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Auto Stock Roundup: Ford to Cut Jobs by 10%, Monthly Sales Drop in Europe, TSLA Unit’s Founder Quits

Zacks

The last week witnessed negative stock performance in the auto sector. Ford Motor Company F revealed its plan for a job cut in the form of voluntary retirement. Moreover, the company saw sales in Europe decline year over year in Apr 2017.

Tesla, Inc. TSLA-owned SolarCity founder announced his decision to leave the company.

Meanwhile, Honda Motor Company, Ltd. HMC launched its first five-door Civic hatchback in the U.S.

Delphi Automotive PLC DLPH topped earnings and revenue estimates and announced a spinoff.


(Read the previous roundup here: Auto Stock Roundup for May 11, 2017)

Recap of the Week’s Most Important Stories

1. Ford has decided to reduce its work force to cut costs. For this, the company will be offering early retirement benefits to workers in North America and Asia. The company is aiming to reduce 10% of its 15,000 managers and other non-production workers.

The auto manufacturer will be offering financial incentives to encourage salaried employees to leave the company voluntarily by the end of Sep, 2017. Ford expects it will hit the target through these voluntary offers.

Ford carries a Zacks Rank #3 (Hold).

2. Tesla-owned SolarCity founder, Lyndon Rive, announced his decision to leave the company. Rive stated that SolarCity is healthier than it has been in the past and he will now be looking to start another company. This comes after Tesla introduced the solar roof last week.

SolarCity aimed to have 1 million customers by 2018 in 2013, but lowered its goal at the end of 2015 as costs to fund growth mounted and demand began to slow. SolarCity hit 300,000 customers late last year.

Tesla carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. Honda launched its first five-door Civic hatchback in the U.S. The 2017 Civic hatchback begins at $20,575 for a base model with manual transmission. The lowest starting retail price for a Civic hatchback with a continuously variable transmission (CVT) that the driver operates like an automatic is $21,375. Even with aggressive driving, the test car averaged the government's 33-mpg rating for combined city/highway travel.

Honda carries a Zacks Rank #4 (Sell).

4. Ford recorded an 11% year-over-year decline in sales to 100,800 vehicles in its 20 traditional European markets (Euro 20) in Apr 2017. With this, the automaker lagged the industry’s sales decline rate of 7.2%. In the Euro 50 market, sales were down 9% year over year in the month to 117,800 vehicles, wider than the 6% decline witnessed by the industry.

5. Delphi Automotive posted a 17% increase in adjusted earnings to $1.59 per share in the first quarter of 2017 from $1.36 earned in the prior-year quarter. Moreover, earnings per share surpassed the Zacks Consensus Estimate of $1.46. Revenues rose 6% year over year to $4.29 billion and surpassed the Zacks Consensus Estimate as well.

Delphi Automotive announced its decision to spin off its Powertrain Systems segment into a new, independent publicly-traded company. The transaction is expected to be completed by Mar 2018, subject to customary market, regulatory and other conditions. Post the transaction, Delphi Automotive shareholders will own shares of both companies.

Delphi Automotive carries a Zacks Rank #3.

Performance

Auto stocks recorded a negative performance over the last week. Toyota Motor Corp Ltd TM lost the least among the stocks listed below, while Harley-Davidson, Inc. HOG saw the largest decline.

In the last six months, Tesla was the sole gainer, while AutoZone, Inc. AZO was the worst performer.

Company

Last 1-Week Period

Last 6 Months

GM

-5.3%

-3.0%

F

-2.5%

-9.4%

TSLA

-5.9%

+62.3%

TM

-0.02%

-6.6%

HMC

-3.5%

-5.1%

HOG

-6.6%

-8.8%

AAP

-1.1%

-13.1%

AZO

-4.9%

-14.1%

Auto-Tires-Trucks Sector 5YR % Return

Auto-Tires-Trucks Sector 5YR % Return

What’s Next in the Auto Space?

The details of Lear’s annual general meeting are expected.

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