Toyota (TM) is going to recall 412,000 cars in the U.S. to fix steering problems, according to Reuters. The report notes that 373,000 of the automobiles are Avalon sedans from the 2000 through 2004 model years and 39,000 are LX470 SUVs from model years 2003 through 2007. The automaker announced that the steering lock bar in the Avalon could break "under certain conditions," while the LX470s are being recalled to "eliminate the risk of steering shaft disengagement."

The company said that it has received three accident reports involving the Avalon and none involving the LX470. Nevertheless, the automaker is trying to fix these problems, which are the latest in a series of recalls this year.

It's been stated before, but it's worth repeating that two enduring trends of the high-oil-price era will be localization and increased density.

Essentially, in the decade ahead the U.S. economy (but not only the U.S.) will adjust by shrinking the distance between just about everything. Spatial geography will adjust to the reality of higher transportation costs per mile.

Advance Auto Part's (AAP) stock has retreated about $7 since mid-summer, but I'm nevertheless reiterating my buy rating for the company, first recommended on May 19, 2009 at a price of $43.38. Here's why.

Advance Auto's stock appears to be the victim of some tad-early, year-end, profit-taking by short-term institutional investors (IIs). AAP posted Q3 EPS of 65 cents -- very close to the First Call Q3 EPS estimate of 66 cents; AAP also reported a 4.7% increase in same store sales in Q3. The two data points helped AAP recover slightly from its $47 to $37 swoon, with shares now trading at/near $39.50, supporting the analysis that the preceding plunge has the look of selected institutions 'getting out, early' ahead of the December crush.

Auto purchases increased 0.7% last month, the highest rate in the past half-year. The "cash for clunkers" program is credited with the spike, particularly given that other retailers continued to struggle.

Not including the auto sector, retail sales were up only 0.1% in July. So, the car manufacturers are getting their bump, but to call a recovery would still be premature. It's even gotten to the point where dealers are running out of inventory.

Car sales in the United States might be struggling, but in China, they are moving product. Passenger vehicle sales spiked 48% last month, its biggest gain since February 2006. Chinese buyers picked up 872,900 cars in June 2009, according to the China Association of Automobile Manufacturers, and total auto sales (with buses and trucks included) climbed 36% to 1.14 million year-over-year.

Government officials are proclaiming the country's "downward slide" over, and aggressive goals are being set. The full 2009 vehicle sales forecast was raised from 10.2 million to 11 million, as sales for the first half of the year were up 18% year-over-year to 6.1 million.

CarMax (NYSE: KMX), an expert in used automobiles and a colleague of AutoNation (NYSE: AN), is up today nearly 14% in early-afternoon trading on spectacular volume. What's driving (pun intended!) the buying action? You guessed it...earnings. Revenues for the first quarter decreased 17%. Adjusting for items, CarMax earned $0.22 per share, and, according to my colleague Melly Alazraki, that figure simply annihilated earnings projections developed by the analysts.

Well, well, well...what to do now, right? CarMax is an interesting company in an interesting time. It sells used cars during a period when new cars aren't selling too well. We all know about the problems at Ford (NYSE: F) and General Motors (OTC: GMGMQ). But that isn't reason enough to put money down on this stock. Especially not after a rally like we're seeing today.

Okay, maybe I'm too bearish, but I'm not sure I could possibly buy stock in CarMax (NYSE: KMX). The used-car dealer, a colleague of AutoNation (NYSE: AN), reported some good profit growth on Thursday, but I just don't like the guidance (or lack thereof) and the sales figures.

Most of all, though, I think buying CarMax now might be violating the buy-low-sell-high principle. Who knows, maybe I should just join the momentum party. The stock is up over 60% over the year-to-date period as of Thursday. See the dilemma a potential buyer would be in?

Five Chinese manufacturers are fielding display automobiles at the 2008 North American Auto Show. Amid a flurry of drab Chinese displays, misspelled promotional materials and one unscheduled auto tour through an ongoing press conference, China is presenting vehicles in the hope that the American auto-buying public will take them for real. I wonder how they feel about this at General Motors (NYSE: GM), Ford Motors (NYSE: F), Toyota (NYSE: TM), and Chrysler.

This influx of Chinese auto manufacturers represents a 400% increase in their presence at the auto show over just two years ago. Should the big auto makers be scared yet? This blogger hardly thinks so, yet the above picture is the Geely-Beauty Leopard, an automobile of Chinese manufacture which has been marketed quite successfully in Europe since 2002.

Venture capital is flowing, engineers are chomping at the bit and layman sources claim that mechanical components of the Chevy Volt are already being road tested on the streets of Detroit. General Motors (NYSE: GM) is not letting anything get in the way of its plans to place a successful electric car on the streets of America and the world by 2010. A report by RedHerring outlines the broad and powerful collection of top tier companies which are coming together to help GM bring its mission to fruition.

Two new research projects targeted towards electric car development were recently announced by General Electric (NYSE: GE) and are specifically geared towards the needs of the Chevy Volt. GE has been asked to design high density electric capacitors and hybrid drive train components in pursuit of our first generation of truly plug-in electric cars. It would seem that GM, GE and the Department of Energy are not willing to settle for an automobile with simple hybrid status. The goal would appear to be full blown electric automobiles at a price within reach of the public. Once the car is built, add the current advances in solar technology and you'll have an automobile that can be charged from a solar powered battery array at home.

Toyota Motors (NYSE: TM) is launching the first U.S. tests of its plug-in hybrid technology in two converted Prius hybrids. The test cars will run on nickel-metal hydride batteries for seven miles before a gas engine kicks in.

Although seven miles is nothing to rejoice about, other automakers are also developing plug-in vehicles that are more technologically advanced:

• General Motors (NYSE: GM) is developing the Volt plug-in, with hopes of reaching 40 miles of electric-powered travel with the new lithium-ion batteries.

• Ford Motor (NYSE: F) announced earlier this month it plans to give 20 Escape Hybrid SUVs modified as plug-ins to Southern California Edison for testing.

• Chrysler Group (NYSE: DCX) modified several Sprinter delivery vans as plug-ins, with one designated for newspaper delivery.

David Herro, of Harris Associates and long-time international investor, is upbeat about auto stocks. Not U.S. auto stocks but international auto stocks, according to this weekend's Barron's interview (subscxription required).

While Toyota (NYSE: TM) has been a great performer, other multinational auto stocks have not performed as strongly but are poised to do well. Herro likes DaimlerChrysler (NYSE: DCX), BMW (which trades in Germany under the symbol BMW) and Honda (NYSE: HMC). Daimler is about 50% undervalued, BMW about 45% and Honda 20%, according to Herro.

Global economic expansion is the reason cited for Herro liking auto companies that have strong franchise names. Herro said some three-fifths of the world's population is now entering the global economy.

Mercedes margins have increased from 1%-to-2% range to 7%, a huge improvement for an auto company. Daimler is also doing better on the commercial side of the business.

BMW's case is that it earns double-digit returns on capital and grows units around 6% per year--that is a big number for the auto industry.

Herro referred to Honda as a BMW for the mass market, with management focused on profitability and return on investment.

Investing in large auto companies does not sound exciting, but Herro has a great track record at picking stocks. Might as well go along for the ride.

It's probably old news already to most of you but it bears repeating that Mazda, a division of Ford Motor Co. (NYSE: F), has announced that it shall completely scrap all 4,703 vehicles which were on board the ill fated Cougar Ace freighter that ran into trouble off the coast of Alaska on July 23, 2006. Initially, Mazda had announced that the vehicles would not be sold as new but left the matter open for discussion pending investigation by corporate engineers and others.

While this scrapping of vehicles is certainly a kick in the pants to Mazda and its insurers, it shows me that Mazda and its parent company, Ford, don't consider short-term profit to be paramount to long-term company image and consumer perception. It's possible that Mazda could have marketed all those 4,703 vehicles as "not like new" and never had a problem, but it's equally likely that such a move could have come back to bite them in a major way. I applaud this decision. Kudos to Mazda and Ford.

On a different note, Mazda has just made delivery of its first two gasoline / hydrogen rotary powered automobiles. These RX-8 Hydrogen RE cars allow the driver to choose between the two fuels "on the fly." The rotary power plants have long been a staple of Mazda engineering and from what I read in the blogosphere, Mazda enthusiasts are quite pleased with them. The vehicles have been leased to corporate fleet customers in Japan and will be closely monitored as a part of the Japan Hydrogen and Fuel Cell Demonstration Project. Both the manufacturers and the recipients are very pleased with this accomplishment.

Read more about this Mazda accomplishment at www.autoblog.com