The auto sector witnessed many positive and negative developments over the last week. While Brexit caused a turmoil in global markets, Ford Motor Co.’s (NYSE:F) planned exit from Indonesia was not free from trouble either. Meanwhile, Toyota Motor Corporation (NYSE:TM) is busy dealing with recalls.
Among the positive developments, General Motors Company (NYSE:GM) announced a $290 million investment in one of its U.S. plants, while both Toyota and Honda Motor Co., Ltd. (NYSE:HMC) reported strong production volumes for May. Meanwhile, reports emerged that Tesla Motors, Inc. (NASDAQ:TSLA) is planning to launch a variant of Model X in China.
(Read the previous roundup here: Auto Stock Roundup for Jun 23, 2016)
Recap of the Week’s Most Important Stories
1. General Motors announced an investment worth $290 million in its Bowling Green Assembly plant to improve and revamp the facility’s vehicle assembly operations with new technologies and processes. Of the total, $153 million will be utilized for an application to participate in the Kentucky Business Incentive. General Motors will start the upgrade this summer (read more: GM Invests $290M for Upgrades at Bowling Green Assembly).
2. Following Ford’s January announcement that it will discontinue operations in Indonesia by the end of this year, six Indonesian dealers are seeking compensation worth $75 million. These dealers, which manage 31 Ford dealerships in Indonesia and account for 85% of its total sales in the country, are threatening to file a lawsuit in Jakarta if the company refuses to pay (read more: Ford's Indonesian Dealers Seek $75M in Compensation).
3. Toyota announced that it is recalling 3.37 million vehicles globally for two separate issues. In the first case, Toyota stated that evaporative fuel emissions’ control units in 2.87 million Prius, Auris compact hatchback and Corolla models may crack. This crack can expand, eventually causing the fuel to leak.
The second recall involves 1.43 million cars worldwide with defective airbags. The vehicles recalled mainly include the Prius hybrid, Prius plug-in and the Lexus CT200h manufactured from Oct 2008 to Apr 2012. A small crack in some of the inflators in the driver and passenger side airbags of these vehicles may expand. This may cause the airbags to partially inflate, thereby increasing the risk of injury (read more: Toyota Recalls 3.37M Vehicles Worldwide on Safety Issues).
4. Tesla will be introducing Model X 75D in the Chinese market on Jul 2, according to sources. Model X 75D is expected to cost 850,000 yuan or around $128,000. The vehicle, featuring a 75kWh battery, will offer a range of 237 miles. Tesla’s Model X 75D will be the new base model of the Chinese Model X lineup that also consists of the 90D and the P90D. Model X was officially launched in China last month (read more: Tesla Set to Launch Model X 75D in China in July).
5. Toyota and Honda reported their May production data. Honda’s production in Japan surged 29.4% to 56,652 units in the month. Production outside Japan increased 9.4% to 341,419 units, which was a record high for the month of May. Consequently, worldwide production volume for May was 398,071 units, up 11.8% from May 2015. The automaker’s global production volume was a record high for the month of May.
Toyota’s total worldwide production surged 11.2% year over year to 837,775 units in May 2016. This was backed by a 10.6% rise in production in Japan to 300,299 units and an 11.5% increase in production outside Japan to 537,476 units.
Performance
Auto sector companies had mixed fortunes on the stock market last week. With a gain of 6.9%, Tesla was leading the winners among the stocks listed below, while Ford lost the most over the week.
Over the last six months, Honda lost the most among the stocks listed below. Advance Auto Parts, Inc. (NYSE:AAP) was the biggest gainer over this period.
Company | Last 1-Week Period | Last 6 Months |
GM | -3.9% | -17.9% |
F | -4.8% | -11.4% |
TSLA | +6.9% | -11.7% |
TM | -4.7% | -17.6% |
HMC | -1.6% | -20.4% |
HOG | -3.9% | -2.7% |
AAP | +5.1% | +6.4% |
AZO | +4.8% | +5.7% |
What’s Next in the Auto Space?
On Jul 1, 2016, automakers will report their U.S. sales data for June and first-half 2016.
FORD MOTOR CO (F): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
ADVANCE AUTO PT (AAP): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
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