Last week saw disappointing news stories for most auto stocks although impact of the positive movement in the overall market prevented any major losses in stock value. A negative twist emerged in General Motors Co.’s (GM) ignition switch recall fiasco. Meanwhile, Advance Auto Parts Inc.’s (AAP) weak fiscal guidance generated enough bearish sentiment to drag the stock despite its earnings beat.
Ford Motor Co.’s (F) October China sales results were weak, although some positive media coverage was garnered as the company started producing the much hyped new F-150 truck. Meanwhile, Toyota Motor Corp.’s (TM) triple recalls pulled down its shares.
(Read last to last week’s recap here: Auto Stock Roundup: Tesla Falls, Toyota Rises on Earnings Impact.)
Recap of the Week’s Most Important Stories
1. According to the emails recently showcased by a Texas attorney, General Motors had ordered about half a million replacement ignition switches almost two months before announcing the recall of vehicles for faulty ignition switches. Legally, automakers are supposed to alert the National Highway Traffic Safety Administration (NHTSA) about any safety concern related to vehicles within five business days of identifying the problem.
The emails were not mentioned when CEO Mary Barra testified before the Congress. It is expected that the emails may lead to further congressional hearings with Barra. (Read more: GM Alleged of Ordering Parts Long Before Recall.)
2. Ford sold 93,179 vehicles in China in Oct 2014. This reflects a 0.8% year-over-year decline from 93,969 units sold in Oct 2013. Year-to-date sales of Ford in the world’s largest automobile market amounted to 906,613 units, up 22.2% from 741,818 vehicles sold in the first 10 months of 2013. (Read more: Ford's China Sales Decline in October 2014, Rise YTD.)
3. Advance Auto Parts reported a 27.7% rise in adjusted comparable earnings to $1.89 per share in the third quarter of fiscal 2014 (ended Oct 4, 2014) from $1.48 in the prior-year quarter. The figure also exceeded the Zacks Consensus Estimate of $1.87. Revenues went up 50.6% year over year to $2.29 billion and came in line with the Zacks Consensus Estimate.
Sales benefited from the General Parts takeover, increase in comparable same-store sales and addition of new stores over the last 12 months. Advance Auto Parts affirmed its earnings expectation of $7.50–$7.60 per share for fiscal 2014. (Read more: Advance Auto Parts Down on Weak Outlook; Earnings Beat.)
4. Toyota Motor Corp. has announced three separate recalls, covering a total of 361,800 vehicles worldwide. The largest among the three recalls covers 170,000 Camry sedans that have a defective ball joint, which can drive the vehicle out of control. The second largest recall covers 105,800 vehicles, mostly in Japan. These vehicles need fuel pipe replacement.
The last of the three recalls covers 86,000 Crown and Crown Majesta vehicles in Japan. Toyota will replace the outer seat belt assemblies of these vehicles. (Read more: Toyota Announces 3 Recalls for 361,800 Vehicles Globally.)
5. Honda Motor Co., Ltd. (HMC) announced that it will start selling the new Legend flagship sedan in Japan from Jan 22, 2015. The new vehicle will introduce Honda’s new driver-assistive system, Honda SENSING. Key features of the system include the world’s first Pedestrian Collision Mitigation Steering System, along with Collision Mitigation Braking System, Road Departure Mitigation system, Lane Keeping Assist System, Adaptive Cruise Control with Low-Speed Follow, Traffic Sign Recognition, False Start Prevention Function and Lead Car Departure Notification System.
Performance
In the last five trading sessions, fortunes of certain auto stocks saw a reversal from the previous week. Toyota, which recorded the maximum gains in the prior week, lost the maximum, along with Advance Auto Parts this week. Meanwhile, the previous week’s biggest loser Tesla recorded maximum gains in the last five trading sessions.
Tesla also gained the maximum in the last six months, while General Motors lost the most during the period.
|
Company |
Last 1-Week Period |
Last 6 Months |
|
GM |
+2.2% |
-10.6% |
|
F |
+4.6% |
-8.1% |
|
TSLA |
+7.8% |
+31.0% |
|
TM |
-2.1% |
+6.7% |
|
HMC |
-1.6% |
-7.6% |
|
HOG |
+4.3% |
-8.7% |
|
AAP |
-2.1% |
+18.5% |
|
AZO |
+1.7% |
+6.7% |
What’s Next in the Auto World?
Tata Motors Ltd. (TTM) is set to report third-quarter earnings on Nov 14. On Nov 18, Toyota will launch its fuel call sedan in Japan and hold a media briefing for the same in Tokyo. The company will also unveil the new Lexus concept car, LF-C2, at the 2014 Los Angeles Auto Show on Nov 19.
Additionally, Europe auto sales figures for October should come out in the coming weeks.
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