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Auto Roundup: F's $3.7B Investment, GM's Milestone in AV Journey & More

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Last week, a number of automakers released their vehicle sales data for May. Most of them saw double-digit declines in sales volumes owing to the chip crisis, supply-chain disruptions and inventory dearth. Per the Automotive News Research & Data Center, cumulative U.S. vehicles sales (for the automakers who reported sales figures) fell more than 31% on a year-over-year basis. Per Motor Intelligence, SAAR for May tumbled to a year-to-date low of 12.81 million.

On the news front, Ford F announced plans to invest $3.7 billion and create over 6,200 new United Auto Workers (“UAW”) jobs in Ohio, Missouri and Michigan. The initiatives are part of the company's Ford+ growth strategy. Ford’s close peer General Motors' GM autonomous vehicle (AV) unit, Cruise, became the first company to secure a permit to charge for driverless car rides in San Francisco. Meanwhile, Nissan Motor NSANY announced a pause in further orders of its Ariya SUV due to supply chain challenges that have been ongoing in Japan in the light of a recent spike in COVID-19 infections. Stellantis STLA and Toyota TM also made to the headlines as they sought to expand their ties through an agreement over a new large light commercial vehicle.

Last Week’s Top Stories

1. Ford and the UAW union announced plans to add more than 6,200 U.S. manufacturing jobs in the Midwest.The joint pact entails $3.7 billion of investments in manufacturing facilities across Ohio, Michigan and Missouri, which, in turn, are expected to generate an estimated 74,000 indirect ancillary non-Ford jobs nationally.

Let’s look at the breakdown of the $3.7 billion investment and more than 6,200 new union jobs that span three states. Ford is advancing its long-standing legacy in Michigan by investing another $2 billion to create 3,200 UAW jobs, per the latest UAW contract. Ford will invest $1.5 billion and create 1,800 union jobs at Ohio Assembly Plant to assemble an all-new commercial EV starting mid-decade. Ford will also create an additional 90 jobs and a $100 million investment between Lima Engine and Sharonville Transmission plants. A $95 million investment and 1,100 union jobs have been planned for Missouri, for a third shift at Kansas City Assembly Plant to increase production of the Transit and the all-new E-Transit electric van.

2. General Motors’ autonomous vehicle (AV) unit, Cruise, is set to operate a commercial taxi service of self-driving cars in San Francisco. In a unanimous decision, Cruise has been awarded a driverless deployment permit by the California Public Utilities Commission to start its services commercially in San Francisco and charge a fare for the rides.

Per the California Public Utilities Commission permit, Cruise may offer its passenger services to the general public at a maximum speed of 30 mph, between 10 p.m. and 6 a.m. daily, in normal weather conditions. It will use a fleet of 30 fully driverless all-electric Chevrolet Bolts to ferry passengers around parts of California. Cruise will decide on a fare that will be comparable and competitive with traditional ride-hailing services. It intends to gradually expand its outreach across the city and, eventually, in other regions.

3. Nissan notified its dealers in the United States to stop taking new orders for the company’s 2023 battery-electric Ariya SUV on the grounds of supply chain issues that have been affecting production at home in Japan. It is uncertain as to how long Nissan intends to keep Ariya EV orders closed. The starting price for the U.S.-spec base-grade front-wheel-drive model is $45,950. Though Nissan has allotted around 6,000 vehicles to the United States market, it has not been able to provide a clear delivery schedule.

Nissan believes that it is judicious to scale down orders to the level at which it can realistically deliver this year. Demand for Ariya SUV has been surging in the United States, Europe and Japan. Previously, the Ariya plant had experienced disruptions when production was halted in 2020 due to semiconductor supply issues and the pandemic. In the current context, the company has decided not to promise more than it can actually deliver.

4. Stellantis and Toyota Motor Europe (“TME”), announced the expansion of their existing partnership with a pact for a new large-size light commercial vehicle (“LCV”), including a battery-electric version. Stellantis will supply TME with the new product for sale in Europe under the Toyota brand. The new van will be built at Stellantis’ plants in Gliwice, Poland and Atessa, Italy. It is planned to begin in mid-2024. The new vehicle is the third body type under the agreement, completing a full LCV line-up, with compact, mid and now a large-size LCV. This marks TME’s debut into the large-size commercial vehicle segment.

The recent announcement on large-size LCV furthers the collaboration, enabling Toyota to complete a full LCV line-up in Europe, while allowing both companies to enjoy the benefits of development and production cost optimization. While Stellantis carries a Zacks rank Rank #2 (Buy), Toyota is Ranked #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

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

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

What’s Next in the Auto Space?

Industry watchers will track China vehicle sales data for May 2022, likely to be released by the China Association of Automobile Manufacturers soon.  Also, stay tuned for any update on how automakers will tackle the semiconductor shortage —aggravated by the Russia-Ukraine war and rising COVID-19 infections— and make changes in their business operations.


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Ford Motor Company (F) : Free Stock Analysis Report
 
Toyota Motor Corporation (TM) : Free Stock Analysis Report
 
Nissan Motor Co. (NSANY) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Stellantis N.V. (STLA) : Free Stock Analysis Report
 
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