The Zacks Analyst Blog Highlights: General Motors, Ford, Honda Motor, Toyota Motor and Volkswagen AG

For Immediate Release

Chicago, IL – March 20, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors GM, Ford F, Honda Motor HMC, Toyota Motor TM, Volkswagen AG VWAGY.

Here are highlights from Thursday’s Analyst Blog:

Automakers Put Brakes on U.S. Production Amid Coronavirus Scare

The coronavirus pandemic has crippled the U.S. auto industry, with closure of factories, dealerships witnessing lower footfall and disruptions in global supply chains. Notably, the number of confirmed coronavirus cases in the United States has crossed 8,700. Acknowledging the gravity of the crisis, President Trump has issued new guidelines to contain the spread of the pandemic. The pandemic is likely to take a severe toll on sales and earnings of automakers in the days to come.

U.S. Automakers Take Precautionary Measures

Various auto companies having operations in the United States have temporarily suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nation-wide campaign addressing the crisis. The companies have implemented more stringent cleaning regimens, imposed restrictions on access to the plants and taken other steps to keep workplaces safe for employees. Other measures to contain the spread of the virus include allowing some employees to work from home and controlling numbers at company cafeterias.

The coronavirus outbreak is posing concerns for auto biggies, including General Motors, Ford, Honda Motor, Toyota Motor, Volkswagen AG and more, all of which have large manufacturing plants in the United States.

General Motors and Fiat Chrysler have temporarily shut all U.S. factories at least until Mar 30 to contain the spread of coronavirus and will evaluate the situation on a weekly basis after that.

Ford has also temporarily halted production at its Chicago assembly plant due to shortage of parts. The plant will be idled for at least two shifts. The closure is related to the COVID-19 cases that caused suspension of work at Lear Corporation’s plant in Hammond, which supplies seats for the Ford Explorer sport utility vehicle and other vehicles manufactured at Ford’s Chicago Plant.

All three automakers have bowed to pressure from the United Auto Workers (UAW) union that has called for protection from the pandemic in order to safeguard its members, families and communities.

Meanwhile, Honda North America will be closing four U.S.-based plants from Mar 23, due to an anticipated decline in market demand. The company will suspend production for six days, with plans to return by the end of March. The hiatus is likely to reduce production by approximately 40,000 vehicles. The affected plants include vehicle production plants in Ohio, Illinois, Alabama and Indiana. Transmission and engines plants are also part of the production suspension.

Per BBC News, Tesla's main factory in California has commenced a three-week lockdown to curb the spread of the virus. This will affect production ramp-up plans of the Model Y electric vehicle, for which the company had been projecting high demand. Tesla currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, Nissan has stopped production across all U.S. plants effective Mar 20, until a few days to over two weeks. Harley-Davidson has also temporarily suspended majority of production at its U.S. manufacturing facilities, beginning Mar 18, through Mar 29. The affected facilities are York Vehicle Operations in Pennsylvania, and Wisconsin facilities Tomahawk Operations and Pilgrim Road Powertrain Operations.

Further, Toyota will suspend operations at all of its automobile and components plants in Huntsville until Mar 25. Hyundai has also suspended production at its Alabama plant after a worker tested positive for coronavirus. Production will resume once its health and safety team determines that the plant has been sanitized sufficiently.

Moreover, Volkswagen has closed its offices in Auburn Hills and will remain shut, while it undergoes a deep cleaning by COVID-19-certified cleaners. Goodyear Tire has also suspended manufacturing across its tire, retread and chemical plants in the United States until Apr 3.

Final Thoughts

Carmakers have to resort to cost containment and other strategies to overcome the resultant challenges. Many companies have started offering coronavirus-induced incentives. For instance, Hyundai is offering payment relief for buyers who are being laid off. General Motors, through its GM Financial arm, is offering 0% financing for seven years –– two years more than recent programs and four months deferred payments for those with A+ credit.

Ford, through its financing division, has announced a program giving customers who buy new vehicles the option to delay their first payment for 90 days. Nonetheless, until normalcy resumes, it is unclear if the incentives policies will provide respite to the dwindling car sales. Automakers should brace themselves for a tougher ride ahead until at least the first half of the year.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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