Auto Stock Roundup: Ford-Volkswagen EV Deal, Toyota Fuel Cell JV in China & More

With states easing restrictions from May, almost all U.S. and foreign carmakers have been planning to ramp up production after reopening their factories. Many are even adding extra shifts and canceling summer breaks. On Jun 10, Ford, General Motors and Volkswagen stated at the Global Auto Industry Conference that production has been smooth sailing since the opening of plants. Ford expects to return all U.S. plants to full, pre-COVID-19 capacity by Jul 6. General Motors recently stated that it will gradually ramp up production, keeping in mind the goal of being back at full capacity by mid-to-late June. Moreover, General Motors and Ford are canceling some or all of their usual summer breaks for many assembly plants to make up for the lost production during the two-month shutdown.

Meanwhile, the highlight of the last week was Tesla TSLA crossing the $1,000 a share mark on Jun 10 for the first time. With this, the automaker became the most valuable car company in the world, with market cap jumping to more than $190 billion. However the stock declined on Thursday and Friday, ending the week at $935.28. The pullback came as two analysts from Morgan Stanley and Goldman Sachs downgraded the automaker, citing valuation concerns and U.S.-China dynamics.

(Read the Last Auto Stock Roundup here)

Recap of the Week’s Most Important Stories

Ford F and Volkswagen VWAGY reached an outline agreement, which was first announced in July 2019, to enhance ownership experiences for current and future customers in Europe and other regions. Ford plans to design and manufacture a medium-sized pick-up truck that will be sold by Volkswagen within its commercial vehicles line-up, Amarok, beginning in 2022. By the end of 2020, the companies also aim to manufacture a highly-differentiated Ford electric vehicle built on Volkswagen's MEB platform for Europe, expanding Ford's zero-emission capabilities in the area. Meanwhile, Ford recalled 2.15 million vehicles in the United States over a defective door latch. The recall allegedly affects vehicles produced during 2011-16, namely Fiesta, C-Max, Focus, Mustang, Fusion, Escape, Transit Connect, Lincoln MKZ and MKC.

Toyota Motor TM and five China-based OEMs signed a joint-venture (JV) agreement aimed at supplying fuel-cell systems for commercial vehicles manufactured by the Japanese automaker in China and strengthening its ties with China-based companies. Toyota is likely to hold a 65% share of the venture. Reportedly, the overall investment amount is estimated to be 5.02 billion yen ($46 million). Meanwhile, Toyota’s CEO vowed to remain profitable despite the coronavirus pandemic. Further, the automaker has not changed its plans to manufacture 3 million cars annually in the country.

Honda Motor HMC was hit by a cyber attack last Monday that disrupted its business in several countries. The virus affecting Honda is reportedly part of the SNAKE ransomware family, which targets an entire network instead of individual workstations. Honda was forced to halt global production for a day since the cyber attack breached the company's internal servers in Japan and several U.S. factories. Nevertheless, the firm stated there was no data breach due to the cyber attack. The Japanese auto giant has now resumed production at automobile and motorcycle plants in the United States and other countries impacted by the cyber attack. Meanwhile, the company will halt some production shifts at three domestic vehicle plants in July due low demand and supply chain issues.

As states continue to ease the shelter-in-place restrictions, Penske Automotive PAG provided an update on recoveries in operations in May. Significant progress was witnessed in May, with new and used unit sales surging 60%, and service and parts gross profit rising 28% from the declines in April. In the United Kingdom, sales have been strong since the resumption of operations, surging about 50% year over year during the first week of June.All dealerships and service operations in Germany, Italy, Spain and Australia have also begun. In addition, Penske Transportation Solutions (PTS) delivered positive outcomes in May. PTS earnings more than tripled from April to May 2020.

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past week, all stocks have declined, with Ford being the biggest loser. In the past six months, all the stocks have slid except Tesla.

What’s Next in the Auto Space?

Watch out for usual news releases and further updates on the impact of the COVID-19 pandemic on the auto sector.

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Ford Motor Company (F) : Free Stock Analysis Report
 
Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
 
Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report
 
Toyota Motor Corporation (TM) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Volkswagen AG (VWAGY) : Free Stock Analysis Report
 
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