U.S. Markets close in 6 hrs 20 mins

Auto Stock Roundup: Ford to Close Plants in Russia, Daimler & BMW to Tie Up

Zacks Equity Research
Faster share price rally over the past year gives IQVIA Holdings (IQV) an edge over Delphi Technologies (DLPH).

Ford Motor Company F has considered closing two plants in Russia in the past week. This auto giant is planning to take this move as it is making losses in all regions, except for North America. Further, the company is mulling over closing vehicle lines in South America, opting for production cuts in Europe and laying off workers in China.

Two other auto giants, Daimler AG DDAIF and BMW AG BAMXF, are set to collaborate for self-driving technology. In fact, auto companies from all over the world are investing huge amounts in this emerging but potentially revolutionary technology. Different partnerships and initiatives have already been adopted by automakers to stay ahead in the industry.

Recap of the Week’s Most Important Stories

1.    Daimler and BMW are likely to partner for the development of self-driving technology, per the Wall Street Journal. Heightened competition in the self-driving technology front brought these rival auto giants together. The aim of this partnership is to make autonomous driving technologies mainstream by the middle of the next decade.

So far, Daimler’s efforts on the self-driving front have been limited to internal developments. The company already plans to launch a fleet of driverless vehicles in San Jose, CA, in 2019. This collaboration with BMW is likely to expand its development in self-driving technology. Then again, BMW has been working on automated technology since 2006 by collaborating with various vehicle manufacturers and technology companies. This latest collaboration with Daimler is likely to provide tremendous momentum to BMW’s self-driving efforts.

Importantly, auto companies are investing huge amounts on this emerging but potentially revolutionary technology. Different partnerships and initiatives have already been adopted to stay ahead in the industry. Given these, this partnership is of huge importance compared with stand-alone efforts. (Read more: Daimler & BMW to Collaborate for Self-driving Technology)

Both Daimler and BMW currently carry a Zacks Rank #4 (Sell).

2.    Dana Incorporated DAN completed the acquisition of Oerlikon Group’s Drive Systems segment, which consists of Graziano and Fairfield brands. The acquisition agreement was signed in July 2018 for CHF 600 million (approximately $600 million).

The newly added Drive Systems unit will widen Dana’s product offering, with high-precision helical gears for light and commercial vehicles. Further, Drive Systems’ wholly-owned business, VOCIS will enhance Dana’s electronic controls ability for transmissions and drivelines, thus, backing the company’s electrification capabilities in key markets.

Additionally, the segments’ wide manufacturing presence will aid Dana to get closer to key customers in growth markets, consisting China, India and the United States. Wide product portfolio and strong manufacturing presence in growing markets will aid Dana in the long term. (Read more: Dana Expands Portfolio With Acquisition of Oerlikon's Segment)

Dana currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3.    Allison Transmission Holdings, Inc. ALSN is making an investment to build a vehicle testing facility in Indianapolis, IN. The new facility will be sited within the campus of the company’s global headquarters on the westside of Indianapolis.

This new vehicle environmental testing center will allow Allison to test replicating vehicle environments and duty cycles. Testing will also aid the company to offer products for highly specialized vehicles that can perform under severe weather conditions. Further, the testing center can be utilized by third parties in times when not being used by Allison.

The planning for construction of the testing facility has already started and is scheduled to be completed in 2020. It will consist of two environmental chambers, which will simulate extreme temperature, altitude and on-road conditions.
The simulation will help in assessing on-board diagnostic development, regulatory compliance and performance improvements for vehicle functional optimization. (Read more: Allison Invests in Vehicle Test Center in Indianapolis)

Allison currently carries a Zacks Rank #3.

4.    Ford is mulling over shutting down two plants in Russia, per Reuters. This move is in sync with the company’s strategy of restructuring operations in regions, where it is not generating profits.

In fourth-quarter 2018, Ford incurred losses in all regions outside North America. This prompted this Dearborn, MI-based company to close vehicle lines in South America, opt for production cuts in Europe and lay off workers in China.

Per sources, in Russia, the company is likely to close one plant in the central region of Tatarstan and one in the northern Leningrad area. EcoSport and Fiesta models produced in the Tatarstan plant, and Focus and Mondeo passenger car models manufactured in Leningrad will no longer be produced in Russia.

In 2018, Ford sold 53,234 vehicles in Russia. Though vehicles sold by the company in Russia in 2018 increased 5.7% from that of 2017, it was well below the overall vehicle sales growth of 12.8% in Russia. Moreover, Ford’s share in vehicles sale in Russia in 2018 declined to 3% from 3.8% in 2013.

Heavy loss incurred by Ford in Russia might have prompted it to consider this downsizing. (Read more: Ford to Close Two Plants in Russia as Losses Increase)

Ford currently carries a Zacks Rank #3.

5. Tenneco Inc. TEN is providing suspension components for the new Jaguar I-PACE all-electric luxury crossover SUV. Tenneco’s passive front and rear dampers along with coil and air spring suspension modules will enhance the new Jaguar model’s performance and stability.

For efficient functioning of electric powertrains, e-vehicles should have a reduced amount of overall weight compared with combustion engine vehicles. Tenneco’s suspension module consists of plastic spring seats, aluminum top mount and light-weight components that will cut the weight of electric motors and battery, thus, improving performance.

Tenneco is supplying suspension components and modules from production hubs situated at Sint-Truiden, Belgium, Hodkovice, the Czech Republic and Birmingham, U.K. Each facility manufactures a specific component for customers. The plant at Belgium is providing front passive dampers while the Czech Republic manufactures rear passive dampers and rear modules, and front air & coil module assembly at the U.K. facility.

This is not the first time when Tenneco is supplying auto components for Jaguar’s vehicles. In October 2018, the company provided suspension technology for Jaguar E-PACE compact SUVs. Apart from Jaguar, Tenneco is also a regular component supplier for Ford Motor Company, BMW AG, AB Volvo and Daimler AG.

Tenneco currently carries a Zacks Rank #3.


In the last week, AutoZone, Inc. AZO gained the maximum while Tesla, Inc. TSLA declined the most.

In the past six months, AutoZone has rallied the most. Harley-Davidson, Inc. HOG declined the maximum.

Company Last Week Last 6 Months
GM -2.3% 14.1%
F -3.3% -8.6%
TSLA -12.2% -3.2%
TM -3.5% -1%
HMC -2.8% -3.3%
HOG 2.2% -14.4%
AAP -0.2% -5.4%
AZO 2.6% 22.3%

What’s Next in the Auto Space?

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

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ford Motor Company (F) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Bayerische Motoren Werke AG (BAMXF) : Free Stock Analysis Report
Daimler AG (DDAIF) : Free Stock Analysis Report
AutoZone, Inc. (AZO) : Free Stock Analysis Report
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
Tenneco Inc. (TEN) : Free Stock Analysis Report
Dana Incorporated (DAN) : Free Stock Analysis Report
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research