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Auto Stock Roundup: Tesla Acquires SolarCity, GM Permitted to Delay Takata Airbag Recall

Zacks

With the wrapping up of the Q3 earnings season, things were relatively quiet in the auto sector last week. Among the major developments, Tesla Motors, Inc. TSLA completed the SolarCity acquisition, while Toyota Motor Corporation TM announced a new recall.

In an unusual move, the National Highway Traffic Safety Administration allowed General Motors Company GM to delay the recall of a large number of trucks related to the Takata airbag explosion issue in order to carry out long-term tests on the vehicles and attest to their safety.

Further, Ford Motor Co. F announced a fall in October sales volumes in Europe. Honda Motor Co., Ltd. HMC started the production of the fifth generation CR–V.

Recap of the Week’s Most Important Stories


1. Tesla completed the acquisition of SolarCity Corporation on Nov 21. Shareholder approval for the merger was received last week. Owners of nearly 85% of the outstanding Tesla shares voted in favor of the deal (read more: Tesla Completes Acquisition of SolarCity for $2.6B).

Tesla currently carries a Zacks Rank #3 (Hold).

2. General Motors has been permitted by U.S. auto safety regulators to delay the recall of a large number of trucks related to the Takata airbag explosion issue, to Aug 31, 2017. The recall of these vehicles was initially slated to begin on Dec 31, 2016.

General Motors claims that its inflator’s vents are bigger and have stronger steel caps than that of the inflators that have been linked to the deaths. Moreover, its trucks have solar-absorbing glass which allows cabin temperatures to remain low, keeping the inflators cooler. The company has been allowed more time to prove that these vehicles are safe. The testing could help the company prevent the recall of 6.8 million vehicles, which would cost about $870 million (read more: General Motors Permitted to Delay Takata Airbag Recalls).

Currently, General Motors has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. Toyota announced the recall of 834,000 Toyota Sienna minivans in North America. Of these, 744,000 vehicles are in the U.S. Per reports, the sliding doors of the Sienna minivans of model years 2011-2016 can open while driving.

Currently, Toyota has a Zacks Rank #3.

4. Ford reported a 1.2% year-over-year fall in sales to 99,900 vehicles in its 20 traditional European markets (Euro 20) in Oct 2016. The automaker fared worse than the industry, which posted a sales decline of 0.9%. In the first 10 months of 2016, Ford’s sales increased 6% to 1,144,200 vehicles, compared with the industry’s growth rate of 7.3%.

Ford currently carries a Zacks Rank #3.

5. Honda initiated the global production of the new 2017 Honda CR-V at the East Liberty Auto Plant in Ohio. The revamped car is expected to be sold in North America from winter.

Honda currently carries a Zacks Rank #4 (Sell).

Performance

The companies in the auto sector recorded mostly positive performance last week. AutoZone, Inc. AZO was leading the gainers’ list with a 6.1% rise. Meanwhile, Ford was the only stock among the ones listed below to post losses over the week.

Even over the last six months, most auto stocks performed well. Harley-Davidson, Inc. HOG gained the most over the longer term, while Tesla lost the most.

Company

Last 1-Week Period

Last 6 Months

GM

+1.9%

+9.1%

F

-0.8%

-10.5%

TSLA

+5.0%

-11.4%

TM

+1.7%

+13.8%

HMC

+0.5%

+6.1%

HOG

+3.9%

+34.6%

AAP

+4.9%

+14.5%

AZO

+6.1%

+5.0%

Auto-Tires-Trucks Sector Price Index

Auto-Tires-Trucks Sector Price Index

What’s Next in the Auto Space?

On Nov 28, Thor Industries, Inc. will release its fiscal first-quarter financial results.

On Dec 1, automakers will report their U.S. sales for November.

On the same day, Ford will pay a quarterly cash dividend of 15 cents per share to shareholders of record as of Oct 27.

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