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Auto Stock Roundup: Record US Sales in 1H16; Strong China Sales from GM, Ford
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Auto sector sales have been strong in recent years and the first half of 2016 was no different. U.S. auto sales reached a new record during this period. General Motors Company (GM - Free Report) and Ford Motor Co. (F - Free Report) also posted strong sales in China.
However, Tesla Motors, Inc. (TSLA - Free Report) lost out in this regard, with weaker-than-expected Q2 sales due to low production levels at the beginning of the quarter. Honda Motor Co., Ltd. (HMC - Free Report) suffered from the reflected negativity of defective Takata airbags once again, as the National Highway Traffic Safety Administration (NHTSA) declared nearly 313,000 vehicles too risky to drive.
On the positive side, Thor Industries Inc. (THO - Free Report) announced a new acquisition.
1. U.S. light-vehicle sales improved 1.5% year over year to 8.65 million units in the first half of 2016, as per Autodata. This represents a new record for first-half sales. In Jun 2016, sales increased 2.5% year over year to 1.5 million units. However, sales on a seasonally adjusted annualized rate (“SAAR”) basis declined to 16.68 million units in the month from 17.46 million units in May 2016 and 17.01 million units in Jun 2015. Product segments like trucks and utility vehicles recorded higher sales in June. However, car sales declined in the month (read more: U.S. Auto Sales Hit Record in 1H16, SAAR Falls in June).
2. Tesla delivered 9,745 Model S and 4,625 Model X vehicles in the second quarter of 2016. The total of 14,370 vehicles delivered is significantly lower than its projected 17,000 vehicle deliveries as well as 14,810 units delivered in the first quarter of 2016. The shortfall in deliveries resulted from low production levels in the beginning of the second quarter. Meanwhile, NHTSA started two investigations into Tesla’s Autopilot system after the crash of one Model S and one Model X vehicle.
3. Thor Industries acquired Jayco Corp. for around $576 million in an all-cash transaction. The acquisition is expected to help Thor Industries expand in the segments in which Jayco specializes, including recreational vehicles (RVs), traveling and camping trailers, high-end diesel Class A and large Class C motorhomes. Over time, the acquisition is expected to help Thor Industries lower its overall cost and improve earnings (read more: Thor Industries Acquires Jayco for $576 Million Cash).
4. General Motors and its joint ventures in China reported a 5.3% year-over-year increase in deliveries to a record 1.81 million vehicles in the first half of 2016. The strong performance was driven by solid sales of the Cadillac, Buick and Baojun brands. Meanwhile, Ford’s sales in China increased 6% year over year to 577,097 units during the period.
5. Nearly 313,000 Honda vehicles were declared as risky to drive by NHTSA due to unrepaired defective Takata airbags. While the company notified the owners of the impending recall several times, these Honda and Acura vehicles have not been brought in for repairs. However, new tests revealed that the airbag inflators of some Honda and Acura vehicles manufactured over the period 2001−2003 have up to 50% chance of exploding while inflating (read more: 313K Honda Vehicles Declared Unsafe Due to Takata Airbags).
Performance
Auto sector companies had mixed fortunes on the stock market last week. Harley-Davidson, Inc. (HOG - Free Report) gained the most, driven by rumors that the company may be acquired by private equity firm, KKR & Co. L.P. The 7.1% gain over the week also helped the stock to become the best performer of the last six months.
Meanwhile, Honda lost the most among the stocks listed below over both the long and the short terms.
A few automakers will report their Europe sales data for June and first-half 2016 in the coming weeks.
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Auto Stock Roundup: Record US Sales in 1H16; Strong China Sales from GM, Ford
Auto sector sales have been strong in recent years and the first half of 2016 was no different. U.S. auto sales reached a new record during this period. General Motors Company (GM - Free Report) and Ford Motor Co. (F - Free Report) also posted strong sales in China.
However, Tesla Motors, Inc. (TSLA - Free Report) lost out in this regard, with weaker-than-expected Q2 sales due to low production levels at the beginning of the quarter. Honda Motor Co., Ltd. (HMC - Free Report) suffered from the reflected negativity of defective Takata airbags once again, as the National Highway Traffic Safety Administration (NHTSA) declared nearly 313,000 vehicles too risky to drive.
On the positive side, Thor Industries Inc. (THO - Free Report) announced a new acquisition.
(Read the previous roundup here: Auto Stock Roundup for Jun 30, 2016)
Recap of the Week’s Most Important Stories
1. U.S. light-vehicle sales improved 1.5% year over year to 8.65 million units in the first half of 2016, as per Autodata. This represents a new record for first-half sales. In Jun 2016, sales increased 2.5% year over year to 1.5 million units. However, sales on a seasonally adjusted annualized rate (“SAAR”) basis declined to 16.68 million units in the month from 17.46 million units in May 2016 and 17.01 million units in Jun 2015. Product segments like trucks and utility vehicles recorded higher sales in June. However, car sales declined in the month (read more: U.S. Auto Sales Hit Record in 1H16, SAAR Falls in June).
2. Tesla delivered 9,745 Model S and 4,625 Model X vehicles in the second quarter of 2016. The total of 14,370 vehicles delivered is significantly lower than its projected 17,000 vehicle deliveries as well as 14,810 units delivered in the first quarter of 2016. The shortfall in deliveries resulted from low production levels in the beginning of the second quarter. Meanwhile, NHTSA started two investigations into Tesla’s Autopilot system after the crash of one Model S and one Model X vehicle.
3. Thor Industries acquired Jayco Corp. for around $576 million in an all-cash transaction. The acquisition is expected to help Thor Industries expand in the segments in which Jayco specializes, including recreational vehicles (RVs), traveling and camping trailers, high-end diesel Class A and large Class C motorhomes. Over time, the acquisition is expected to help Thor Industries lower its overall cost and improve earnings (read more: Thor Industries Acquires Jayco for $576 Million Cash).
4. General Motors and its joint ventures in China reported a 5.3% year-over-year increase in deliveries to a record 1.81 million vehicles in the first half of 2016. The strong performance was driven by solid sales of the Cadillac, Buick and Baojun brands. Meanwhile, Ford’s sales in China increased 6% year over year to 577,097 units during the period.
5. Nearly 313,000 Honda vehicles were declared as risky to drive by NHTSA due to unrepaired defective Takata airbags. While the company notified the owners of the impending recall several times, these Honda and Acura vehicles have not been brought in for repairs. However, new tests revealed that the airbag inflators of some Honda and Acura vehicles manufactured over the period 2001−2003 have up to 50% chance of exploding while inflating (read more: 313K Honda Vehicles Declared Unsafe Due to Takata Airbags).
Performance
Auto sector companies had mixed fortunes on the stock market last week. Harley-Davidson, Inc. (HOG - Free Report) gained the most, driven by rumors that the company may be acquired by private equity firm, KKR & Co. L.P. The 7.1% gain over the week also helped the stock to become the best performer of the last six months.
Meanwhile, Honda lost the most among the stocks listed below over both the long and the short terms.
Company
Last 1-Week Period
Last 6 Months
GM
+0.8%
-5.3%
F
+0.2%
-1.0%
TSLA
+2.0%
-0.6%
TM
-1.7%
-13.7%
HMC
-4.0%
-17.0%
HOG
+7.1%
+10.1%
AAP
+0.3%
+8.5%
AZO
+1.6%
+9.5%
Auto-Tires-Trucks Sector Price Index
Auto-Tires-Trucks Sector Price Index
What’s Next in the Auto Space?
A few automakers will report their Europe sales data for June and first-half 2016 in the coming weeks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>