U.S. Markets close in 4 hrs 20 mins
  • S&P 500

    -99.80 (-2.94%)
  • Dow 30

    -821.87 (-2.99%)
  • Nasdaq

    -358.52 (-3.14%)
  • Russell 2000

    -40.04 (-2.52%)
  • Crude Oil

    -2.42 (-6.12%)
  • Gold

    -33.70 (-1.76%)
  • Silver

    -1.30 (-5.29%)

    -0.0048 (-0.4109%)
  • 10-Yr Bond

    -0.0090 (-1.16%)
  • Vix

    +6.07 (+18.20%)

    -0.0039 (-0.3016%)

    -0.2440 (-0.2335%)

    -547.03 (-3.99%)
  • CMC Crypto 200

    -12.21 (-4.48%)
  • FTSE 100

    -194.25 (-3.39%)
  • Nikkei 225

    -75.79 (-0.32%)

Toyota to Scrap Corolla and Build New SUV at Alabama Plant

Zacks Equity Research

Toyota Motor Corporation TM announced its plan to scrap the production of Corolla compact cars at a new factory under construction at Alabama. Instead, the company will manufacture a new sport utility vehicle (SUV) at the plant. The facility is being constructed in association with Mazda Motor Corporation in Huntsville.

The largest Japanese automaker has taken this decision in response to the striking shift of vehicle buyers in the United States from cars to SUVs, pickup trucks and crossovers. Additionally, Per the company’s report for the first half of 2019, Corolla sales declined 5% to just 152,868, while overall Toyota car sales fell 8%. During the same period, U.S. SUV sales dipped 1%.

Production in $1.6-billion Alabama plant is expected to start in 2021. The company has started hiring and the construction is on schedule. The plant is slated to hire up to 4,000 employees and build 3,00,000 vehicles on an annual basis. Among the U.S. states, Alabama is the fifth largest producer of light trucks and cars.

However, there are a few headwinds that can make a negative impact on the plant. Sales in the U.S. auto industry have witnessed a decline. New vehicle sales in the United States fell 2.2% in the first half of 2019. This is likely to exert pressure on vehicle prices and aggravate the problem of overcapacity.

Nevertheless, the company still relies on its Mississippi plant and Japan for the production of Corolla cars.

In the past six months, Toyota has outperformed the industry it belongs to. During the same time frame, the company’s shares have inched up 1.5% against the industry’s decline of 3.8%.

Zacks Rank & Stocks to Consider

Toyota carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Ford Motor Company F, CarMax, Inc KMX and AutoZone, Inc AZO. While Ford sports a Zacks Rank #1 (Strong Buy), CarMax and AutoZone carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ford has an expected long-term growth rate of 7.3%. In the past six months, shares of the company have gained 12.5%.

CarMax has an expected long-term growth rate of 12.57%. In the past six months, shares of the company have rallied 34.8%.

AutoZone has an expected long-term growth rate of 12.2%. In the past six months, shares of the company have surged 38.9%.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

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
CarMax, Inc. (KMX) : Free Stock Analysis Report
Ford Motor Company (F) : Free Stock Analysis Report
Toyota Motor Corporation (TM) : Free Stock Analysis Report
AutoZone, Inc. (AZO) : Free Stock Analysis Report
To read this article on Zacks.com click here.