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Auto Stock Roundup: Record US Sales, More Airbag Recalls for Ford & Honda

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Record U.S. light-vehicle sales volume for May was the biggest story of the week for the auto industry. The strong sales were driven by low gas prices as well as the easy availability of credit with lower interest rates and longer repayment periods.

Recalls related to the defective Takata airbags dominated the week’s headlines no less. Both Ford Motor Co. (F - Free Report) and Honda Motor Co., Ltd. (HMC - Free Report) announced a significant increase in the number of recalled vehicles.

Ford also announced the decision to share its electrified vehicle technology patents for a fee. Meanwhile, General Motors Co. (GM - Free Report) announced details of a $119 million investment in a plant and Tata Motors Ltd. (TTM - Free Report) came up with good May sales figures. Surprisingly, these developments failed to stir the share prices of auto stocks that traded at more or less the same prices as they did a week ago.

(Read last to last week’s recap here: Auto Stock Roundup for May 28, 2015)

Recap of the Week’s Most Important Stories

1. U.S. light-vehicle sales increased 1.6% year over year to 1.63 million units in May. This is a record high for May sales. Sales on a seasonally adjusted annualized rate (“SAAR”) basis surged to 17.78 million units in May 2015 from 16.52 million in Apr 2015 and 16.73 million in May 2014. This is the highest SAAR since Jul 2005. The impressive sales volume was driven by strong demand for light trucks, along with crossovers and SUVs (read more: Low Gas Prices, Easy Loans Drive Record May U.S. Auto Sales).

2. General Motors announced that it will make an investment of $119 million at its Grand Rapids Operations plant. The investment will be utilized for tools and equipment, which will support the production of vehicle components at the plant in the future. With this, the automaker will also create 300 new jobs (read more: General Motors to Invest $119M at Grand Rapids Operations).

3. Honda will expand the recall of vehicles with defective passenger side Takata airbags by around 350,000 units in the U.S. This will bring the total number of Honda and Acura vehicles recalled for defective driver and passenger side Takata airbags to approximately 6.28 million. Ford has also expanded the recall of vehicles with faulty Takata airbags to 1,509,535 units. These recalls follow the recent declaration by Takata that 33.8 million of its airbags are defective (read more: Ford Extends Recall of Vehicles with Takata Airbags to 1.5M).

4. Tata Motors recorded a 5% increase in total sales of its commercial and passenger vehicles, including exports, to 39,496 units in May 2015 from 37,538 units in May 2014. The year-over-year improvement was driven by better sales of Medium and Heavy Commercial Vehicle and Passenger Cars, along with higher exports. The automaker’s domestic sales of commercial and passenger vehicles were 34,818 units in May 2015, in line with the year-ago level (read more: Tata Motors May Sales Up on Exports, Passenger Car Volume).

5. Ford has decided to share its electrified vehicle technology patents with competitors for a fee. The move is aimed at accelerating the development of electrified vehicle technology. The automaker has over 650 electrified vehicle patents and nearly 1,000 pending patent applications on electrified vehicle technologies.

Performance

Most auto stocks recorded minute price changes over the last week. The biggest gainer, Tesla Motors, Inc. (TSLA - Free Report) inched up 0.6%, while the largest loser – Toyota Motor Corp. (TM - Free Report) – saw just a 1% dip.

In comparison, the price movements over the last six months were remarkable. Harley-Davidson, Inc. (HOG - Free Report) lost 21.8% over the six months, leading the list of losses. AutoZone held on to its position as the biggest gainer over the last six months with an impressive 15.9% gain.

 Company

 Last 1-Week  Period

 Last 6 Months

GM

+0.4%

+9.6%

F

-0.8%

-3.9%

TSLA

+0.6%

+9.1%

TM

-1.0%

+6.9%

HMC

+0.5%

+10.5%

HOG

-0.8%

-21.8%

AAP

-0.4%

+2.1%

AZO

+0.2%

+15.9%

What’s Next in the Auto Space?

Automakers will soon report their May auto sales for China and Europe.

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