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Auto Stock Roundup: AutoZone Buyback Boost, Tesla Q3 Deliveries & More

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United Auto Workers’ (“UAW”) nationwide strike against General Motors GM has completed its 24th day. Investors seem to be losing patience, as shares of the top U.S. automaker plunged nearly 9% since the start of the strike. Vehicle production has been ceased across all the North American plants of the company due to the strike. The strike was called after the company’s four-year contract with workers expired on Sep 15 without any agreement on replacement. Notably, this marks the first major work stoppage at General Motors in the last 12 years and the longest national strike in the United States since 1970.

With nearly 50,000 employees in the UAW union carrying picket signs, negotiations between the union’s office and the automaker’s board appear to have hit a snag. As the strike enters the fourth week, the negotiating parties are still at loggerheads regarding wages and retirement benefits. While the UAW wants to lock in more guaranteed wage increases during the four-year labor contract, the company is insisting on paying workers lump-sum bonuses that are based on sales and do not raise long-term labor costs.

(Read the Last Auto Stock Roundup here).

Recap of the Week’s Most Important Stories

LKQ Corporation LKQ declared that it has merged its subsidiary, Auto Kelly Bulgaria EOOD, with Elit Kar OOD, thereby creating a leading distributor of automotive spare parts based in Bulgaria. LKQ Corp will now own a 20% equity stake in the combined entity. The combined business will also acquire parts of LKQ Corp’s aftermarket supply chain, thereby becoming an equity holder as well as a supplier. The deal is part of LKQ Corp's efforts to streamline its portfolio and divest non-core businesses, which in turn will help its margins. (Read more: LKQ Corp Divests Major Portion of Bulgaria-Based Business).

Tesla TSLA delivered a record 97,000 vehicles globally in the third quarter but it still fell short of Elon Musk’s target of 100,000 vehicles. It delivered 79,600 Model 3, and 17,400 Model S and X cars in the three months ended September 2019 compared with 55,840 Model 3, and 27,660 Model S and X cars in third-quarter 2018. Tesla expects deliveries in 2019 between 360,000 and 400,000 units. This target can be attained only if the company can deliver around 105,000 vehicles in fourth-quarter 2019. (Read more: Tesla Falls Short of Achieving Q3 Delivery Target).

Volkswagen AG VWAGY recently reported weaker U.S. vehicle sales for September, ending the six-month streak of year-over-year monthly gains. The firm’s U.S. auto sales in September came in at 26,947 units, marking a decline of 12% year over year. The sales were weighed down by a decline in car sales, partially offset by SUV sales. Meanwhile, the German automobile giant’s truck unit is likely to pour $2.2 billion into electric vehicles and software developments in a bid to keep pace with the changing dynamics of the auto industry. (Read more: Volkswagen Posts Weak September US Car Sales, Bets Big on EVs)

AutoZone, Inc. AZO recently authorized the repurchase of an additional $1.25 billion worth of shares under its ongoing stock buyback program. The share repurchase program was first started by the company in 1998. As of now, AutoZone has authorized $23.2 billion in share repurchases. At the end of the last reported quarter, it had shares worth $476.8 million remaining under the current repurchase authorization. The company’s efforts to consistently enhance long-term shareholder value are impressive. (Read More: AutoZone's Board Approves Additional $1.25B Share Buyback)

Lithia Motors, Inc. LAD has announced the addition of Chrysler Dodge Jeep Ram Fiat and Subaru stores in Morgantown, WV. Previously, the company acquired Ford Lincoln of Morgantown as part of its nationwide network reaching 82% of the United States. With rapid growth of the market for purchasing dealership, Lithia Motors continuously strives to make acquisitions for increasing its market share and catering to customer requirements in a better way. The addition of FCA brands and Subaru means that customers will get more domestic and import selection. It also strengthens Lithia Motors’ network. It is anticipated that the new Morgantown locations will generate around $100 million in annual revenues. (Read More: Lithia Motors Expands in West Virginia by Adding New Stores)

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past week, Advance Auto Parts AAP witnessed the maximum loss, whereas Toyota Motors registered highest gains. In the past six months, all the stocks declined expect Toyota which scaled up 9.9%.

 

 

Company

Last Week

Last 6 Months

GM

-1.6%

-13.2%

F

-0.6%

-8.8%

TSLA

0.6%

-8.9%

TM

1.2%

9.9%

HMC

-0.4%

-7.6%

HOG

-4.5%

-15.6%

AAP

-5.3%

-14.6%

AZO

0.5%

-0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What’s Next in the Auto Space?

Industry participants will be waiting for new updates related to the UAW-General Motors strike. As the strike continues, increasing number of suppliers and workers are getting affected. The company’s inventory level is being watched closely.

Watch out for the usual news releases over the next week.

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Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
 
AutoZone, Inc. (AZO) : Free Stock Analysis Report
 
LKQ Corporation (LKQ) : Free Stock Analysis Report
 
Volkswagen AG (VWAGY) : Free Stock Analysis Report
 
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