The auto industry found itself leaning toward the negative side in the last one-week period, in terms of both news and stock price. Safety recalls dominated headlines yet again with most automakers expanding their recall of vehicles with defective Takata airbags. Ford Motor Company (NYSE:F) and General Motors Co also announced new recalls.
There were a few positive developments too. AutoZone Inc (NYSE:AZO)reported solid first-quarter financial results and Tesla Motors Inc (NASDAQ:TSLA) started vehicle deliveries in Australia, a market with huge potential.
(Read last to last week’s recap here: Auto Stock Roundup for Dec 4, 2014)
Recap of the Week’s Most Important Stories
1. As part of its global expansion plans, Tesla started delivering vehicles in Australia. The electric carmaker marked the grand beginning with a ceremony in Sydney, where it displayed the Model S, and opened its first retail store and service centre in the continent at St Leonards. Additionally, Tesla showcased a Supercharging station at the ceremony. (Read more: Tesla Starts Delivery in Australia, Opens Store & Supercharger.)
2. AutoZone reported a 15.6% rise in earnings per share to $7.27 for the first quarter of fiscal 2015 (ended Nov 22, 2014) from $6.29 in the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $7.18. Net income was up 9.3% to $238.3 million from $218.1 million in the year-ago quarter. Quarterly revenues increased 8% year over year to $2.26 billion, and surpassed the Zacks Consensus Estimate of $2.22 billion. (Read more: AutoZone Beats Q1 Earnings and Revenue Estimates.)
3. Honda Motor Co Ltd (OTC:HNDAF) was reported by Reuters to be recalling about 400,000 vehicles worldwide to replace the faulty air bag inflators produced by Takata Corp. Of the total vehicles to be recalled, about 177,000 are from Japan, 22,000 are from America (excluding the U.S.), 100,000 from Europe and 70,000 from the Asia-Pacific.
Separately, Honda announced that it will replace the driver's side air bag inflators in 2.6 million vehicles in the U.S.
4. Ford announced two new safety recalls and widened an earlier recall in the week under consideration. The first new recall covers 19,825 Transit Connect cargo vans in which the adhesion of an exterior plastic panel to sliding doors may not be adequate and lead to loosening or severance of the panel, along with noise or water leakage. The second recall covers 728 Ford Mustangs of model year 2015, due to improper installation of the fuel pressure sensor, which may lead to pressurized fuel leak, increasing the risk of fire.
Additionally, Ford expanded its recall of vehicles with faulty Takata-made passenger-side airbag inflators to 38,500 in the U.S. and federalized territories, at the request of the National Highway Traffic Safety Administration (“NHTSA”). (
5. General Motors Company (NYSE:GM) announced the recall of over 2,400 new mid-sized pickup trucks in the U.S. and Canada. The driver air bags in these trucks may not have been wired properly and could reverse the deployment sequence of the vehicles' two-stage air bag system, thus delaying their deployment. General Motors also revealed that it has announced 80 recalls till November this year.
These recalls covered nearly 30.4 million vehicles in North America (including exports). Of these, 26.9 million vehicles were recalled in the U.S. alone.
Performance
Stock price of most auto stocks trended downward in the last one-week period as the combined effect of recalls and overall market weakness weighed on them. Tesla lost the most in the period on concerns that falling gas prices might affect the sales of electric cars. Meanwhile, Honda recorded the maximum loss in the last 6 months.
Advance Auto Parts Inc (NYSE:AAP), however, emerged as the top gainer in both the short and the long term.
What’s Next in the Auto Space?
On Dec 18, Winnebago Industries Inc (NYSE:WGO) will report first-quarter fiscal 2015 results.
Following General Motors, other automakers are expected to report their monthly sales for China in the coming week. Europe sales figures for October should also come out in the weeks ahead.