Last week, various auto giants unveiled second-quarter 2021 U.S. sales reports. Amid rising demand for vehicles buoyed by economic recovery, easier credit conditions and preference for private transportation, most automakers reported an upswing in U.S. quarterly sales. For the June-end quarter, Toyota was the bestselling automaker in the United States, with sales of 688,813 units, up 73% year over year. Honda sold 486,419 vehicles, up 65.7% year over year. U.S. auto giants including General Motors and Ford delivered 688,236 and 475,327 vehicles in the quarter under review. Quarterly sales of Stellantis, Volkswagen and Nissan in the United States jumped 32%, 72% and 74%, respectively.
Having said so, vehicles sales for the month of June started to tail off as inventories in the dealerships began to dwindle owing to shortage in the supply of semiconductors. Per Emmanuel Rosner, an analyst at Deutsche Bank, seasonally adjusted annualized rate for new vehicle sales dropped to 15.7 million units in June from 18.6 million and 17.1 million units in April and May, respectively.
Last Week’s Top Stories
Volkswagen
’s
VWAGY
trucks arm TRATON announced the completion of merger with Navistar in a deal worth $3.7 billion. TRATON acquired the remaining shares of the Illinois-based truck maker at $44.5 per share in cash. The deal is worth $3.7 billion. Considering Volkswagen’s limited exposure in the North American truck industry, and Navistar’s strong footing in the region along with impressive dealership networks, the deal is set to significantly boost TRATON’s prospects. The deal in fact marks a major milestone in TRATON’s expansion plans and the company is now contemplating to expand to Asia, especially in China.
Ford
F
is set to significantly slash vehicle production in several North American factories for a few weeks in July and August due to global crunch in semiconductor supply. Affected plants include the Chicago Assembly plant, Kansas City Assembly plant, Dearborn Truck plant, Flat Rock Assembly plant, Hermosillo Assembly Plant, Kentucky Truck, Louisville Assembly plant in Kentucky and Oakville Assembly Complex in Ontario. Downtime in the factories is set to result in reduction in the production of several popular nameplates, ranging from the Ford F-150 and Ford Bronco Sport to the Ford Mustang and Ford Explorer.
Lithia Motors
LAD
announced the acquisition of Michael’s Toyota dealership in Bellevue, WA. The transaction has been financed through the company’s existing on-balance sheet capacity. The acquisition has enhanced Lithia’s presence and offerings in the largest automotive retail market in the Pacific Northwest region by twofold and is anticipated to add $235 million in combined annualized revenues. Importantly, the latest buyout brings Lithia’s total expected annualized revenues during the first full year of the five-year plan to a whopping $7.8 billion, keeping the company well ahead of its schedule of network expansion.
Honda
HMC
announced that its first volume battery-electric vehicle (BEV) for North America — Prologue — is set to hit the market in early 2024. The launch of Honda’s first volume BEV will mark the beginning of the company’s transition to an electric future in North America. In addition to the Honda Prologue, it will also unveil an all-electric Acura SUV in the year 2024 in North America.Based on Honda’s strategic partnership with General Motors, both Honda Prologue SUV and Acura SUV will utilize the latter’s Ultium-branded EV architecture as well as battery system. It should be noted that the Japan-based automaker plans to change course and self-manufacture this new series of EV models, going forward.
Tesla
TSLA
announced production and delivery results for second-quarter 2021. The company produced a total of 206,421 vehicles, including 2,340 Model S/X and 204,081 Model 3/Y. Deliveries totaled 201,250 units, with Model 3/Y accounting for 99% of total sales. Tesla currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Renault SA
RNLSY
recently entered into partnerships with China’s Envision AESC and France’s Verkor to supply electric car batteries for EVsin northern France.Envision will invest up to 2 billion euros ($2.4 billion) for developing a gigafactory in Douai, northern France. Verkor plans commencing work on a battery facility in France in 2023, with an initial capacity of 16 GWh, of which 10 GWh will be exclusively for Renault. The two alliances will significantly enhance the automaker’s position in Europe and be truly beneficial for the company in achieving its vow of Europe-based production of 1 million EVs by 2030.
Price Performance
The following table shows the price movement of some of the major auto players over the past week and six-month period.
Image Source: Zacks Investment Research
In the past six months, all stocks have increased, apart from Tesla. The past week displayed a mixed price trend, with AutoZone registering the maximum gain and General Motors losing the most.
What’s Next in the Auto Space?
Industry watchers will track China vehicle sales data for June 2021, which is likely to be released by China Association of Automobile Manufacturers this week. Also, stay tuned for updates on how automakers will tackle the semiconductor shortage and make changes in business operations.
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