By Meg Richards
The Associated Press

NEW YORK - Lower sales, higher fuel costs and rising interest rates have helped make U.S. auto stocks some of the most unloved investments on Wall Street.

Just 30 percent of analysts rate Ford Motor Co. a buy, and only 25 percent think you should take a chance on General Motors Corp., according to Zacks Investment Research. Most professional investors believe there are rough years ahead for Detroit, as huge fixed expenses, a protracted price war and an addiction to buying incentives cut into profits.

When interest rates were at 45-year lows, automakers were able to boost sales to record levels by offering great deals with sweet financing terms. They also focused on more expensive products, such as sport-utility vehicles, light trucks and minivans. Now that interest rates and gas prices are higher, that strategy seems unsustainable.

"The fundamentals of the auto industry for every manufacturer are bad. It's a bad business to be in," said Phil Guziec, an equity analyst with Morningstar Inc. "So many new vehicles have been stuffed out there, they've stuffed their pipeline. Eventually that's going to come back to haunt them. And the worst part is, the whole time they've been selling more cars, they haven't been making that much money on them."

Annual sales rates for cars, trucks and SUVs in the United States have hovered between 15 million and 16 million since the mid-1980s. For the past 21/2 years, the average annual sales rate has been 16.7 million. But last month the seasonally adjusted annual sales rate dipped to 15.4 million units, delivering a punishing blow to auto stocks.

"They had a great run. The question is, now what?" said Kenneth McCarthy, chief economist with vFinance Investments Inc. "It's so unusual to look back and say auto sales rose during the recession, that's never happened before. But the economic reality is that at some point they have to cycle down."

Foreign manufacturers are taking a higher market share this year, edging closer to the levels they enjoyed in the late 1980s.

Despite the strikes against them, some market contrarians believe the big U.S. car makers are worth holding on to. They're attractively valued by price-to-earnings ratio - market capitalization divided by after-tax earnings - and are known for paying substantial dividends.