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Auto Stock Roundup: Ford Cuts Guidance, Tesla Reveals Autopilot Details

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The last week was an eventful one for Ford Motor Co. (F - Free Report) as it made several announcements in the run up to its Investor Day. Meanwhile, Tesla Motors, Inc. (TSLA - Free Report) also revealed several details about its upcoming software update for the Autopilot system. Further, General Motors Company (GM - Free Report) and Honda Motor Co., Ltd. (HMC - Free Report) announced recalls, while Toyota Motor Corporation (TM - Free Report) announced an investment in Mexico to raise the production volume of trucks.

(Read the previous roundup here: Auto Stock Roundup for Sep 8, 2016)

Recap of the Week’s Most Important Stories

1. Ford lowered its pre-tax guidance for 2016 to roughly $10.2 billion from the previous projection of equal to or more than $10.8 billion. This means that the company’s pre-tax results are likely to fall from the 2015 level. The lowered guidance resulted from the company’s move to increase the number of vehicles being recalled for a door latch-related issue in North America, which will raise its expense related to this recall to roughly $640 million.

At its Investor Day, Ford also revealed that its adjusted pre-tax profits are expected to decline in 2017 due to higher investments and the cost of emerging opportunities. However, results are expected to improve in 2018. Moreover, adjusted pre-tax profits of the core business are expected to improve in both years. Ford also revealed plans to shift its small car production to Mexico from the U.S.

Separately, Ford disclosed that it is creating a new City Solutions team that will work with several major global cities to develop mobility solutions aimed at solving unique transportation challenges faced by each city. Working toward this goal, Ford has signed an agreement to acquire a crowd-sourced shuttle service called Chariot and has teamed up with the bike-sharing provider Motivate (read more: Ford to Develop City-based Mobility Solutions, Buy Chariot).

Ford currently carries a Zacks Rank #5 (Strong Sell).

2. Tesla revealed that the upcoming Autopilot software update will enable the system to use radar as a primary control sensor. Radar is already part of the Autopilot hardware suite of all Tesla cars made since Oct 2014 but is currently used as a supplementary sensor to the primary camera and image processing system. Apart from radar, another major change is that the car will turn off Autosteer if the driver repeatedly ignores warnings to keep hands on the steering wheel and will not allow it to be turned on till the car is parked. Further, Autopilot 8.0 will be able to automatically make a highway exit if the turn indicator is on, while Autopilot 8.1 will take it a step further by taking the exit when the navigation system is on. Currently, Tesla carries a Zacks Rank #3 (Hold) (read more: Tesla Autopilot to Improve Obstacle Detection Using Radar).

3. General Motors announced the recall of 3.64 million vehicles in the U.S. due to a software defect in the sensing and diagnostic module (SDM). A vehicle’s airbag and pretensioners deployment is controlled by the SDM. As a result of this defect, frontal airbags and pretensioners may not be deployed in certain conditions. General Motors currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. Honda announced the recall of 668,000 vehicles in Japan due to faulty Takata airbag inflators. This is part of a wider recall that was announced earlier. With this, Honda will complete the recall of around 51 million airbags to fix faulty inflators. However, this is only half of its expected total tally of 100 million inflators that need to be recalled globally. Honda carries a Zacks Rank #3.

5. Toyota announced that it will invest $150 million in its facility in Baja California, Mexico to increase the production of Tacoma trucks by over 60,000 units annually by late 2017 or early 2018. The facility, Toyota Motor Manufacturing de Baja California (TMMBC), currently produces over 100,000 Tacomas and truck beds every year. Toyota carries a Zacks Rank #4 (Sell).

Performance

Many auto sector companies recorded losses last week. AutoZone, Inc. (AZO - Free Report) was the only stock among the ones listed below to record a gain. Meanwhile, Advance Auto Parts Inc. (AAP - Free Report) was the biggest loser.

Over the last six months, Toyota outperformed yet again, while Tesla lost the most.

Company

Last 1-Week Period

Last 6 Months

GM

-3.7%

-1.1%

F

-4.4%

-8.2%

TSLA

-2.6%

-10.0%

TM

-2.7%

+9.5%

HMC

-4.1%

+7.2%

HOG

-3.5%

+7.4%

AAP

-6.9%

-5.0%

AZO

+1.0%

-6.9%

Auto-Tires-Trucks Sector Price Index

Auto-Tires-Trucks Sector Price Index

What’s Next in the Auto Space?

AutoZone will report fourth-quarter fiscal 2016 (ended Aug 27, 2016) results before the opening bell on Sep 22.

A few automakers may report their European auto sales for August in the coming week.

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