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The Zacks Analyst Blog Highlights: Geely, Ford and General Motors
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For Immediate Release
Chicago, IL –January 16, 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: Geely Automobile Holdings Ltd. (GELYY - Free Report) , Ford Motor Company (F - Free Report) and General Motors Company (GM - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
China Sales Decline Puts Automakers in a Tight Spot
Passenger car sales in China declined in 2018 for the first time in nearly three decades. Per China’s Association of Automobile Association (CAAM), vehicle sales in China dropped 13% in December 2018, marking the sixth consecutive month of decline. In 2018, total automobile sales declined 2.8% to 28.1 million units.
The slump in China doused hopes of robust growth in auto sales in the months ahead. Foreign automakers were banking heavily on the world’s largest car market, China but the recent collapse played spoilsport. Importantly, this has happened at a time when global automakers are spending heavily on their transition to electric and autonomous vehicles.
Per Bloomberg, adding to automakers’ woes, economists predict economic growth in China to slow down to 6.2% in 2019 from 6.6% in 2018. The unsettled trade spat between the United States and China is likely to affect consumer confidence in 2019. Goldman Sachs Group Inc. does not predict bright prospect for the auto sector in China in 2019 and it expects sales volume to drop 7% in the year. China-based automaker Geely Automobile Holdings Ltd. forecasts flat sales for 2019.
Likely Losers
Along with consumers’ waning appetite for passenger cars in China, lack of demand in other parts of the world such as the United States, the U.K. and Germany, is making the journey tougher for global automakers. As escalating vehicle prices, uncertainty related to Britain’s pending exit from the European Union and the launch of services such as car sharing are keeping a lid on auto demand, automakers are reorienting business models.
The second largest U.S. automaker Ford Motor Company and Britain’s Jaguar Land Rover recently announced heavy job cuts in Europe. Stricter emission standards, a sharp decline in the demand for diesel vehicles and a slump in global economies led by China might have prompted these automakers to make such a move. (Read more: Ford, Jaguar Announce Job Cuts in Europe as Demand Wanes)
Among others, German auto giant Volkswagen AG and the largest auto manufacturer in the United States, General Motors Company, are likely to be hurt as these companies sell more vehicles in China than anywhere else, per Wall Street Journal. Further, auto companies such as Ford, Hyundai Motor Co and Peugeot SA are likely to face the problem of overcapacity.
Policy Stimulus
The auto sector witnessed some positive developments. Per CAAM, in 2018, new energy vehicles (NEVs) in China surged 61.7% to 1.3 million units. Further, NEV sales are anticipated to reach 1.6 million in 2019.
Drop in passenger vehicle sales in China is likely to lead to some strong policy incentives. In fact, authorities in China have already introduced some changes to the income tax limit to give a boost to personal disposable income and purchasing power. More such policy measures are likely to follow. This could be beneficial to the auto industry in China, which is facing the problem of unsold inventory.
While General Motors and Ford currently carry a Zacks Rank #3 (Hold), Geely has a Zacks Rank #5 (Strong Sell).
Currently, Ford, Geely and General Motors expect long-term growth rates of 5.3%, 7% and 8.5%, respectively.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Geely, Ford and General Motors
For Immediate Release
Chicago, IL –January 16, 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: Geely Automobile Holdings Ltd. (GELYY - Free Report) , Ford Motor Company (F - Free Report) and General Motors Company (GM - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
China Sales Decline Puts Automakers in a Tight Spot
Passenger car sales in China declined in 2018 for the first time in nearly three decades. Per China’s Association of Automobile Association (CAAM), vehicle sales in China dropped 13% in December 2018, marking the sixth consecutive month of decline. In 2018, total automobile sales declined 2.8% to 28.1 million units.
The slump in China doused hopes of robust growth in auto sales in the months ahead. Foreign automakers were banking heavily on the world’s largest car market, China but the recent collapse played spoilsport. Importantly, this has happened at a time when global automakers are spending heavily on their transition to electric and autonomous vehicles.
Per Bloomberg, adding to automakers’ woes, economists predict economic growth in China to slow down to 6.2% in 2019 from 6.6% in 2018. The unsettled trade spat between the United States and China is likely to affect consumer confidence in 2019. Goldman Sachs Group Inc. does not predict bright prospect for the auto sector in China in 2019 and it expects sales volume to drop 7% in the year. China-based automaker Geely Automobile Holdings Ltd. forecasts flat sales for 2019.
Likely Losers
Along with consumers’ waning appetite for passenger cars in China, lack of demand in other parts of the world such as the United States, the U.K. and Germany, is making the journey tougher for global automakers. As escalating vehicle prices, uncertainty related to Britain’s pending exit from the European Union and the launch of services such as car sharing are keeping a lid on auto demand, automakers are reorienting business models.
The second largest U.S. automaker Ford Motor Company and Britain’s Jaguar Land Rover recently announced heavy job cuts in Europe. Stricter emission standards, a sharp decline in the demand for diesel vehicles and a slump in global economies led by China might have prompted these automakers to make such a move. (Read more: Ford, Jaguar Announce Job Cuts in Europe as Demand Wanes)
Among others, German auto giant Volkswagen AG and the largest auto manufacturer in the United States, General Motors Company, are likely to be hurt as these companies sell more vehicles in China than anywhere else, per Wall Street Journal. Further, auto companies such as Ford, Hyundai Motor Co and Peugeot SA are likely to face the problem of overcapacity.
Policy Stimulus
The auto sector witnessed some positive developments. Per CAAM, in 2018, new energy vehicles (NEVs) in China surged 61.7% to 1.3 million units. Further, NEV sales are anticipated to reach 1.6 million in 2019.
Drop in passenger vehicle sales in China is likely to lead to some strong policy incentives. In fact, authorities in China have already introduced some changes to the income tax limit to give a boost to personal disposable income and purchasing power. More such policy measures are likely to follow. This could be beneficial to the auto industry in China, which is facing the problem of unsold inventory.
While General Motors and Ford currently carry a Zacks Rank #3 (Hold), Geely has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Currently, Ford, Geely and General Motors expect long-term growth rates of 5.3%, 7% and 8.5%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.