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Auto Stock Roundup: GM, HMC Tie Up for Self-Driving Technology, TM to Form JV

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Global automakers’ bid to invest hugely into the development of autonomous and electric vehicles continues unabated. Honda Motor Co., Ltd. (HMC - Free Report) , which has so far been lagging behind with respect to self-driving vehicle front, has come up in a big way.

This Japanese auto giant has partnered with General Motors Company (GM - Free Report) to pursue the common objective of transforming mobility by developing autonomous vehicle technology. Honda intends to invest $2.75 billion in this venture.

Toyota Motor Corp. (TM - Free Report) is starting a joint venture (JV) with SoftBank Corp. to develop autonomous vehicle services, per Reuters. The JV will begin its operation with an initial investment of ¥2 billion ($17.5 million). This JV plans to develop a platform to operate autonomous cars, which can be used for services — including mobile shops, hospitals and others.

This week Ford Motor Co. (F - Free Report) announced that it will downsize its workforce in a bid to reorganize. The move is in sync with this auto giant’s strategy to lower costs for enhancing efficiency and increasing its stock price.

(Read the previous roundup here: Auto Stock Roundup for Oct 4, 2018)

Recap of the Week’s Most Important Stories

1.    General Motors announced that it teamed up with Honda to pursue the common objective of transforming mobility by rapidly developing autonomous vehicle technology. Japanese auto giant Honda will work closely with General Motors’ autonomous vehicle unit, General Motors Cruise Holdings, to develop autonomous vehicle for Cruise that can be manufactured in large numbers for global deployment. Additionally, the companies plan to explore global opportunities for commercial deployment of Cruise network.

Honda, which is lagging behind many of its rivals that are also developing self-driving technology, is likely to invest $2.75 billion and holds 5.7% stake in Cruise. Honda is contributing $750 million upfront for the equity stake in Cruise and is going to pay another $2 billion over the span of 12 years for development initiatives.

Notably, in 2016, General Motors acquired Cruise, which used to be called Cruise Automation, for $1 billion. In early 2018, in a bid to speed up development of its self-driving technology, General Motors brought in Japanese tech and investment firm Softbank, which invested $2.25 billion in Cruise. Alongside sharing expenses, Honda will offer its expertise to manufacture and engineer compact vehicles. (Read more: General Motors & Honda Tie Up for Self-Driving Technology)

General Motors currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.    Toyota is starting a joint venture with SoftBank Corp. to develop autonomous vehicle services, per Reuters. With increasing competition to develop autonomous car technology, many automakers are collaborating with technology companies to be at par with competitors. This is one of many such collaborations taking place globally.

MONET, the JV will start its operation with an initial investment of ¥2 billion ($17.5 million). At first, the joint company will focus on Japan and in the course of time, it will spread out globally. Toyota and SoftBank intend to develop a platform to operate autonomous cars, which can be used for services — including mobile shops, hospitals and others.

The collaboration will develop Toyota’s e-Palette concept-based multi-purpose mobility service, along with software and hardware required for convoys for bus-sized shuttle, and autonomous multi-purpose vehicles. Further, SoftBank will provide technology that will allow collating and analyzing of transportation data, enabling to dispatch cars competently when needed.

The collaboration, between a big automaker and a powerful technology firm, confirms that even such well-financed companies rely on sharing expenses and skills to develop automotive technologies. Due to less consumer experience, investments involved in pursuing such developments make it a risky bet. (Read more: Toyota, SoftBank to Form JV for Autonomous Mobility Services)

Toyota currently carries a Zacks Rank #3.

3.    Per Bloomberg, Ford announced that it was mulling over downsizing its workforce in a bid to reorganize according to the company’s plans. The move is in sync with this Dearborn, MI-based auto giant’s strategy to lower costs for enhancing efficiency and increasing stock price.

The second-largest U.S. automaker, which is not doing well currently, informed its employees that they will encounter unspecified job cuts as part of the company’s $11-billion restructuring program. Per reports, some of these layoffs will be effected by lessening the company’s salaried staff. More details on job retrenchments are likely to emerge by second-quarter 2019. Regions mostly suffering on the monetary front — including Europe, Asia and South America — are likely to witness the deepest slashes.

During second-quarter earnings release, Ford trimmed its 2018 profit forecast due to a sharp decline in the bottom line. At that point of time, chief executive officer, Jim Hackett announced the company’s $11-billion cost restructuring initiative but kept details of the plan under wraps. (Read more: Ford to Cut Salaried Workforce for Better Efficiency)

Ford currently carries a Zacks Rank #4 (Sell).

4.    Daimler AG (DDAIF - Free Report) has announced that it will begin building a battery plant in Tuscaloosa, AL. This move is in tune with the German automaker’s $1-billion planned investment to upgrade its Alabama factory. Notably, the manufacturing hub has started to produce a new sports utility vehicle, the GLE.

Daimler’s latest action supports its strategy to make a mark in the electric vehicles (EVs) market, presently dominated by Tesla, Inc. (TSLA - Free Report) .  In fact, the Mercedes-Benz producer plans to play a key role in the development of e-mobility and attempts to introduce electric sports utility vehicle (SUV), the EQ.

In a bid to aid its smooth transitional ride from combustion engine to electric vehicles, the company is making preparations in its six factories to wheel out EQ electrified vehicles as well as manufacturing eight battery plants per Reuters. Notably, the company already has a battery manufacturing plant in Kamenz, Germany, and is building more production sites across Bangkok and Beijing. (Read more: Daimler to Begin Manufacturing EV Battery in Alabama)

Daimler currently carries a Zacks Rank #4.

5.    Fiat Chrysler Automobiles N.V. (FCAU - Free Report) has announced that it started arrangements for the production of plug-in hybrid version of Jeep Renegade, per Reuters. This is in sync with the company’s plan to move ahead with its electrification drive to comply with stricter emission regulations.

Notably, in order to become fully compliant with emissions regulations, this seventh largest automaker in the world spelled out a plan in June to invest €9 billion (£7.88 billion) in electric and hybrid vehicles over the next five years.

Likely to enter the market in early 2020, the plug-in hybrid version of Jeep Renegade will be produced at Fiat Chrysler’s Melfi plant in Southern Italy. Notably, Melfi plant is already producing Fiat 500X crossover and combustion engine version of Jeep Renegade. Over €200 million will be spent on the new engine and workers will be trained for the new technology.

Though initially reluctant, Fiat Chrysler is gradually embracing electrification, in compliance with stricter emission rules. By 2022, the company intends to offer 12 electric propulsion systems. This will include battery electric vehicles (BEV), plug-in hybrids (PHEV) and full hybrids. (Read more: Fiat Chrysler to Produce Plug-in Hybrid Version of Renegade)

Fiat Chrysler currently carries a Zacks Rank #5 (Strong Sell).


In the last week, all these stocks except AutoZone, Inc. (AZO - Free Report) declined. Tesla shares declined the most.

In the past six months, Advance Auto Parts, Inc. (AAP - Free Report) has increased the most, whereas Ford declined the most.

CompanyLast WeekLast 6 Months

What’s Next in the Auto Space?

Watch out for the usual news releases over the next week.

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