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Auto Roundup: F's $365M Fine & TM's Significant Wage Hike Hog Limelight
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The China Association of Automobile Manufacturers (“CAAM”) released February vehicle sales data for the world’s biggest auto market. China's car sales plummeted by approximately 27% in February, with 1.2 million vehicles sold, largely attributed to reduced production during the eight-day Spring Festival holiday, according to CAAM.
On the news front, the auto retailer Group 1 Automotive, Inc. (GPI - Free Report) continued with its buyout spree with the acquisition of Modern Classic Motors. The U.S. legacy automaker Ford (F - Free Report) agreed to pay $365 million to settle the violation of a federal tariff law and resolve the decade-long dispute. The maker of natural gas engine technology, Westport Fuel Systems (WPRT - Free Report) , teamed up with Volvo Group in the pursuit of cleaner, more sustainable transportation solutions. Japan’s auto giant Toyota (TM - Free Report) agreed to the union's demand for a significant salary hike, marking the biggest pay raise in 25 years. Finally, the Germany-based auto giant Mercedes-Benz Group (MBGAF - Free Report) partnered with Apptronik to deploy humanoid robots in its factories, aiming to automate physically demanding tasks and alleviate staffing shortages.
While TM presently sports a Zacks Rank #1 (Strong Buy), F carries a Zacks Rank #2 (Buy). Meanwhile, WPRT, GPI and MBGAF each currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Last Week’s Top Stories
Group 1 acquired Modern Classic Motors in Hilton Head, SC. The buyout comprises three franchises, including Mercedes-Benz, Sprinter and Honda in Beaufort County. With this acquisition, Group 1 expanded its relationship with Mercedes-Benz to 17 franchises in the United States and the United Kingdom. The company also expanded its partnership with Honda to 13 franchises in the United States. The transaction is expected to add $140 million to GPI's annual revenues.Year to date, Group 1 has added an estimated $1 billion in annual revenues. In 2023, it added estimated annual revenues of $1.1 billion.
Ford has agreed to pay $365 million to settle allegations made by the U.S. Justice Department regarding the intentional misclassification of imported Transit Connect vehicles. The claims suggest that Ford understated the value of these vehicles to avoid higher tariffs. Ford, while denying liability, opted to settle the dispute to move past the decade-long conflict. The case involved claims that from 2009 to 2013, Ford imported Transit Connect vans from Turkey with features to appear as passenger vehicles, subject to a 2.5% import tax rather than the 25% for cargo vehicles.The settlement, one of the largest in the history of the U.S. Customs agency, includes approximately $183,000 for lost import duties, with the remainder as penalties.
Westport inked an investment agreement with Volvo to establish a joint venture aimed at fast-tracking the commercialization and widespread adoption of Westport's innovative High-Pressure Direct Injection (“HPDI”) fuel system technology.It is scheduled to become operational in the second quarter of 2024, pending regulatory and government approvals. Westport is set to infuse the venture with its HPDI assets, including fixed assets, intellectual property and related businesses. In turn, Volvo will acquire a 45% stake in the joint venture with an investment of approximately $28 million, alongside a potential additional earn-out of $45 million based on the venture's performance.Targeting the long-haul and off-road industries, the collaboration underscores a mutual commitment to environmental sustainability and the reduction of carbon emissions within the transportation industry.
Toyota has yielded to the union's request for higher wages and bonuses, agreeing to a monthly salary increase of 28,440 yen and a record bonus payment. As a key player in Japan's automotive sector, Toyota's decision influences industry standards. With more than five million employees nationwide, Toyota's actions serve as an economic barometer. The company's improved earnings signal Japan's advancement in boosting wages and prices. Similar agreements have been reached by Honda, Nissan and Mazda of late. These negotiations are crucial in Japan's annual spring wage talks, reflecting the broader economic landscape.
Mercedes is embarking on a robotic endeavor by partnering with Apptronik, a Texas-based company, to deploy humanoid robots in its factories. The initiative aims to alleviate staffing shortages and enhance manufacturing efficiency by automating physically demanding tasks. One such robot, Apollo, standing at 5 feet 8 inches tall and capable of lifting up to 55 pounds, will be utilized to assist human workers in various industrial tasks. While specific use cases are still being explored, early trials have commenced in Mercedes' Hungarian factory. This move echoes a broader trend in the automotive industry, as seen with BMW's partnership with Figure to automate challenging manufacturing tasks in its U.S. facilities. Mercedes and Apptronik envision these robots augmenting human labor, ensuring a seamless production process and addressing labor shortages in key manufacturing hubs.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on February new car registration data to be released by the European Automobile Manufacturers Association. Investors are awaiting recreational vehicle maker Winnebago’s quarterly results, scheduled to be released on Mar 21.
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Auto Roundup: F's $365M Fine & TM's Significant Wage Hike Hog Limelight
The China Association of Automobile Manufacturers (“CAAM”) released February vehicle sales data for the world’s biggest auto market. China's car sales plummeted by approximately 27% in February, with 1.2 million vehicles sold, largely attributed to reduced production during the eight-day Spring Festival holiday, according to CAAM.
On the news front, the auto retailer Group 1 Automotive, Inc. (GPI - Free Report) continued with its buyout spree with the acquisition of Modern Classic Motors. The U.S. legacy automaker Ford (F - Free Report) agreed to pay $365 million to settle the violation of a federal tariff law and resolve the decade-long dispute. The maker of natural gas engine technology, Westport Fuel Systems (WPRT - Free Report) , teamed up with Volvo Group in the pursuit of cleaner, more sustainable transportation solutions. Japan’s auto giant Toyota (TM - Free Report) agreed to the union's demand for a significant salary hike, marking the biggest pay raise in 25 years. Finally, the Germany-based auto giant Mercedes-Benz Group (MBGAF - Free Report) partnered with Apptronik to deploy humanoid robots in its factories, aiming to automate physically demanding tasks and alleviate staffing shortages.
While TM presently sports a Zacks Rank #1 (Strong Buy), F carries a Zacks Rank #2 (Buy). Meanwhile, WPRT, GPI and MBGAF each currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Last Week’s Top Stories
Group 1 acquired Modern Classic Motors in Hilton Head, SC. The buyout comprises three franchises, including Mercedes-Benz, Sprinter and Honda in Beaufort County. With this acquisition, Group 1 expanded its relationship with Mercedes-Benz to 17 franchises in the United States and the United Kingdom. The company also expanded its partnership with Honda to 13 franchises in the United States. The transaction is expected to add $140 million to GPI's annual revenues.Year to date, Group 1 has added an estimated $1 billion in annual revenues. In 2023, it added estimated annual revenues of $1.1 billion.
Ford has agreed to pay $365 million to settle allegations made by the U.S. Justice Department regarding the intentional misclassification of imported Transit Connect vehicles. The claims suggest that Ford understated the value of these vehicles to avoid higher tariffs. Ford, while denying liability, opted to settle the dispute to move past the decade-long conflict. The case involved claims that from 2009 to 2013, Ford imported Transit Connect vans from Turkey with features to appear as passenger vehicles, subject to a 2.5% import tax rather than the 25% for cargo vehicles.The settlement, one of the largest in the history of the U.S. Customs agency, includes approximately $183,000 for lost import duties, with the remainder as penalties.
Westport inked an investment agreement with Volvo to establish a joint venture aimed at fast-tracking the commercialization and widespread adoption of Westport's innovative High-Pressure Direct Injection (“HPDI”) fuel system technology.It is scheduled to become operational in the second quarter of 2024, pending regulatory and government approvals. Westport is set to infuse the venture with its HPDI assets, including fixed assets, intellectual property and related businesses. In turn, Volvo will acquire a 45% stake in the joint venture with an investment of approximately $28 million, alongside a potential additional earn-out of $45 million based on the venture's performance.Targeting the long-haul and off-road industries, the collaboration underscores a mutual commitment to environmental sustainability and the reduction of carbon emissions within the transportation industry.
Toyota has yielded to the union's request for higher wages and bonuses, agreeing to a monthly salary increase of 28,440 yen and a record bonus payment. As a key player in Japan's automotive sector, Toyota's decision influences industry standards. With more than five million employees nationwide, Toyota's actions serve as an economic barometer. The company's improved earnings signal Japan's advancement in boosting wages and prices. Similar agreements have been reached by Honda, Nissan and Mazda of late. These negotiations are crucial in Japan's annual spring wage talks, reflecting the broader economic landscape.
Mercedes is embarking on a robotic endeavor by partnering with Apptronik, a Texas-based company, to deploy humanoid robots in its factories. The initiative aims to alleviate staffing shortages and enhance manufacturing efficiency by automating physically demanding tasks. One such robot, Apollo, standing at 5 feet 8 inches tall and capable of lifting up to 55 pounds, will be utilized to assist human workers in various industrial tasks. While specific use cases are still being explored, early trials have commenced in Mercedes' Hungarian factory. This move echoes a broader trend in the automotive industry, as seen with BMW's partnership with Figure to automate challenging manufacturing tasks in its U.S. facilities. Mercedes and Apptronik envision these robots augmenting human labor, ensuring a seamless production process and addressing labor shortages in key manufacturing hubs.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on February new car registration data to be released by the European Automobile Manufacturers Association. Investors are awaiting recreational vehicle maker Winnebago’s quarterly results, scheduled to be released on Mar 21.