Ford Motor Company (F - Free Report) announced that it will recall more than 108,000 mid-size cars in North America, due to seat-belt anchor pretensioners that can restrain an occupant in case of a crash and increase the risk of injury.
Nissan Motor Co. (NSANY - Free Report) , BMW AG and Volkswagen AG made efforts to popularize electric vehicles in South Africa in the past week. One important objective of this parley is to persuade lawmakers to reduce import tariff costs on electric vehicles by 23%.
In another development, Honda Motor Co., Ltd. (HMC - Free Report) announced that it will stop automobile production in Argentina in 2020 as part of its plan of reorganizing automobile production across the globe.
Recap of the Week’s Most Important Stories
1. Honda is set to stop automobile production in Argentina in 2020, per Reuters. The move is part of its plan of reorganizing automobile production across the globe and has no relation to the primary election results in the Latin American country.
The Japan-based auto giant began motorcycle production in Argentina in 2006 and started automobile production in 2011. From the next year, the Campana plant in the Buenos Aires province will solely concentrate on motorcycle production and stop producing the HR-V auto model.
Honda is a leading manufacturer of automobiles and the largest producer of motorcycles in the world. In the first quarter of fiscal 2020, the company reported operating profit of ¥252.4 billion, down 15.7% from the year-ago period. The decline in operating profit can be attributed to high selling, general and administrative expenses; adverse impacts of foreign currency, and decreased sales revenues. These negative factors were partly offset by continuous cost-reduction efforts.
Honda Argentina employs 1,000 people. The company is trying to offer buyouts for the employees engaged in automobile production.
Honda generates the majority of revenues in the automobile division from markets in North America and Japan. Countries in Asia — including China, India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Singapore, Taiwan, Thailand and Vietnam — remain the major revenue contributors for the motorcycle segment. (Read more: Honda to Stop Auto Production in Argentina From 2020)
Honda currently carries a Zacks Rank #4 (Sell).
2. Nissan, BMW AG and Volkswagen AG are in talks to popularize electric vehicles in South Africa, per Bloomberg.
One of the objectives of the auto giants is to persuade lawmakers to reduce import tariff costs on electric vehicles by 23%. This shall assist auto companies to ramp up domestic sales. Another objective is to supply a charging infrastructure in a country, where the state-owned power is going through crucial monetary adversity. The industry aims to present a unified stance to the government by the end of the current year.
From Toyota Motor to Isuzu Motors, South Africa has been a hub for plants operated by seven carmakers. Till date, there is no firm plan for an electric car or hybrid manufacturing in South Africa. However, in 2018, the South Africa government and industry agreed to expand production incentive program, creating jobs and enabling models like BMW X3 sports utility vehicle and Nissan’s Novara pickup to be produced regionally.
Consumers in South Africa will not determine the electric-vehicle play. In fact, it shall be determined by the requirements of export markets. The standard of the local plants of BMW, Ford Motor Company and Mercedes-Benz AG is good enough to make retooling simple. The subsequent product launched in South Africa by these automakers might feasibly be electrical. (Read more: Nissan-BMW to Reach Electric Car Concept to South Africa)
Nissan currently carries a Zacks Rank #3 (Hold).
3. Much to the delight of the shareholders, the board of directors of Group 1 Automotive, Inc. (GPI - Free Report) announced a second-quarter 2019 cash dividend payout of 28 cents per share. This marked a 7.7% sequential increase in its dividend payment. The increased dividend will be paid out on Sep 17, 2019, to stockholders of record as of Sep 3, 2019.
Houston, TX-based Group 1 Automotive is one of the leading automotive retailers in the world. It is engaged in selling new and used vehicles as well as offers vehicle financing, insurance and service contracts. The company operates through three reportable segments — the United States, the U.K. and Brazil. In order to boost shareholder value, it pursues different capital deployment strategies.
In second-quarter 2019, the company had $300 million of cash flow. For the six months ended Jun 30, 2019, it paid out dividends worth $9.3 million to shareholders of its common stock. (Read more: Group 1 Automotive Increases Cash Dividend by 7.7%)
Group 1 Automotive currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..
4. Ford announced that it will recall more than 108,000 mid-size cars in North America. The initiative is being taken to resolve an issue with seat belt anchor pretensioners that can restrain an occupant in case of a crash and increase the risk of injury. The recall includes 103,374 vehicles in the United States, 4,002 in Canada and 1,023 vehicles in Mexico.
The affected vehicles involve Ford Fusion and Lincoln MKZ cars from the company’s 2015 model. Ford Fusion vehicles were built at Flat Rock Assembly plant from Aug 1, 2014, to Jan 30, 2015, and at the Hermosillo Assembly facility from Aug 1, 2014, to Nov 24, 2014. Meanwhile, Lincoln MKZ vehicles were built at Hermosillo Assembly from Aug 1, 2014, to Nov 21, 2014.
The vehicles’ front seat-belt cable can degrade the strength below the required level due to heat buildup, which may not adequately restrain passengers.
The dealers are expected to provide a protective coating to the cables during a pretensioner deployment as a solution to the above-mentioned issue. (Read more: Ford Recalls 108,000 Vehicles to Resolve Seat-Belt Issue)
Currently, Ford has a Zacks Rank #3.
In the past week, AutoZone, Inc. (AZO - Free Report) has recorded the maximum gain while General Motors Company (GM - Free Report) has declined the most.
In the past six months, Tesla, Inc. (TSLA - Free Report) has declined the most while AutoZone has recorded the maximum gain.
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What’s Next in the Auto Space?
Watch out for the usual news releases over the next week.
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