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Here’s what Wall St. experts are saying about these automakers ahead of earnings

Posted April 23, 2024 at 10:30 am
Kelly Carroll
The Fly

General Motors (GM) is scheduled to report quarterly results before market open on Tuesday, April 23, with a conference call scheduled for 8:30 am EST, while Ford (F) is scheduled to report after market close on Wednesday, April 24, with a conference call scheduled for 5:00 pm EST. What to watch for:


In April, General Motors announced the company and its dealers increased retail sales by 6% year-over-year and delivered 594,233 vehicles in the U.S. in Q1, down 1.5% year-over-year due to lower fleet deliveries. The company said, “Our brands are all performing well. GM gained retail market share year-over-year with strong mix and pricing, our inventories are in good shape heading into the spring, and production and deliveries of Ultium Platform EVs are rising, led by the Cadillac LYRIQ. We’re on plan.” GM and its joint ventures delivered over 441,000 vehicles in China in Q1.


In January, EV Connect expanded its partnership with GM by announcing the availability of Plug and Charge on the EV Connect network through GM vehicle brand apps. Additionally in January, the company announced a $1.4B investment in its plants and operations in Brazil to deliver a new generation vehicle portfolio for customers in South America. GM and Honda (HMC) also announced in January the start of production at their 50-50 joint venture production facility, FCSM. In February, Nouveau Monde (NMG) and GM Holdings agreed to sign a supply agreement upon closing of the Tranche 1 Investment, in which NMG will provide 18,000 tons per annum of its expected Phase-2 active anode material output to GM upon reaching full production for an initial term of six years. NMG and GM also entered into a subscription agreement in which GM commits an aggregate $150M equity investment in NMG. The company also announced in February it is adding an additional group of highways to its hands-free technology Super Cruise, bringing the total to about 750,000 miles of compatible roads across the U.S. and Canada. In March, GM, Magna (MGA) and Wipro (WIT) teamed up to develop a B2B sales platform for buying and selling automotive software. The company also hired former Tesla (TSLA) executive Jens Peter Clausen to lead manufacturing in March.


In October, The California Department of Motor Vehicles issued a statement on the immediate suspension of deployment and driverless testing permits for GM’s Cruise: “The California DMV notified Cruise that the department is suspending Cruise’s autonomous vehicle deployment and driverless testing permits, effective immediately. The DMV has provided Cruise with the steps needed to apply to reinstate its suspended permits, which the DMV will not approve until the company has fulfilled the requirements to the department’s satisfaction.” Following the suspension, Cruise said, “The most important thing for us right now is to take steps to rebuild public trust…In that spirit, we have decided to proactively pause driverless operations across all of our fleets while we take time to examine our processes, systems, and tools and reflect on how we can better operate in a way that will earn public trust.” In November, Cruise CEO Kyle Vogt and Daniel Kan, co-founder and chief product officer, resigned and GM laid off 24% of Cruise full-time employees in December. In January, Cruise released the Quinn Emanuel Urquhart & Sullivan report regarding the October 2, 2023 incident in San Francisco and Cruise’s subsequent interactions with regulators and the media. “The Quinn Emanuel report makes important findings, conclusions, and recommendations regarding these events, which arose from an incident in which a hit-and-run driver tragically struck a pedestrian and launched her into the lane of travel of a Cruise AV, which unavoidably struck her,” the company said. “The Cruise AV, determining the collision to be a side impact with the pedestrian rather than frontal, pulled forward approximately 20 feet and dragged the individual in the process. This sequence of events caused serious injury…. Understanding exactly where Cruise fell short will help both Cruise and the industry learn from the incident, strengthen protocols, and improve technology.” Cruise said it accepts Quinn Emanuel’s conclusions and will act on all of their recommendations. In February, Cruise appointed Steve Kenner as chief safety officer.


In April, Barclays raised the firm’s price target on General Motors. The firm downgraded its sector view for U.S. autos and mobility to Neutral from Positive. While car maker stocks should continue outperforming, cycle and electric vehicle risks remain, the analyst said. For suppliers, the firm believes the challenges of a flat LVP environment with customer mix and margin difficulties “poses a significant overhang, which may take time to clear.”

Meanwhile, Morgan Stanley raised the firm’s price target on General Motors. Ahead of Q1, the firm said it wanted to “mark to market” its GM model, noting that it doubled anticipated fiscal year impairment charges to $3B from $1.5B previously, trimmed capex expectations to the low-end of guidance and raised its EPS forecast. While the firm reiterates an Overweight rating on GM, and calls the EV slowdown “positive for GM,” it highlights “Top Pick” Ford as its preferred U.S. automaker.


In February, Ford reported total U.S. vehicle sales of 152,617 in January, up 4.3% from last year. This includes Electric Vehicle sales of 4,674, down 10.9%, Hybrid Vehicle sales of 11,157, up 42.7%, and Internal Combustion sales of 136,786, up 2.6% on a year-over-year basis. In March, Ford reported February U.S. sales were up 10.5% year-over-year to 174,192 total vehicles, including sales of 6,368 electric vehicles, 12,045 hybrid vehicles and 155,779 internal combustion vehicles. In April, Ford reported Q1 U.S. sales up 6.8% to 508,083 units. Maverick Hybrid sales were up 77 percent over a year ago on sales of 19,660. Overall hybrid sales in Q1 were up 42 percent on sales of 38,421 vehicles. Across Ford electric vehicles, sales started the year strong, up 86 percent. Ford sold 20,223 EVs in Q1.


In January, Ford announced plans to create nearly 900 jobs as part of a new third crew at the Michigan Assembly Plant in Wayne to meet demand for the Bronco, Bronco Raptor, Ranger and Ranger Raptor. The company also announced a reduction in F-150 Lightning production. Additionally in January, Ford recalled nearly 1.9M Explorer SUVs in the U.S. because a trim piece can fly off and create a hazard for other drivers. Ecolab (ECL) also announced in January it selected Ford Pro to accelerate the electrification of its sales and service fleet. In February, UAW Local 862 announced that it has reached a tentative local agreement with Ford, averting a potential strike. In March, Ford agreed to pay the United States $365M to resolve allegations that it violated the Tariff Act of 1930 by misclassifying and understating the value of hundreds of thousands of its Transit Connect vehicles. Additionally in March, Ford and Allego (ALLG) announced a strategic partnership to bring ultra-fast charging infrastructure to hundreds of Ford dealerships across Europe.


In March, Barclays raised the firm’s price target on Ford. The firm downgraded its sector view for U.S. autos and mobility to Neutral from Positive.

Originally Posted April 22, 2024 – Here’s what Wall St. experts are saying about these automakers ahead of earnings

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