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Auto Stock Roundup: GM Boosts EV Prowess, LAD Buys Suburban Collection & More

Last week, the European Automobile Manufacturers Association released data for passenger car registrations for the month of March and first-quarter 2021. New car registrations totaled 1,062,446 units, reflecting a surge of 87.3% from the comparable year-ago quarter, when vehicle demand was badly hit by coronavirus woes. All European Union (EU) markets apart from Netherlands and Hungary saw at least double-digit growth. Registrations in major markets like Spain, France and Italy witnessed triple-digit gains of 128%, 191.7% and 497.2% and 12.3%, respectively. Sales in Germany increased 35.9% year over year.

Importantly, high demand for the month of March helped to offset the declines witnessed in January and February, which in turn led to EU car sales growth of 3.2% year over year for first-quarter 2021. During the said time frame, the four major EU markets displayed mixed performance, with demand in Italy and France rising in double digits, whereas sales in Spain and Germany declining 14.9% and 6.4%, respectively.

Meanwhile, various companies including General Motors GM, Xpeng Inc. XPEV, Toyota TM, Nikola NKLA and CNH Industrial CNHI announced new partnerships and developments to boost their mobility prospects. While XPeng launched an electric vehicle (EV), General Motors announced plans to set up a battery manufacturing plant. Nikola teamed up with network operator OGE and truckmaker IVECO to aid hydrogen transportation for fuel-cell EV refuelling. Toyota entered into an alliance with fuel giant Sasol to establish a green hydrogen-powered mobility ecosystem. CNH Industrial collaborated with Plus to develop autonomous trucks.

(Read the Last Auto Stock Roundup here)

Last Week’s Top Stories

1. General Motors and LG Energy Solutions are set to jointly invest more than $2.3 billion to build a battery manufacturing plant in Spring Hill, TN. The facility is scheduled to commence operations in 2023. In addition to its first facility in Ohio, which is in the construction stage, the second all-new Ultium battery plant in Tennessee also demonstrates General Motors’ big push toward e-mobility. Apart from scaling up EV capabilities, General Motors is also revving up autonomous prospects. The U.S. auto giant’s self-driving car start-up Cruise intends to expand operations to Dubai as it plans to operate robotaxis in the emirate effective 2023. Cruise expects to ramp up its fleet to 4,000 autonomous vehicles in Dubai by the end of the decade. 

2. CNH Industrial joined forces with autonomous truck technology developer, Plus, to jointly build self-driving trucks that will be deployed across Europe, China and other parts of the world. Per the memorandum of understanding signed by both the parties, IVECO’s latest generation heavy-duty pickup will be equipped with PlusDrive autonomous driving system. The alliance will also explore deploying IVECO’s liquefied natural gas engine system to power Level 4 automated trucks. In a bid to create a more sustainable future and lower greenhouse emissions, the firms will work together to develop autonomous trucks that will be powered by natural gas.

3. Lithia Motors LAD announced the acquisition of Troy-based The Suburban Collection. The buyout includes 56 franchises, representing one of the biggest acquisitions by the auto retailer. The deal has strengthened Lithia’s position in the North Central region and is expected to add $2.4 billion in the firm’s annualized revenues. The deal was funded through the capital raised in concurrent equity and debt offerings in late 2020. Lithia — which presently carries a Zacks Rank #3 (Hold) — is highly optimistic about the buyout as The Suburban Collection is the 12th largest dealership in the United States in terms of revenues. The acquired franchises supplement Lithia’s existing product portfolio, and align with the company’s plan of fortifying the reach and density of its network to serve customers more conveniently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. XPeng launched its third production model, named P5. The model will be an electric sedan equipped with driverless features. The China EV maker is set to release the pricing and further details about the new model at the Shanghai Auto Show, which will be held on Apr 19. The XPILOT 3.5 architecture will have an updated version of Navigated Guided Pilot, which is also designed for city roads, in addition to highways. Meanwhile, the Xmart OS 3.0 platform will help in offering full scenario voice assistance. The P5 model, boasting XPeng’s proprietary XPILOT 3.5 system and Xmart 3.0, is likely to be a game changer for the company. The model aims to bring about high level of technological advancement for smart electric cars, which is increasingly essential in China’s crowded EV market.

Price Performance

The following table shows the stock movement of a few major auto players over the past week and six-month period.

In the past six months, all stocks have increased, with Tesla being the maximum gainer. In the past week, all stocks have gained apart from General Motors, Ford and Harley-Davidson.

What’s Next in the Auto Space?

Industry watchers will keep a tab on March commercial vehicle registrations, to be released by the European Automobile Manufacturers Association this week. Meanwhile, investors will eager await quarterly earnings of key auto players including Harley-Davidson, AutoNation, Genuine Parts Company, which are set to report this week. Also, watch out for any updates related to chip crunch-related disruptions in the auto market. All eyes will remain glued to how automakers tackle the semiconductor shortage and make resultant changes in business operations. 

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