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.
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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.
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