Last week, the China Association of Automobile Manufacturers released vehicle sales data for 2021. A total of 26.28 million vehicles were sold in China last year, an increase of 3. 8% from 2020 levels. While COVID-19 concerns and the chip shortage disrupted production, overall vehicle sales growth was mainly driven by strong sales of green vehicles. In a telling sign that the chip shortage was wreaking havoc on the industry, vehicle sales in the country in December 2021 fell for the eighth consecutive month. The bright spot for the Chinese auto market in 2021 has been the growing popularity of electric vehicles (EVs). According to data compiled by the China Passenger Car Association, full-year new energy vehicle shipments soared 169 percent to a record 2.99 million units.
American automotive giants General Engines GM and Ford F released its China vehicle sales data for 2021. While GM’s full-year deliveries in the world’s largest auto market were flat year-over-year, F in 2021 in China grew by nearly 4% year-on-year.
Meanwhile, the results for the 2022 NACTOY (North American Car, Truck and Utility Vehicle of the Year) awards were announced last week. Ford Maverick was named 2022 Truck of the Year, while Ford Bronco won Commercial Vehicle of the Year. Meanwhile, Japan’s automotive biggie HondaHMC’s popular Honda Civic won Car of the Year.
Updates from Allison Transmission Holdings ALSN and Magna International MGA was also among the top stories of the past week. Allison partnered with Autotech and made the 2 millionth delivery of the 1000/2000 series. Magna announced the expansion of its workforce to bolster ADAS capabilities. Additionally, according to media sources, talks are underway for a likely joint venture between Honda and LG Energy to establish an electric vehicle battery plant in the United States.
Summary of important news of the week
1. General Engines delivered around 2.9 million vehicles in China in 2021, which remained stable year-on-year. The challenging supply chain environment could not deter premium models and New Energy Vehicles (NEVs) from maintaining robust growth momentum. GM delivered strong performance across all of its brands in China. Cadillac posted record sales of more than 230,000 units in 2021. Buick, Chevrolet and Baojun delivered 820,000, 230,000 and 210,000 units respectively. Wuling’s shipments exceeded 1.4 million units. The Hong Guang MINI EV cemented its position as the best-selling electric vehicle in China, with sales of 400,000 units.
In another groundbreaking development bringing newness to used vehicle shopping, General Motors has launched CarBravo, a new online used vehicle marketplace. The virtual platform promises to offer used-vehicle customers from GM and other automakers access to extensive inventory, an omnichannel shopping experience and exclusive ownership benefits. The site should be launched in the spring.
2. Ford delivered 624,000 vehicles in China in 2021, representing a 3.7% year-on-year increase. The Lincoln brand maintained its momentum, posting record sales of more than 91,000 units last year. This represents a 48.3% increase from the 2020 level. For the fourth quarter of 2021, the American auto giant sold 167,000 units. The rollout of new vehicles (including China-made Ford Mustang Mach-E, Ford EVOS and Lincoln Zephyr) and the launch of 25 direct-to-customer battery electric vehicle stores positions Ford well to maintain the upward trajectory of the largest market in the world. automotive market.
In other news, Ford declared a regular first-quarter dividend of 10 cents per share, payable March 1 to shareholders of record January 31. The payment would come after more than a year and a half of suspension amid the coronavirus crisis. Ford currently sports a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.
3. Allison pledged a $15 million investment in Autotech Ventures, paving the way for the next frontier in mobility. Under the joint venture, Autotech will provide Allison with direct exposure to relevant startups, venture capital expertise and high-tech companies in strategic areas of the transportation industry. The partnership is also aligned with Allison’s mission to advance propulsion solutions in the dynamic and unforgiving vehicle industry. Leveraging Autotech’s strong base through this investment, ALSN is poised to diversify its portfolio and provide customers with brand value and efficient next-generation propulsion solutions.
In another significant development, Allison has reached an important milestone by completing delivery of its 2 millionth 1000 and 2000 Series, remaining focused on its vision to provide reliable and durable transmissions for light and medium duty vehicles. The landmark unit was delivered to Penske Truck Leasing, one of the world’s leading providers of transportation services.
4. magna added 120 engineers to its workforce at Optimus Ride, an autonomous vehicle and mobility company, to bolster its expertise in advanced driver assistance systems (ADAS). To compete well in the rapidly growing ADAS market and strengthen its engineering bench in detection hardware and software, Magna considered bringing in additional expertise to support current programs and future customer needs.
In recent months, Magna has expanded rapidly, adding additional staff and acquiring businesses to its approximately 150,000 existing employees worldwide. MGA’s focus on developing ADAS technology and improving the electric powertrain product portfolio provides great visibility for growth. He projects commercial ADAS sales to grow at a compound annual growth rate of 20% from 2020 to 2023 and 15-20% from 2020 to 2027.
5. Honda and LG Energy are considering forming a battery joint venture in the United States, according to industry sources. The joint venture could cost up to $3.4 billion and is expected to have an annual production capacity of 40 gigawatt hours of batteries, enough to power 600,000 electric vehicles. The companies, however, did not provide any detailed outline of the deal.
The partnership comes at a crucial time as Honda prepares to enter the proliferating US electric vehicle market. Last year, HMC outlined a plan to transition to 100% electric vehicles by 2040 and became the first Japan-based automaker to aim for full electrification.
Price performance
The following chart shows the price movement of some of the major automotive players over the past week and six-month period.
Image source: Zacks Investment Research
What’s new in the Auto Area?
Industry watchers will be keeping an eye on December and 2021 passenger vehicle registrations to be released by the European Automobile Manufacturers Association this week. Also, stay tuned for updates on how automakers will tackle the semiconductor shortage and make changes to business operations.
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