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Auto Stock Roundup: Ford, General Motors Rev Up for Autonomous Future, Volkswagen in Focus

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Last week saw some philanthropic activities by a few big auto companies in the Hurricane Irma-affected areas. Besides, the sector also witnessed heightened activities as Chinese authorities announced its plans of withdrawing manufacture and sales of traditional energy cars at an unspecified date.

This readiness is evident all round. Shrugging off the emission scandals, Volkswagen AG VLKAY is going all out to establish itself in the electric vehicles market.

Electric vehicles race apart, big automakers’ fight against car-sharing services and ride-hailing apps continued in the past week. Also, carmakers continued with their experimentation on self-driving vehicles.

Given the assistance from government, technological breakthroughs and increasing acceptance of the powertrain by automakers and customers, the auto market seems to have almost reached a point of inflection.

(Read the previous roundup here: Auto Stock Roundup for Sep 7, 2017)

Recap of the Week’s Most Important Stories

1. Penske Automotive Group, Inc. PAG reported that it has acquired an extra 5.5% ownership interest in Penske Truck Leasing Co., L.P. (“PTL”) from the subsidiaries of GE Capital Global Holdings, LLC for roughly $239 million. This additional stake has been funded by using liquidity, available under the company’s U.S. credit agreement.

PTL is a provider of supply chain management and transportation services.

The additional 5.5% ownership in PTL will enable Penske Automotive to realize earnings accretion, additional cash flows through tax savings and an increased amount of annual cash distribution that PTL offers to its partners (read more: Penske Acquires Additional 5.5% Ownership Stake in PTL).

Currently, Penske Automotive has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. In its bid to shift to electric vehicles, Volkswagen is vehemently taking a slew of measures. This move is not only an indication of the company throwing a challenge to Tesla, Inc. TSLA, the frontrunner in this area, but also its plans of reorienting its strategies in line with the changing dynamics of the auto sector.

The German auto major intends to invest more than 20 billion euros ($24 billion) in zero-emission vehicles by 2030 to create mass market. The company plans to offer 80 new electric cars across its different groups by 2025, up from its earlier target of 30. In fact, the company intends to roll out the electric version of each of its 300 group models by 2030.

Notably, until Volkswagen admitted to cheating on U.S. diesel emissions tests around two years ago, it did not show much interest in electric vehicles and self-driving technology. However, the massive transformation that is taking place in the industry has prompted the company to follow suit (read more: Volkswagen Joins Electric Car Race in a Big Way).

Volkswagen currently carries a Zacks Rank #2 (Buy), while Tesla has a Zacks Rank #3.

3. Autoliv, Inc. ALV partners with Adient plc — the leading automotive seating supplier in the world — to tackle vehicle seating problems and suit the designs of future cars with autonomous driving facility. Both companies will engage in developing products and solutions to handle challenges pertaining to safety and comfort of self-driving vehicles.

With the introduction of such sophisticated models in the market, drivers and passengers will be spending more time on non-driving activities. The interiors of these autonomous cars will thus grab more attention and play a more dominant role on the road.

Passengers will look for more internal flexibility in computer-driven vehicles than before. For instance, alternative seating positions to relax, socialize and work. Also, seatbelts, pretentioners and buckles will remain primary components for controlling accidents even in vehicles without manual drivers (read more: Autoliv Allies With Adient for Advanced Seating System).

Autoliv currently carries a Zacks Rank #3.

4. Per a Bloomberg report, General Motors Company GM is taking a slew of measures to compete with car-sharing services and ride-hailing apps.

General Motors’ driverless car is ready for mass production and its Maven car-sharing business is also expanding, indicating that the automaker is ramping up for the autonomous future.

General Motors has showcased the newest version of its autonomous Chevrolet Bolt electric car in San Francisco. Recently, Maven announced that it has been operating in 17 cities and will soon expand its services in eight metro areas with Maven Gig. Notably, Maven Gig rents cars to Uber, Lyft and delivery drivers.

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

5. Ford Motor Company F collaborated with Virginia Tech Transportation Institute to test ways through which autonomous cars will communicate with pedestrians, human drivers and bicyclists. The attempt was to create normal visual language that people can understand.

The company believes that developing a way to communicate is essential for self-driving cars since hand waves or head nods cannot be used in this scenario.

Through this project, Ford’s attempt was to ensure that self-driving vehicles can safely share the road with humans.

Researchers have come to a conclusion that lighting signals are the most helpful means for visual communication for autonomous cars. Similar to light signals used to indicate turning or braking signs, which is widely understood, will help self-driving vehicles to indicate if they are beginning to yield or are about to accelerate from a stop.

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

Performance

In the last week, all the stocks moved north. Tesla registered the maximum increase, whereas Ford recorded lowest increase.

In the last six months, Tesla gained the most, while Advance Auto Parts AAP registered the steepest decline.

CompanyLast WeekLast 6 Months
GM2.5%3%
F1%-8.1%
TSLA6.3%43.2%
TM2.5%3%
HMC4.1%-6.2%
HOG3.6%-23.8%
AAP4.7%-34.6%
AZO5.3%-20.6%


What’s Next in the Auto Space?

Stay tuned for the usual news updates in the space.

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