By Ben Levisohn

October has been painful for shares in General Motors and Ford, which have both dropped more than 5% so far this month, as concerns around pricing dominate the conversation around the big U.S. automakers.

However, Citigroup’s Itay Michaeli and team think the Bears have it wrong:

The bear case argues that a weak Yen, slippage in used car prices, regulatory costs and new capacity will bring back the “old days” of irrational price behavior…We do not see evidence that the days of irrational price behavior are upon us…

Although the Yen is indeed a headwind, it’s important to remember that it doesn’t materially encroach on Detroit 3 profit centers (trucks). That’s why General Motors North America was able to earn nearly a 10% adj. margin in Q3 even after allowing for share loss in cars.

As we see it, General Motors rationally gave up share in carryover car products and earned positive pricing from new HD pickups & SUVs while gaining share in half-ton pickups consistent with the product cycle trajectory.

Ford also managed to hold Q3 variable profits by giving up car share and netting out positive price—10.2% adj. margin. How could this be? In our view, this is simply our “Go Long” pickups thesis playing out (another trend street missing)—we still see pent-up demand in trucks…