There was a wave of positive developments in the auto sector over the last week. Toyota Motor Corp Ltd Ord (NYSE:TM) reported favorable earnings and revenues for the fourth-quarter of fiscal 2015 (ended Mar 31, 2015) and revealed the guidance for fiscal 2016. Tesla Motors (NASDAQ:TSLA) made its first ever acquisition. Ford Motor (NYSE:F) decided to handle currency-related issues in Venezuela by selling vehicles in U.S. dollars.
However, in a major negative development, the recalls related to the faulty Takata airbags have resurfaced. All three major Japanese automakers – Honda Motor Company Ltd (NYSE:HMC) and (Nissan Motor Co Ltd (OTC:NSANY) have announced new vehicle recalls based on the study of an investigation which revealed that the airbags can be affected by moisture.
(Read last to last week’s recap here: Auto Stock Roundup for May 7, 2015)
Recap of the Week’s Most Important Stories
1. Toyota posted consolidated net income of ¥446.4 billion ($3.75 billion) in fourth-quarter fiscal 2015, higher than ¥297 billion ($2.88 billion) in the year-ago quarter. Consolidated revenues increased 8.4% year over year to ¥7.17 trillion ($59.82 billion). Revenues also surpassed the Zacks Consensus Estimate of $56.69 billion.
Toyota expects consolidated revenues of ¥27.5 trillion ($239.1 billion) for fiscal 2016. The revenue guidance reflects a 1% improvement from fiscal 2015. Net earnings are expected around ¥2.25 trillion ($19.6 billion) or ¥715.01 per share ($12.43 per ADR). The net income guidance reflects expectations of a 3.5% improvement over fiscal 2015 (read more: Toyota Beats FY15 Earnings & Revenues; Guides FY16).
2. The recall of vehicles with faulty Takata (OTC:TKTDY) airbags has been extended. Honda has announced the recall of an additional 4.89 million vehicles, Toyota has expanded the recall by 5 million units and Nissan by 1.56 million vehicles. These recalls have been prompted by revelations that the Takata airbags can be damaged by moisture due to improper sealing. Nearly 36 million vehicles have been recalled globally since 2008 due to faulty Takata airbags.The Takata airbags have faulty inflators due to which these can explode and shoot out metal fragments when deployed.
3. Tesla acquired Riviera Tool LLC of Cascade Township in Michigan, per media reports. This is the electric automaker’s first acquisition. It will allow Tesla to produce more vehicle models, going forward. Riviera Tool produces tools and dies (read more: Tesla Acquires Michigan-based Riviera Tool).
4. Ford’s Venezuela division will sell some vehicles in U.S. dollars soon, according to media reports. The decision is based on the strict currency controls imposed by the Venezuelan government that affect the company’s revenues and limit the availability of U.S. dollars to import parts for assembly. Per the reports, the sale of Ford vehicles in U.S. dollars will likely begin from June. However, some vehicle models will continue to be available in bolivars. The company has not responded to the news (read more: Will Ford Sell Vehicles in U.S. Dollars in Venezuela?)
5. Honda has revealed that the revamped CRF1000L Africa Twin will be available in dealerships across Europe later this year. Africa Twin is a renowned motorcycle.
Performance
The performance of auto stocks was leaning toward the positive side over the last one week. Tesla gained the maximum driven by several positive developments, including completion of the company’s first acquisition, signing of a bill that will allow it to directly sell vehicles in Maryland and its decision to modify its vehicles for China according to the country’s charging standards to boost sales.
Meanwhile, Harley-Davidson lost the maximum in the last one week as well as six months, largely due to the plunge in its share price following its earnings release on Apr 21. AutoZone (NYSE:AZO) continued to hold on to its position as the biggest gainer over the last six months.
What’s Next in the Auto Space?
On May 16, General Motors Company (NYSE:GM) will introduce the all-new, 2016 Chevrolet Camaro at a special public event at Detroit’s Belle Isle park.
On May 21, Advance Auto Parts Inc (NYSE:AAP) will report first-quarter 2015 financial results.