Yahoo Finance Auto Stock Roundup: Toyota to Raise Production Capacity in China, Ford Issues Recall
China has been a sought-after destination for automakers across the globe. Past week saw two major Japanese automakers — Toyota Motor Corporation TM and Nissan Motor Co., Ltd. NSANY — intending to raise their manufacturing capabilities in China. Toyota is planning to expand the capacity at the Guangzhou facility in China. Nissan also plans to increase vehicle manufacturing capacity in China by 40%.
On the other hand, the week received news of vehicle recalls. Ford Motor Company F announced two safety recalls in North America. Further, it has been reported in a German trade magazine Kfz-Betrieb that the German auto behemoth Volkswagen AG VLKAY has to recall around 700,000 Tiguan and Touran cars from around the world.
In another development, motorcycle manufacturer Harley-Davidson, Inc. HOG revealed details of its 2019 model launches. This includes a power cruiser model and various other technological upgrade. This is in line with the company’s strategy rollout in July, when it has provided the blueprint for launching lighter motorcycles and strengthening dealer networks.
(Read the previous roundup here: Auto Stock Roundup for Aug 16, 2018)
Recap of the Week’s Most Important Stories
1. Toyota is going to expand the capacity at the Guangzhou facility in China, per Reuters. This is in addition to the production expansion at another hub in Tianjin by around 120,000 units per year.
The capacity increase at Toyota’s Guangzhou hub will help manufacture an additional 120,000 vehicles a year. Combining the production increase of Tianjin and Guangzhou plants, the company will raise its overall manufacturing capacity by 20% or 240,000 units per year. Currently, the production capacity of Toyota in China is 1.16 million vehicles each year.
Notably, the expansion of Tianjin facility will be used to manufacture 110,000 plug-in hybrid electric vehicles (EVs) and 10,000 all-electric battery vehicles each year. The capacity addition at the hub is likely to cost $257 million. Per a company source, the capacity expansion in Guangzhou will also aid EV manufacturing.
These plant expansions are in sync with Toyota’s medium-term strategy to boost China’s yearly sales by more than 50% to 2 million vehicles by 2020. Except for boosting production capacity, the company is also developing its focus toward EV technologies and sales networks. Moreover, Toyota might probably add one or two assembly plants in China. (Read more: Toyota to Expand Guangzhou & Tianjin Hubs' Capacity in China)
Toyota currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. The recall issue is seemingly giving no respite to automakers around the world. Per Reuters, it has been reported in a German trade magazine Kfz-Betrieb that the German auto behemoth Volkswagen has to recall around 700,000 Tiguan and Touran cars across the globe. This latest recall issue is likely to tarnish the image of this auto giant in the days ahead. A possible lighting defect has been cited as the reason for this recall.
As per the magazine, humidity can result into a short circuit in the affected vehicles’ roof strip. This may cause scorching damages on the roof or result in a fire. It has been reported that around 52,500 cars have been affected in Germany and the company is trying to reach a solution.
In fact, the case of recall is not new to Volkswagen. Per Reuters, in the middle of May, the company has announced that it is going to recall roughly 220,000 units of new Polo vehicles due to defective rear seatbelt lock. Additionally, 191,000 cars of the company’s Spanish subsidiary, Seat, were also affected. (Read more: Volkswagen to Recall Vehicles Over Lighting Defect)
Volkswagen currently carries a Zacks Rank #4 (Sell).
3. By 2021, Nissan plans to expand its vehicle manufacturing capacity in China by 40%, per Reuters. For this, the company will invest $900 million, part of $8.73 billion allocated to expand its footprint in China.
Over the next few years, Nissan, along with its joint-venture (JV) partner, DongFeng Motor Group Co., Ltd. (Dongfeng), aims to invest approximately $900 million for the capacity expansion. Except for manufacturing Nissan’s passenger cars at its two existing facilities, the JV is expected to create a new manufacturing hub at Wuhan, where Dongfeng is headquartered. If construction of the planned hub gets approved from China’s regulators, the plant is likely to produce around 300,000 vehicles per year.
The expanded capacities will be used to manufacture Nissan and its China-only Venucia brand’s electric vehicles as well as cars with gasoline engines. (Read more: Nissan to Augment Vehicle Production in China by 40%)
Nissan currently carries a Zacks Rank #2 (Buy).
4. Harley-Davidson has provided the details of its 2019 model launches. This includes introducing a power cruiser model and various other technological enhancements. This is in sync with the company’s strategy rollout in July, when it emphasized on launching lighter motorcycles and bolstering dealer networks.
This Milwaukee, WI-based motorcycle manufacturer is coming out with the FXDR 114 model, equipped with an extremely powerful engine and accessories as well as advanced technology. The FXDR 114 includes the powerful Milwaukee-Eight 114 engine, with light-weight aluminum and composite components to enhance its performance. The limited edition Custom Vehicle Operations models are also in the pipeline.
In fact, Harley-Davidson’s innovation is imbued in all of the products that the company is introducing in 2019. It is making long-term investments to expand its product portfolio and enhance technology. By 2027, the company aims to launch 100 motorcycles. Beginning in 2020, the company plans to launch motorcycles under middle-weight (500cc to 1250cc) and light-weight (250cc to 500cc) categories, except for its heavy-weight category. (Read more: Harley-Davidson to Launch Models & Technology Upgrades)
Harley-Davidson currently carries a Zacks Rank #3.
5. Ford announced two safety recalls in North America. Of the two recalls, one is of roughly 50,000 120-volt convenience charge cords provided with selected 2012-15 Ford Focus Electric, 2013-15 Ford Fusion Energi and 2013-15 Ford C-MAX Energi vehicles.
When connected with a damaged, corroded or worn-out AC outlet, the 120-volt convenience cords may lead to increased temperature at the wall outlet, which might catch fire. The company is aware of a few such fire reports.
Approximately 50,524 vehicles in North America, accompanied by these charge cords, are defective. Out of the total, 49,197 vehicles are from the United States and its federalized territories, and 1,327 are from Canada.
All the defective charge cords will be replaced with the latest version of the 120-volt convenience cord, enabled with a thermistor that will discontinue charging in case plug/outlet gets too hot. The cords will be replaced at Ford’s dealership without charging the customers any extra cost.
The other recall is of roughly 100 2018 Ford Edge, 2019 Ford Flex, 2018 Lincoln MKX and 2019 Lincoln MKT vehicles. Built at Oakville assembly plant on May 29, 2018, the affected vehicles don’t have the power supply cable fastener appropriately secured to the alternator or to the starter motor. An inappropriately fastened power supply cable has the potential of an electrical surge, leading to a fire. The recall consists of 87 vehicles in the United States and seven in Canada.
Ford currently carries a Zacks Rank #5 (Strong Sell).
Performance
Last week, all other stocks except for Tesla, Inc. TSLA have gained. Harley-Davidson has witnessed the maximum gain.
In the past six months, Advance Auto Parts, Inc. has increased the most. Honda Motor Co., Ltd. HMC has declined the most.
Company | Last Week | Last 6 Months |
GM | 0.5% | -13.1% |
F | 2.5% | -11% |
TSLA | -5% | -10.1% |
TM | 1.6% | -10.6% |
HMC | 3.6% | -17% |
HOG | 4.5% | -8.1% |
AAP | 1.7% | 39.9% |
AZO | 0.9% | 3.1% |
What’s Next in the Auto Space?
Watch out for the usual news releases over the next week.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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
Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report
Toyota Motor Corporation (TM) : Free Stock Analysis Report
Nissan Motor Co. (NSANY) : Free Stock Analysis Report
Volkswagen AG (VLKAY) : Free Stock Analysis Report
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
