Auto Stock Roundup: Ford's Q2 China Sales, Asbury-Park Place Deal & More
Last week, China Passenger Car Association unveiled the sales report of passenger cars and EVs for the month of June. Passenger car sales in June declined 6.5% year over year to 1.68 million units. Sales of new energy vehicles — including battery EVs, plug-in hybrids and hydrogen fuel vehicles — declined 35% year over year to 85,600 units in June. While EVs resulted in the overall decline in China auto sales, Tesla TSLA and its smaller rival NIO Inc. NIO grabbed limelight by reporting higher sales.
Read the Last Auto Stock Roundup here)
Recap of the Week’s Most Important Stories
1. Ford’s F vehicle sales in China increased 3% year over year to 158,589 units during the second quarter of 2020. This also marks a 78.7% rise from the prior quarter. The rise in second-quarter sales was primarily driven by robust demand amid the lifting of coronavirus-induced lockdown restrictions in the country and a strong product mix. Importantly, this marked the first time in nearly three years that the U.S. auto giant registered a rise in quarterly sales in China. The automaker plans to launch more than 30 models in China over the next three years, of which more than a third will be electric vehicles. Ford’s efforts to bolster sales in China — the world’s biggest auto market — are indeed signaling early signs of recovery. However, it’s still too soon to say if the firm will be able to maintain the same.
2. Daimler AG DDAIF is set to implement aggressive cost-containment measures to boost the company’s cash position due to an expected second-quarter decline in sales. Despite some signs of recovery in demand for luxury cars of late, it still expects to post operating loss and negative free cash flow in the industrial business amid the coronavirus crisis. Notably, revenues of Daimler's Mercedes-Benz brand fell nearly 19% to about 870,000 cars in first-half 2020. While the company has recorded the highest second-quarter sales in China so far, the market losses that have piled up in recent months on rising coronavirus-related uncertainties would not be recovered by the end of the year, requiring further cost cuts.
3. Nissan Motor NSANY has secured $7.8 billion in financing from creditors since April, per the latest annual securities report. The move will help the Japan-based auto giant to bolster its cash position amid the COVID-19 pandemic. The automaker had been reeling under financial crisis even before the coronavirus outbreak. Strained relationship with Renault SA, ebbing sales of vehicles amid economic slowdown in Japan and deteriorating cash position of the firm had already been weighing on Nissan. The virus eruption further added to the woes. In addition to the secured credit facility, Nissan has 1.1 trillion yen in net cash in the automotive business and credit lines of up to 1.3 trillion yen. Nonetheless, the company pointed out that it may need additional funding to battle coronavirus woes, which will weigh on sales for quite some time.
4. Asbury Automotive Group, Inc. ABG recently entered into an agreement to acquire certain Park Place Dealerships’ assets for $685 million of goodwill and about $50 million for parts, fixed assets, as well as leaseholds, excluding vehicle inventories. Subject to satisfactory conditions, the acquisition is scheduled to complete in third-quarter 2020.The deal will enhance Asbury’s portfolio and is projected to add $1.7 billion in annual sales. The agreement is expected to result in an additional EBITDA of $95 million, including at least $20 million in run-rate synergies that are likely to be realized over the next three years.
5. Lithia Motors, Inc. LAD witnessed recoveries across all business lines in June from the declines seen in April and May, as states have eased shelter-in-place restrictions — which were imposed due to the coronavirus outbreak. Significant progress was witnessed in June, with total same-store vehicle unit sales increasing roughly 3% year over year. Sales of the same-store used vehicle unit increased around 23% year over year. Service, body and parts recorded a solid improvement in June, with monthly same-store sales falling nearly 3% from 27% decline witnessed in May. Moreover, same-store web traffic — reflecting new visits to the company's websites — jumped almost 53% year over year during June. Lithia continuously strives to make acquisitions for increasing market share and catering to customer requirements in a better way. It recently announced the acquisition of the Smolich Chrysler Jeep Dodge Ram and Nissan locations in Oregon.
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 apart from Tesla and Harley-Davidson. In the past six months, all stocks apart from Tesla have plummeted, with Ford registering the maximum loss.
What’s Next in the Auto Space?
Watch out for usual news releases and further updates on the COVID-19 pandemic’s impacts on the auto sector. All eyes will remain glued on how automakers deal with the coronavirus rampage, with second-quarter earnings around the corner.
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Ford Motor Company (F) : Free Stock Analysis Report
Nissan Motor Co. (NSANY) : Free Stock Analysis Report
Daimler AG (DDAIF) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
NIO Inc. (NIO) : Free Stock Analysis Report
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