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Auto Stock Roundup: Tesla Updates Software, AutoZone Raises Buyback

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It was a mixed week for the auto sector in terms of business developments, but share prices leaned toward the negative side for most stocks. Among the positive developments, Tesla Motors, Inc. (TSLA - Free Report) announced a new software update to address the range anxiety of Model S owners. Additionally, AutoZone, Inc. (AZO - Free Report) increased its share repurchase authorization by $750 million and General Motors Co. (GM - Free Report) announced the new generation of V-6 engines.

On the negative front, Honda Motor Co., Ltd. (HMC - Free Report) and Toyota Motor Corp. (TM - Free Report) reported a decline in global production and Japanese sales in Feb 2015.

Recap of the Week’s Most Important Stories

1. Tesla announced that it is upgrading the software in its Model S electric vehicle to address the range anxiety of Model S owners.  The revamped software – expected to be released within 10 days from the announcement – shows Tesla’s good intention to address issues related to a limited number of charging stations and the low range of electric cars.

The software will alert the driver about the battery charge and thus reduce the risk of the vehicle running out of power. Moreover, Tesla is working on another software update that will enable hands-free driving on the highway in the near future (read more: Tesla to Update Model S Software, Shares Rise).

2. AutoZone announced that its board of directors has increased the share repurchase authorization by $750 million. Including this new authorization, the company has authorized a total of $15.7 billion for buying back shares since 1988.

3. General Motors’s Cadillac brand announced a new generation of V-6 engines. An exclusive Twin Turbo V-6 engine from this line will be featured in the Cadillac CT6 sedan, which makes its global premiere on Mar 31. General Motors will produce the new 3.0L Twin Turbo and 3.6L V-6 engines at its Romulus Powertrain Operations assembly facility near Detroit. The company had invested $540 million in the plant for the manufacture of the next-generation V-6 engines.

4. Honda reported that its worldwide production volume for Feb 2015 was 299,740 units, down 15% from Feb 2014. Production outside Japan declined 9.5% to 242,543 units. Meanwhile, production in Japan plunged 32.6% to 57,197 units in the month, marking the seventh continuous month of decline.

Sales in the Japanese market also went down 16.9% year over year to 71,395 units in February. Exports from Japan increased 4.3% year over year to 2,073 units in February. This is the first increase recorded since Oct 2013.

5. Toyota reported a decline in both global and Japanese production, sales and exports in Feb 2015. Toyota’s total worldwide production fell 5.1% year over year to 806,855 units last month. The decline resulted from a 6.3% plunge in production in Japan and a 4.1% decrease in production outside Japan. Total sales in Japan decreased 14.8% to 201,337 units and exports went down 6.7% year over year to 148,289 units. It is worth noting here that the production decline was planned by Toyota due to its expectation of lower sales this year.

Performance

Most auto stocks recorded small losses in the last one week due to a decline in the broader market. Toyota was the only major auto stock to record a gain. Meanwhile, Tesla’s downward trajectory continued and the electric carmaker recorded the maximum loss over the last five trading sessions as well as the last six months. AutoZone retained its position as the biggest gainer in the last six months.

Company

Last 1-Week Period

Last 6 Months

GM

-2.9%

+13.7%

F

-1.7%

-0.1%

TSLA

-3.2%

-21.3%

TM

+2.7%

+22.0%

HMC

-1.3%

-1.3%

HOG

-1.0%

-1.2%

AAP

-0.2%

+16.0%

AZO

-1.0%

+30.9%

What’s Next in the Auto Space?

Toyota will hold an investors’ meeting in Japan on Mar 29. The Japanese automaker will also hold a press conference for the global launch of the fourth generation Lexus RX at the 2015 New York International Auto Show on Apr 1. General Motors’ Cadillac CT6 will have its global premiere at the show on Mar 31. Ford Motor Co.’s (F - Free Report) new Focus RS will also make its U.S. debut at the auto show.

Additionally, automakers will report their U.S. auto sales for March, on Apr 1.

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