The approaching Christmas and New Year have turned people’s attention to pleasure rather than business, resulting in a slothful week in the auto industry. Still, the launch of Ford Motor Co.’s (F) new SYNC 3 communications and entertainment system, and General Motors Company’s (GM) decision to invest $5 billion in Mexico by 2018 were the key developments.
On the other hand, new safety recalls by Honda Motor Co., Ltd. (HMC) and Ford, and rating plus target price downgrade for some automakers hit headlines for wrong reasons.
(Read last to last week’s recap here: Auto Stock Roundup for Dec 12, 2014)
Recap of the Week’s Most Important Stories
1. Ford has introduced its new communications and entertainment system – SYNC 3 – produced by Panasonic on a QNX operating system. Previously, Sync was produced by Microsoft. The new SYNC 3 touch screen system is faster than the previous system and easier to use as it responds better to driver commands. (Read more: Ford Introduces SYNC 3, Dumps Microsoft for Panasonic.)
2. Honda’s list of recalls increased this week with two new announcements. The automaker and its two Chinese joint ventures will recall 569,769 vehicles due to defective Takata airbags, according to media reports. Of these, 527,136 Accord vehicles and 16,505 Fit Saloon will be recalled by GAC-Honda, the joint venture between Honda and Guangzhou Automobile Group Co., Ltd.
The remaining 26,128 vehicles will be recalled by Dongfeng-Honda, the joint venture between Honda and Dongfeng Motor Group Co. These vehicles include Elysion MPVs manufactured from Jun 4, 2012 to Jun 17, 2014. (Read more: Honda to Recall 570K Vehicles in China for Takata Airbags.)
Additionally, Honda’s Acura division will recall 9,700 RLX vehicles of model years 2014 and 2015 in the U.S. due to the possibility of the reflective film backing material in the headlights delaminating. (Read more: Honda to Recall Acura RLX for Headlight Delamination Issue.)
3. General Motors announced that it will be investing $5 billion in Mexico by 2018. Of the total investment, the automaker has already invested $1.4 billion. The investment is aimed at increasing production capacity of vehicles, engines and transmissions at its plants across the country.
General Motors will allocate the funds toward the expansion of its four manufacturing complexes in the states of Coahuila, San Luis Potosi, Mexico State and Guanajuato. The automaker will also modernize production lines and update the technology in autos and auto parts. (Read more: General Motors to Invest $5B to Hike Production in Mexico.)
4. A Morgan Stanley analyst reduced the target price for Tesla Motors, Inc. (TSLA) to $290 from $320. Additionally, the analyst reduced the sales projection for the upcoming Model 3 by 33% and 50%, respectively, for 2020 and 2028. Morgan Stanley also projected significantly lower sales for Tesla’s cars by 2020 compared to the company’s forecast.
5. Tata Motors Limited (TTM) announced that its global wholesales, together with Jaguar Land Rover global wholesales were 83,906 units in Nov 2014, marginally better than 81,957 units in Nov 2013. Most other figures also improved year over year, although global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo declined to 30,233 units in the reported month from 31,254 in Nov 2013.
Global wholesales of all passenger vehicles were 53,673 units in Nov 2014, of which Tata Motors’ global wholesales of passenger vehicles in the month were 12,355 units. Jaguar Land Rover’s global wholesales for the month were 41,318 units. (Read more:Tata Motors' Nov 2014 Global Wholesales Nearly Hit 84K.)
Performance
Stock price of most auto stocks continued to move downward in the last one-week period due to the overall market weakness, rating downgrade by some analysts, weak industry sales in Europe and continued recalls.
Harley-Davidson, Inc. (HOG) lost the most in the period, while Honda recorded the maximum loss in the last 6 months. Advance Auto Parts Inc. (AAP) remained the top gainer in both the short- and the long-term periods.
|
Company |
Last 1-Week Period |
Last 6 Months |
|
GM |
-2.6% |
-14.2% |
|
F |
-4.7% |
-14.1% |
|
TSLA |
-1.9% |
-9.4% |
|
TM |
-1.8% |
+6.2% |
|
HMC |
-1.1% |
-14.8% |
|
HOG |
-6.4% |
-9.9% |
|
AAP |
+1.5% |
+23.0% |
|
AZO |
+0.7% |
+14.3% |
What’s Next in the Auto Space?
Winnebago Industries, Inc. is scheduled to report first-quarter fiscal 2015 results today. General Motors will pay a dividend of 30 cents a share on Dec 23 to shareholders of record as of Dec 10.
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