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Auto Stock Roundup: TSLA's India Entry, F's South America Restructuring & More

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Rimmi Singhi
·6 min read
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Last week, China’s 2020 auto sales data was released. Last to last week, 2020 U.S. and U.K. auto sales results were out, reflecting coronavirus woes. Vehicle sales in China, which is the world’s largest car market, also depicted coronavirus-led sluggish demand. The country witnessed the third consecutive annual sales decline in 2020. However, sales increased for the ninth straight month in December as the industry is on the recovery track from coronavirus-induced lows. According to the China Association of Automobile Manufacturers, a total of 25.3 million vehicles were sold in 2019, marking a year-over-year drop of around 2%. While sales of passenger vehicles slipped 6% in 2020, sales of new energy vehicles — including electric vehicle (EVs) and hybrids — were up 11% year over year to 1.37 million units. 

On the news front, China EV star NIO Inc. NIO announced the pricing of $650 million of convertible senior notes due 2026 and another $650 million of convertible senior notes due 2027. The firm will utilize the proceeds to repay debts, strengthen cash position and for general corporate purposes. Meanwhile, another rising EV star of China, XPeng Inc. XPEV inked a strategic agreement with five banks in China to secure a credit line of 12.8 billion yuan ($2 billion) for expansion of its manufacturing, sales and service capabilities. The most important news for the week gone by are mentioned below.

Recap of the Week’s Top Stories

Tesla TSLA officially commenced operations in India by establishing a fully-owned subsidiary in Bengaluru. Further, it plans to set up a research and development unit and eventually, a manufacturing facility for its EVs in the country.The company will begin operations in India as a sales company by importing completely built units into the country. The U.S.-based EV behemoth plans to import, distribute, sell, service, and maintain EVs, stationary energy storage systems and equipment, including solar panels in the world's fourth largest auto market. The first model to be offered to consumers in India will be Tesla’s flagship Model 3, entry-level variant, initially priced at INR 55-60 lakhs, ex-showroom. Tesla currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Motors GM announced the launch of a business unit — BrightDrop. This unit has been particularly designed to offer an integrated ecosystem of electric first-to-last-mile products, software and services, aimed at helping delivery as well as logistics companies to transfer goods efficiently. The BrightDrop EP1 will be the first product to be rolled out early this year in the new unit. The second product, an all-electric light commercial delivery van, namely EV600, is slated to be unveiled by the end of this year and become more widely available to customers by early 2022. At the CES annual tech and gadget show, General Motors also unveiled a futuristic flying Cadillac and a Cadillac boxy shuttle.

Ford F recently announced that the company will shut three manufacturing plants — Camacari, Taubate and Troller plants — in Brazil as it is restructuring the South American business. On account of the decision, Ford currently expects to incur pre-tax charges of $4.1 billion, of which $2.5 billion pertains to 2020 and $1.6 billion to 2021. The company claims to be transiting to a lean, asset-light business model by halting production in Brazil. Nonetheless, the automaker is focused on serving customers in Brazil with the all-new Ranger pickup, Transit van, Bronco and Mustang Mach 1, as well as several of its most premium models. 

Navistar International Corporation NAV announced the decision to shut and sell the Melrose Park facility in Illinois to an industrial park developer that has an actionable plan to redevelop the parcel into a modern industrial business park. The company expects to terminate operations at the Melrose Park campus by this November, and complete the sale and divestiture of the property by 2021-end. On account of the sale, Navistar will incur a pre-tax charge of roughly $85 million, including approximately $40 million of cash-related charges. Meanwhile, the truck giant recalled almost 20,000 heavy-duty trucks in the United States and Canada, whose engine revving while using a power take-off accessory might overcome the vehicle’s parking brake, in turn resulting in an accident.

CarMax Inc. KMX rolled out a new consumer offering, Love Your Car Guarantee, a fresh and unique feature in the automotive retail industry. This trademark experience will enhance buyers’ peace of mind and confidence by giving them the ability to take 24-Hour Test Drives before making the purchasing decision. Additionally, CarMax has extended its 7-Day Money Back Guarantee to a “30-Day Money Back Guarantee”. Now, customers have a period of 30 days to decide if a vehicle is the relevant fit, offering them the option to return the car for any reason for a full refund of up to 1,500 miles. Remarkably, this offering is unrivalled in the automotive industry.

Price Performance

Below we highlight the price movement of some of the major auto players over the past week and six-month period.

In the past six months, all stocks have increased, with Tesla being the maximum gainer. Over the past week, all stocks have witnessed gains apart from Toyota, Advance Auto Parts and AutoZone.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


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
 
Navistar International Corporation (NAV) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
CarMax, Inc. (KMX) : Free Stock Analysis Report
 
NIO Inc. (NIO) : Free Stock Analysis Report
 
XPeng Inc. Sponsored ADR (XPEV) : Free Stock Analysis Report
 
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