showrooms. That's been an effective come-on in a year when car-loan rates are stuck around 7%.

One other bit of good news: Don't worry about prices going up as the model year continues. For most high-volume models, carmakers are facing too much competition to be able to sneak in midyear price increases, says Tom Libby, director of industry analysis at Power Information Network.

So the hot spot for bargain hunters is Detroit. Yes, Motor City is downsizing, but don't be scared off by the headlines. And don't be quick to dismiss Detroit automakers because you have the impression that they churn out lower-quality vehicles than European and Asian carmakers. Domestic vehicle quality isn't so bad anymore. In J.D. Power's latest three-year dependability study, Lexus tops the list (as usual), but Mercury, Buick and Cadillac are close behind, and Lincoln and Ford rank above the industry average.

The real problem with domestic cars is the ho-hum factor. Says Erich Merkle, director of forecasting for IRN, an automotive-industry consulting firm: "People want to be seen in their car. A car is conspicuously consumed, and there's an entertainment value." Ford is saddled with gas-guzzling trucks and plain-vanilla cars, such as the Five Hundred. Chrysler and Dodge are also truck-heavy, and their big hits, the 300 and the Charger, are now dated. Plus, the domestic carmakers have been slow to join the crossover parade.

HIRE A HAGGLER

Hassle-free buying

Hate playing games at the dealer? Why not let a professional car shopper strike a deal for you? Kiplinger's Personal Finance has teamed up with CarBargains, the buying service of the nonprofit Consumers' Checkbook organization, to make it easier for you to take advantage of the service.

You tell us the make, model and style of the car you want and CarBargains will solicit bids from at least five dealers in your area. You'll receive a copy of each bid and the name of a contact at the dealership. The service costs $190. A similar service for leasing, called LeaseWise, costs $335. For more information, plus how to find out about the latest incentives, visit kiplinger.com/links/carbargains or call 800-475-7283.

Few would have guessed it six months ago, but GM is Detroit's bright spot. America's largest carmaker scored with its big new SUVs. It sells two sexy, value-priced roadsters (Pontiac Solstice and Saturn Sky). And its Saturn division is once again kicking tailpipe: The Saturn Aura wins a Kiplinger's Best New Car plaudit. Saturn's new large crossover, the Outlook, is at dealers, and large crossovers from GMC and Buick are also on the way. To boost consumer confidence, GM recently took a page from the Korean carmakers' playbook, extending its powertrain warranty to five years or 100,000 miles. Ford also extended its powertrain warranty to five years or 60,000 miles.

Nevertheless, the ascendancy of Toyota and other Asian carmakers can't be denied. They've done a better job at predicting buyers' preferences, so they offer more vehicles that people want to buy than domestic carmakers do. Toyota, along with its Lexus and Scion nameplates, may soon overtake GM as the world's biggest carmaker. Toyota also has more Kiplinger's winners than any of its competitors.

No matter which continent's cars you're shopping, as the year draws to a close, expect more deals. They will come in a trifecta of cash rebates, low-interest financing and leasing offers. For example, to move inventory by New Year's Day, Asian and European carmakers often offer subsidized leases as well as dealer cash. That's money from the carmakers that dealers can -- but don't have to -- pass on to you. (CarBargains offers a list of incentives as well as a vehicle-shopping service; see the box at right.)

Crossovers are king

For the first year ever, crossovers are likely to outsell traditional SUVs. (Crossovers look like SUVs but are built on car platforms for a smoother ride and better fuel economy.) Because there are so many new crossovers, this year Kiplinger's separates them into two classes: large/midsize and small. The new models range from ponderous-but-popular luxe-mobiles, such as the Audi Q7 and Mercedes-Benz GL450, to diminutive models, such as the Jeep Compass and redesigned Honda CR-V. Some of the biggest gas-guzzlers continue to sell well, proving that big-budget buyers aren't very sensitive to pump prices.

Why are crossovers so popular? "There's been a permanent shift from traditional SUVs to crossovers, but not necessarily because of gas prices," says Merkle. "Carmakers are taking more risks with crossover design, and that's capturing consumers' hearts and minds."

The Audi Q7's smooth, muscular exterior and refined interior caught Joe Harpaz's attention, but they weren't the only attributes that persuaded him to trade in his Infiniti FX35. The Q7 is "sporty, luxurious and practical -- all in one vehicle," says the New York business-development executive. The Q7 comes in handy when he's on the road for work because it includes a Bluetooth hands-free connection for his mobile phone and a voice-activated navigation system. It also has a rear camera, for backing up safely, and "side assist," which uses radar to alert you if a vehicle is in your blind spot when you want to change lanes.

He wanted the larger Q7 so that he could comfortably transport his wife, Pamela, plus daughter Maya, 3, and baby Zachary on weekend trips. Strong demand for the Q7 meant the Harpazes paid close to sticker -- $60,620 -- for the 4.2-liter Premium V8 model with a third-row seat and enough room for strollers and suitcases.

Even though the six-cylinder Q7 costs the same as the redesigned Acura MDX, which starts at $40,665, we pick the MDX as Best New Large/Midsize Crossover. The MDX's superior fuel economy and roomier cargo area are its main advantages. Compared with the 2006 model, the 2007 MDX is larger (although third-row passengers don't get any more legroom), faster, safer and sportier. The 300-horsepower V6 delivers plenty of oomph, and Acura's Super Handling all-wheel drive, which delivers extra torque as needed to any of the four wheels, comes standard.

The Best in Class honor goes to the $38,115 Lexus RX 350. The engine is bigger for 2007, and a mix of performance, roominess and safety pushes it to the top. Its outstanding resale value and $3,000-below-sticker average transaction price are icing on the cake. Mercedes-Benz has also introduced a large crossover for 2007, the $55,675 GL450. Saturn is the first in the GM family to debut its version of a large crossover, the Outlook ($24,000). Also arriving at dealerships this fall is the $25,995 Ford Edge.

Mazda's CX-7 beats the new Acura RDX for Best New Small Crossover. Both vehicles have a 2.3-liter turbocharged engine, high-tech add-ons and sport-sedan aspirations. And the RDX offers its Super Handling all-wheel drive as standard equipment. But at a starting price of $24,310 -- about $9,000 less than the RDX -- the CX-7 gets the nod. Best in Class goes to the Toyota RAV4 V6. Last year Toyota enlarged the original crossover (a third seat is optional) and goosed it with 269 hp (it can zip from zero to 60 miles per hour in less than 7 seconds). Yet at $23,530, it's still a bargain.

In the traditional, truck-based SUV category, the Best in Class and Best New SUV awards go to the GMC Yukon Denali ($48,370). Its 380-hp engine, 60-cubic-foot cargo area, three-year resale value of 58%, safety features and smart design are a winning combination. But consider the Yukon Denali a proxy for all the new large SUVs from GM. The base Yukon and Chevy Tahoe get up to a respectable 16 miles per gallon city and 22 mpg highway, and the top-of-the-line Cadillac Escalade redefines luxury. Ford has also freshened up its large Expedition and luxury Lincoln Navigator.

Fuel-efficient sedans

The gas-electric hybrid is getting a mixed reception despite fuel prices that soared past $3 in many areas last summer. The Toyota Prius still rules the hot-car list (see the box), and the Honda Civic Hybrid is selling well. But buyers are lukewarm toward higher-priced, less fuel-efficient hybrids.

So it's no surprise that a new standout in the hybrid arena is the gas-sipping Toyota Camry. Unlike the Honda Accord hybrid, which combines an electric motor with a V6 engine, the Toyota Camry scales back the power and uses a four-cylinder gas engine, achieving fuel economy of 40 mpg city and 38 highway. (Note that most hybrid drivers -- many drivers, in fact -- report lower gas mileage than Environmental Protection Agency ratings show; new tests starting with all 2008 models will produce closer to real-world estimates.)

The Camry hybrid has won fans coast to coast and among all age groups. Tatiana Santos of Los Angeles went shopping for a new car last summer, after she got a job with Bank of America. Only a year out of college, she was interested in the sporty Lexus IS 250 -- until the Camry hybrid caught her eye. She loved the new design, and her 40-mile-a-day commute put fuel economy near the top of her priority list. Fully loaded, it cost $31,000 -- just $1,000 more than a fully loaded Prius. The price was reduced by the $2,600 federal tax credit and the $3,000 reimbursement that Bank of America offered employees who purchased a hybrid. (Tax credits for hybrids are designed to be phased out and have since been cut in half for Toyota and Lexus hybrids.)

George and Cathy Rommal of Bethlehem, Pa., set out to buy either a Camry or its big sister, the Avalon. When they test-drove the Camry hybrid, they were sold. They wanted good fuel economy, and George was fascinated by the technology. "It's fun to drive, though in a different way than a sports car," he says. "The tax incentive combined with the economy took away the pain of paying a little more for the hybrid up front." And a Camry is roomy enough to transport the whole family -- including daughters Lauren, 18, and Andrea, 15 -- in comfort.

Two new hybrids are debuting this fall: the Nissan Altima and the Saturn Vue Green Line. The Vue doesn't rely as much on its electric motor as other hybrids do, so its fuel economy isn't stellar, at 27 mpg city and 32 highway. But at $22,995, it's the least expensive hybrid crossover on the market, and it qualifies for a $650 tax credit.

You can get about 30% better fuel economy with a diesel model, but there's a catch. Strict new emissions standards have just kicked in, and carmakers must tweak their diesel models to meet the new requirements. Only Mercedes-Benz and Volkswagen have new entries now, but Jeep will introduce a diesel Grand Cherokee early next year. None of the 2007 diesels on the market yet qualifies for the stricter emissions standards in California and four northeastern states: Maine, Massachusetts, New York and Vermont.

MOST POPULAR CARS

HOTTEST SELLERS: Vehicles averaging fewest days on dealers' lots

1. Toyota Prius

2. Honda Civic

3. Honda Fit

4. Toyota Yaris

5. Scion xA

6. Lexus ES 350

7. Toyota Camry

8. Toyota FJ Cruiser

9. Pontiac Solstice

10. Volvo C70

BEST SELLERS: For 2006 model year, not including pickups1. Toyota Camry

2. Honda Accord

3. Toyota Corolla

4. Honda Civic

5. Chevy Impala

6. Chevy Cobalt

7. Nissan Altima

8. Dodge Caravan

9. Chevy Trailblazer

10. Honda Odyssey

But you don't have to pay the higher price for a hybrid or wait around for diesels to achieve outstanding fuel economy. Subcompact and compact cars, which reside in our under-$20,000 category, have practically been driving themselves out of dealerships. The tiny Toyota Yaris wins the lowest-annual-fuel-cost derby, followed by the subcompact Honda Fit and Nissan Versa. But don't ignore the strong fuel numbers posted by the larger Honda Civic and Toyota Corolla.

Best New Car in this category is the $15,620 Volkswagen Rabbit. Although the redesigned Golf has a recycled name associated with the 1980s econoboxes, it has 21st-century amenities and Euro-sport-sedan handling, and it is one of the safest small cars on the road. Best in Class is the Hyundai Sonata GLS four-cylinder ($17,795) -- a value-priced, midsize sedan that's safe, roomy and fuel-efficient.

Value abounds in the $20,000-to-$25,000 class. The smartly redesigned Nissan Altima 3.5-liter V6 ($24,350) wins Best in Class. And the new Saturn Aura ($20,595) brings home Best New Car honors. This is no Ion: It has a smooth powertrain and a stiff chassis, and it accelerates and handles well.

Hyundai scores again in the $25,000-to-$30,000 class with the Azera Limited. It has entry-luxury features, such as leather seats and a rear-window sunshade, for $27,795. The $25,235 Toyota Camry SE V6 earns Best New Car accolades. It's the sportiest Camry, with a stiffer suspension and 17-inch wheels.

Luxury lines

In the $30,000-to-$45,000, entry-luxury category, the $42,150 Infiniti M35 wins Best in Class, propelled by a stunning design, high resale value, safety features and loads of technology. The Lexus ES 350 ($33,885), the benchmark "comfort" entry-luxury car, takes Best New Car.

Choosing winners in this intensely competitive category was tough. Here's where you find the BMW 525i as well as the smaller 3 series (the coupe is new for 2007). Also new is the sleek, fast rival of the BMW 3 series, the Infiniti G35 sedan, and the Volvo S80, which boasts high-tech safety features, including a lane-departure warning system.

In the luxury class -- vehicles $45,000 and up -- you'll find power and pampering. We give the Best in Class nod to the Mercedes-Benz S-Class ($86,175 for the S550), which debuted last spring. Besides superb ride and handling (and so much technology that you'll need to study the owner's manual), it sports options such as eight-way power rear seats and a massage feature on the front seats. The 382-hp, 5.5-liter V8-equipped S550 gets 16 mpg city and 24 highway. The penalty for this excess is a $1,000 gas-guzzler tax.

Best New Car is the Lexus LS 460. With the new LS, Lexus is gunning for the Mercedes S crowd. Starting at $61,715 -- $4,500 more than last year's model -- it's still a bargain in this class. The eight-speed automatic transmission and 4.6-liter V8 propel the car from zero to 60 in 5.4 seconds, the same time as the S550 manages with its larger, thirstier engine. An option lets this technology leader park itself (see the box on page 88), and it will keep a safe following distance with its optional dynamic cruise control.

Among minivans, the redesigned Toyota Sienna (about $25,000) stands out. It one-ups the Honda Odyssey with more horsepower and slightly better fuel economy. The sporty-yet-utilitarian Volkswagen Passat 2.0T wagon ($26,865) gets the Best in Class designation. Among sports cars, the $44,995 Chevrolet Corvette keeps its Best in Class spot. And the new Jaguar XK ($75,500 for the coupe) earns the Best New Car award. Coupe or convertible, this car will add a touch of British class to any driveway.

Go to our Gallery of Kiplinger's 2007 Auto Picks >>