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The Zacks Analyst Blog Highlights: General Motors, Toyota, Ford, Fiat and Genuine Parts

Zacks Equity Research
Toyota Motor (TM) to manufacture new SUV in response to vehicle buyers??? shift from cars to crossovers, SUVs and pickup trucks.

For Immediate Release

Chicago, IL –June 14, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors Co. GM, Toyota Motor Corp. TM, Ford Motor Co. F, Fiat Chrysler Automobiles N.V. FCAU and Genuine Parts Company’s GPC.

Here are highlights from Thursday’s Analyst Blog:

Auto Stock Roundup: GM, TM, F & More

In order to meet the growing demand for sport utility vehicles (SUVs) and pickup trucks, automakers are expanding their product lines with enhanced and spacious vehicles. The rising demand for large vehicles is driving the top lines of auto manufacturers, who otherwise are making loss due to waning traditional passenger car sales.

General Motors Co. made the announcement to invest around $150 million at its Flint Assembly in Michigan. The company intends to make this investment to increase the production of heavy-duty trucks. Early this month, it made the announcement to upgrade its Fort Wayne assembly hub to raise production of new Chevrolet Silverado 1500 and GMC Sierra 1500 pickup trucks.

In another development, Toyota Motor Corp. has shown its intent to partner with Subaru Corp to develop battery-electric sports utility vehicles in a joint platform. The underlying idea is to share huge costs involved in the production of low-emission vehicles.

Recap of the Week’s Most Important Stories

1.    Ford Motor Co. announced that it would close its engine plant in Bridgend, South Wales, U.K. The production of its 1.5-liter petrol engine, which has been facing demand constraint, is likely to end in February 2020. Also, the contract for supplying Jaguar Land Rover (JLR) will end in September 2020. This came as a big blow to Britain’s car industry and put 1,700 jobs at stake.

Recently, Britain’s car sector witnessed slump in sales, output and investment. The Bridgend plant has been under economic troubles resulting from cost disadvantages, changing demand pattern of consumers and absence of additional engine models. But the Bridgend plant built around one-fifth of the country’s 2.7 million automotive engines in 2018.

Notably, Dearborn, MI-based Ford has been devising a turnaround plan for its Europe operations. This plan involves several job cuts, plant closures and discontinuation of loss-making units. Earlier, the company took the decision to cut more than 500 white-collar roles in Britain and more than 5,000 jobs in Germany. (Read more: Ford to Close Engine Plant in South Wales' Bridgend)

Ford currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..

2.    Toyota and Subaru Corp intend to develop battery-electric SUV on a joint platform, per Reuters. The underlying idea is to share huge costs involved in the production of low-emission vehicles.

In recent times, global auto giants are competing fiercely for the development of latest vehicle technologies, including all-battery electric cars and autonomous vehicles. Not to mention, development of this new technology requires huge investment. Toyota has been scouting for partnerships in the areas of new technologies, even from the rival companies, in order to reduce capital expenditure.

In one hand, though Toyota holds the edge in technologies for hybrid and fuel-cell vehicles, it is trailing in areas of bringing fully-electric vehicles to showrooms. On the other hand, Subaru is struggling to independently invest in and develop lower-emission vehicles, and on-demand transportation services.

However, the partnership opens up the opportunity to combine Toyota’s vehicle electrification technologies with Subaru’s all-wheel-drive technologies. However, the automakers stated that they will sell vehicles under their own brands. (Read more: Toyota to Team Up With Subaru to Develop Electric SUV)

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

3.    Fiat Chrysler Automobiles N.V. is tying up with self-driving technology company, Aurora Innovation, to develop and deploy autonomous vehicle platforms, per Bloomberg. The company took this decision to catch up with other automakers that invested heavily in self-driving technology.

The partnership will help to integrate Fiat Chrysler’s commercial vehicle lines in the United States with Aurora’s self-driving platform. This partnership is likely to give Fiat Chrysler the access to several commercialization opportunities, including ride sharing and driverless delivery trucks.

The Silicon Valley-based startup Aurora’s three co-founders are among the leaders who pushed to make self-driving cars a reality. Aurora raised a huge sum of money from the market.

Further, Fiat Chrysler inked a deal to supply Waymo, the self-driving unit of Alphabet Inc, with more than 62,000 Chrysler Pacifica plug-in hybrid minivans to create autonomous vehicles. (Read more: Fiat Chrysler to Tie Up With Aurora for Autonomous Technology)

Fiat Chrysler currently carries a Zacks Rank #3.

4.    General Motors intends to invest around $150 million at its Flint Assembly in Michigan, per Reuters. In fact, Flint Assembly plant, which opened in 1947, manufacturers some of the company’s most iconic vehicles. The Flint plant produces full-size GM pickup trucks. The Detroit-based auto giant plans to make this investment to increase the production of heavy-duty trucks.

Early this month, General Motors announced that it was upgrading its Fort Wayne assembly hub to increase production of the new Chevrolet Silverado 1500 and GMC Sierra 1500 pickup trucks. The U.S. automaker decided to invest $24 million to upgrade its facility at Fort Wayne, IN.

In February, General Motors announced that it was adding 1,000 jobs to manufacture a new generation of heavy-duty pickup truck. In fact, with the rising demand for SUVs and pickup trucks, automakers are widening their product line, and flooding the market with enhanced and spacious vehicles. Robust demand for large vehicles is likely to drive the industry players’ top line, who otherwise are making loss due to the drop in the sale of traditional passenger cars. (Read more: General Motors Plans to Invest $150M in Flint Assembly Plant)

General Motors currently carries a Zacks Rank #3.

5.    Genuine Parts Company’s U.K.-based wholly-owned automotive distribution company, Alliance Automotive Group (“AAG”), completed the acquisition of PartsPoint Group (PartsPoint) on Jun 4, 2019. The Netherlands-based acquired company deals with automotive aftermarket parts and accessories, with presence across Netherlands and Belgium.

The acquisition of PartsPoint will support the expansion of AAG in Europe. Addition of the Dutch company in the portfolio will provide opportunities to increase Genuine Parts’ footprint in the Benelux marketplace over the years to come.

Genuine Parts regularly undertakes acquisitions to improve product offerings and expand the geographical footprint. The acquisition of AAG in November 2018 is helping the company to witness robust sales and operational results. In order to keep growing in Europe, its subsidiary, AAG, is undertaking acquisitions that are expected to favorably impact sales across Europe.

In February 2019, the company announced the acquisition of Axis New England and Axis New York. With an effective close date of Mar 1, 2019, the buyout is part of its Industrial segment. (Read more: Genuine Parts' Europe Unit Completes PartsPoint Acquisition)

Genuine Parts currently carries a Zacks Rank #4 (Sell).

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