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Auto Stock Roundup: Volkswagen and Daimler's Financial Plans & More

In the past week, German auto biggies including Volkswagen VWAGY and Daimler DDAIF outlined their targets and plans for the coming years. Volkswagen has ramped up its five-year (2020-2024) investment budget as it intends to bet big on electric cars, hybrid technology and digitization over the said time frame. Meanwhile, its peer Daimler plans to put a rein on spending and cut jobs as it has invested heavily to develop electric vehicles (EVs) in the recent years. The move will help the company save more than 1.3 billion euros in the next couple of years.

In a bid to keep up with the EV wave, Ford F unveiled its first all-electric SUV, Mustang Mach E. The model is set for a late 2020 launch, with prices starting at $43,895. Ford’s Mustang Mach E will be pitched against Tesla’s TSLA model Y crossover, with a starting price of $39,000, that is due to release next year.

(Read the Last Auto Stock Roundup here).

Recap of the Week’s Most Important Stories

1. In a bid to keep pace with the EV wave and retain its leading position in greener vehicles’ transition, Volkswagen unveiled plans to rev up spending on electric cars, hybridization and digitization.Per the new five-year (2020-2024) investment budget of Volkswagen, it will be spending 60 billion euros in electric cars, hybrid technology and digitalization over the said time frame. The investment budget depicts a 36.3% increase from the previous five-year plan.It is to be noted that while €33 billion will be spent on electric mobility alone, €27 billion will be directed toward hybridization and digitalization.The firm also updated its 10-year targets. Through 2029, Volkswagen has pledged to launch 75 all-electric models, up from the prior forecast of 70. Over the next decade, it intends to produce nearly 26 million e-vehicles compared with the previous target of 22 million. It aims to sell around 6 million hybrid vehicles by 2029. (Read more: Volkswagen Bets Big on EVs, Revs Up 5-Year Investment Plan)

2. Amid changing dynamics of the auto industry, Daimler announced a cost-reduction plan to revive profit margins. The expenditure needed to achieve European Union’s stricter emissions target and the race to roll out EVs are likely to dent the company’s earnings in 2020 and 2021. In view of the increasing costs, it has outlined restructuring measures to maintain financial health. While Daimler invested massively in the recent years to develop electric and driverless cars, it is time to freeze the capex now. Daimler intends capex and research & development costs to be capped at 2019 levels, and reduced in the medium term. It aims to cut jobs of more than 1,000 managers. This is in turn likely to slash costs by about 1 billion euros by the end of 2022. Putting a rein on spending and cutting jobs will aid the company to save more than 1.3 billion euros. (Read more: Daimler Outlines Restructuring Plans to Offset Cost Woes)

3. Copart, Inc. CPRT delivered a comprehensive beat in first-quarter fiscal 2020 (ended Oct 31), wherein it managed to surpass earnings and revenue estimates. Rising service revenues across markets served by the company and expanding network of facilities have aided the results.The Texas-based online vehicle auctioning company reported adjusted earnings per share of 65 cents, surpassing the Zacks Consensus Estimate of 59 cents and increasing from the year-ago figure of 47 cents. Total revenues came in at $554.4 million, surpassing the Zacks Consensus Estimate of $531 million. The top line was also 20.2% higher than the year-ago figure of $461.4 million. While service revenues accounted for nearly 88% of total revenues, vehicle sales totaled $66.5 million during the quarter under review, almost flat with the year-ago level. (Read more: Copart Q1 Earnings and Revenues Surpass Estimates)

Copart currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

4. Navistar International Corporation NAV announced that the United Auto Workers’ (“UAW”) six-week strike at General Motors GM has affected the company's potential to deliver about 5,000 vehicles to customers during fourth-quarter fiscal 2019. As a result of the lost production, Navistar expects 2019 revenues and adjusted EBITDA to be hit by $140 million and $15 million, respectively. Subsequent to the strike, Navistar halted production of GM-branded vehicles and its own commercial trucks at the Springfield plant on Sep 23, 2019, which in turn affected roughly 1,500 plant workers and the delivery of 5,000 vehicles to customers, approximately. Nevertheless, Navistar recommenced production at the plant on Nov 4, 2019. (Read more: Navistar to Face $140M Revenue Loss From UAW's Strike at GM)

5. Autoliv, Inc. ALV rolled out latest financial plans and targets, and briefly outlined growth opportunities for the next few years. The company expects sales to grow organically by 3-4% more than light vehicle sales over period of three-five years. It also aims at achieving an adjusted operating margin of around 12% and maintaining the leverage ratio (debt/EBITDA) target in the 0.5-1.5 band over the same time frame.The firm anticipates to benefit from cost-reduction initiatives and lower raw-material costs in 2020. Autoliv aims to grow at least in line with the market over the long term (beyond five years). The company is focused on achieving an adjusted operating margin of roughly 13%, thereby boosting its earnings potential. (Read more: Autoliv Sets Long-Term Profit Margin Target of 13%)

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 declined, except Advance Auto Parts and Tesla. In the past six months, Ford has declined the most, while Tesla has registered the maximum gain.

Company Last Week Last 6 Months
GM -4.2% -5%
F -0.7% -14.7%
TSLA 0.8% 71.6%
TM -1.8% 19.5%
HMC -1.4% 10.5%
HOG -5.7% -0.4%
AAP 3.1% 0.2%
AZO -1.4% 12.3%

 

What’s Next in the Auto Space?

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

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Ford Motor Company (F): Free Stock Analysis Report

Tesla, Inc. (TSLA): Free Stock Analysis Report

General Motors Company (GM): Free Stock Analysis Report

Daimler AG (DDAIF): Free Stock Analysis Report

Autoliv, Inc. (ALV): Free Stock Analysis Report

Navistar International Corporation (NAV): Free Stock Analysis Report

Copart, Inc. (CPRT): Free Stock Analysis Report

Volkswagen AG (VWAGY): Free Stock Analysis Report

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