Auto Stock Roundup: Spotlight on North American International Auto Show - Analyst Blog

The 2015 North American International Auto Show dominated headlines over the week with spectacular events and exciting announcements. Aside from several impressive vehicle launches, many concept cars, a personal mobility device and even a jet were on display. Also, a few automakers took the opportunity to reveal their future plans and financial guidance.

Amid all the enthusiasm, Tesla Motors, Inc. (TSLA) presented weak fourth-quarter China sales data and GAAP loss projection til 2020, pushing the stock down 5.7% in a single day.

Among other notable events, Honda Motor Co., Ltd. (HMC) was fined for failing to meet safety regulations and General Motors Co. (GM) reported record high global sales for 2014.

(Read last to last week’s recap here: Auto Stock Roundup for Jan 8, 2015)

Recap of the Week’s Most Important Stories

2015 North American International Auto Show Vehicle Launches

The annual auto show in Detroit was teeming with debutantes. Ford Motor Co. (F) unveiled the new Lincoln MKX along with the new-generation GT, Shelby GT350R Mustang and F-150 Raptor under the Ford Performance lineup. Honda launched its next-generation Acura NSX supercar.

An advanced light jet – HondaJet – and Honda FCV Concept were presented. General Motors’ introduced the 2016 Chevrolet Volt electric car and Bolt EV concept along with Buick Avenir concept and 2016 Buick Cascada.

Toyota Motor Corp. (TM) unveiled its high performance sports sedan – Lexus GS F – and the 2016 Tacoma truck. Other automakers, including Nissan and BMW also showcased new models.

Tesla CEO Reveals Losses, Production Plans & China Miss

At the same auto show, Tesla CEO Elon Musk disappointed with the projection of no net profits until the company’s yet-to-be-launched Model 3 enters full-scale production in 2020. Prior profits from the electric carmaker would come only after excluding special items. The Model 3, slated for a 2017 launch, would drive 500,000 units in annual sales by 2020.

Thereafter, Tesla hopes to double its production every year for a few years to sell several million vehicles annually by 2025. Tesla might even establish three production plants in Asia, Europe and eastern U.S. after the Fremont plant attains full production capacity in 2020.

Musk also stated that Tesla’s China sales failed expectations in fourth-quarter 2014 on worries related to the charging method for electric cars. The CEO plans to clear the misconception and expects better sales thereafter (read more: Tesla Targets 0.5M Sales by 2020; Losses to Persist till Then?).

General Motors’ Record Global Sales Lag Volkswagen

General Motors reported record high global sales of 9.92 million vehicles in 2014, up 2% from 2013. The automaker, however, failed to surpass Volkswagen’s sales of 10.14 million vehicles.

Honda Reveals Future Plans; Fined for Safety Reporting Violation

At the auto show, Honda also launched its UNI-CUB personal mobility device and revealed future plans. These include the 2018 launch of an all-new battery electric vehicle and an all-new plug-in hybrid vehicle, the 2016 HR-V crossover in spring 2015 and the fully redesigned Pilot 8-passenger SUV this summer.

The new Ridgeline pickup truck will hit roads in 2016 and the 4-cylinder VTEC Turbo engine would be launched by 2015 end. A $340 million investment in Honda’s Anna, OH plant is also planned for the engine’s development (read more: Honda: Huge Exhibit at North American International Auto Show).

Separately, Honda agreed to pay a cumulative fine of $70 million to the U.S. safety regulators for two issues. The first $35 million fine follows failure to report 1,729 complaints of deaths and injuries related to its vehicles, recorded from Jul 2003 through Jun 2014.

The other $35 million fine was slapped for not reporting warranty claims and claims registered under customer satisfaction campaigns during the same period. Both fines are the maximum that the government can impose.

Lear Corp. Reveals 2015 Guidance

For 2015, Lear Corp. (LEA) projected $18.5–$19.0 billion in sales, $1.175–$1.225 billion core operating earnings, adjusted net income of $720–$755 million, capital spending of around $500 million and free cash flow of nearly $575 million, at the auto show. Also, the company guided 6.4% year over year increase in adjusted operating margin.

Performance

Despite so many vehicle launches, share price of many automakers declined in the last one-week period due to the continued impact of market weakness. As expected, Tesla slid the most on soft China sales and a profit-less projection by Musk.

Meanwhile, Honda recorded maximum gains over the last five trading sessions courtesy of its impressive vehicle launches, which overshadowed the hefty fine imposed on it. However, the Japanese automaker recorded the maximum loss in the last six months, while Advance Auto Parts Inc. (AAP) retained its position as the top gainer.

Company

Last 1-Week Period

Last 6 Months

GM

-4.3%

-8.7%

F

+0.5%

-13.9%

TSLA

-8.7%

-12.3%

TM

+0.5%

+6.0%

HMC

+3.9%

-14.5%

HOG

-2.0%

-3.9%

AAP

-5.6%

+13.7%

AZO

-4.0%

+9.2%

What’s Next in the Auto Space?

While most vehicle unveilings are over, we can expect more news and announcements from the 2015 North American International Auto Show, which ends on Jan 25.

Further, Toyota is expected to announce its global sales figures for 2014 soon. The Japanese automaker was leading in terms of sales in the first nine months and is expected to emerge as the largest selling automaker in 2014, surpassing General Motors and Volkswagen. This should boost the company’s stock. Volkswagen and General Motors will then occupy the second and third positions, respectively.

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FORD MOTOR CO (F): Free Stock Analysis Report
 
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ADVANCE AUTO PT (AAP): Free Stock Analysis Report
 
LEAR CORPORATN (LEA): Free Stock Analysis Report
 
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