3 Companies Making Headlines in the Automotive Industry
The Dow Jones Industrial Average is trading 0.64% higher this afternoon after U.S. GDP expanded by an 3.2% annual pace in the fourth quarter, which was slightly below expectations of 3.3% growth, according to the first estimate from the Commerce Department. Part of the growth was driven by a 3.3% increase in consumer spending, which was good enough for its best reading since 2010. The positive fourth-quarter reading follows a 4.1% increase in the third quarter which secures the best back-to-back growth since the end of 2011. With that in mind, here are some companies making headlines today.
Ford's 2015 F-150. Source: Ford
In the automotive industry, it's no secret that full-size trucks haul big profits for Ford , General Motors, and Chrysler. America's best-selling truck for 37 consecutive years, Ford's F-Series, grew its sales by more than 18% in 2013, drastically outpacing the industry. With demand expected to surge again this year after the company unveiled its all-new F-150, Ford announced today it will invest $80 million at its Kentucky truck plant to increase production by roughly 15% to satisfy additional demand in the F-Series.
"F-Series continues to dominate the segment, widening the gap between Ford and key competitors," said Doug Scott, Ford truck group marketing manager, in a press release. "The continued domination of F-Series has made the Blue Oval not just the industry leader for trucks, but America's favorite truck manufacturer."
The investment will support facility upgrades, retooling, and significant automation, according to Ford, and will add 350 jobs. For investors, any details regarding the manufacturing of its most profitable vehicle will be big news. Ford will need to execute a flawless launch, avoid recalls, and balance inventory appropriately.
Toyota is making headlines for different reasons today, as it told North American dealers today to stop selling eight vehicle models for possible fire risks with heated seating. Certain 2013 and 2014 Camry, Camry hybrid, Avalon, Avalon hybrid, Corolla, Sienna minivan, and Tundra and Tacoma trucks that are equipped with seat heaters and sold since August 2012 are included in the official alert.
According to Automotive News, approximately 36,000 vehicles will be subject to the stop sale order. However, the number covered by a potential recall would be substantially larger. There's no timetable on when the National Highway Traffic Safety Administration will make the final determination on whether a recall will be required, and in the meantime Toyota has identified a fix for the problem. This is possibly the latest recall in a string of bad years for the Japanese automaker that has long built a reputation for higher-quality vehicles. Investors would be wise to keep an eye on this as large recalls can come at a large cost in a company's quarterly reports.
Harley-Davidson is trading 1.2% lower despite posting a higher quarterly profit on Thursday, driven by growing global motorcycle sales. The iconic motorcycle manufacturer posted a fourth-quarter net profit of $75.4 million, or $0.34 per share, which was a 9.7% improvement from last year's $70.6 million, or $0.31 per share. For full-year 2013, Harley-Davidson posted net income of $734 million on consolidated revenue of $5.9 billion. Its full-year earnings-per-share were up 20.6% from 2012.
"Without question 2013 was an outstanding year for Harley-Davidson. We unveiled game-changing motorcycles like Project Rushmore and Street, launched surge manufacturing, celebrated our 110th anniversary with customers around the globe and delivered continued financial growth," said CEO Keith Wandell in a press release
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