Japanese automakers (OTCPK:NSANY, TM, HMC, OTCPK:MZDAY, OTCPK:SZKMY, OTCPK:FUJHY, OTCPK:MMTOF) are reconsidering strategy in the U.S. after taking in the strong preference by American buyers for SUVs and trucks. The shift in sales mix has contributed to the rising incentive spending needed to clear inventory.
Top execs at Toyota say the company will have to be "very careful" with the North American market going forward.
"It’s a peak and we don’t see a potential for further growth," said Nissan co-CEO Hiruto Saikawa.
Toyota reported earlier today a sharp drop in FQ2 operating profit. Last weekend, news broke that the company may make a serious pure EV commitment.
The shifting ground in the automobile industry has long-term implications for suppliers as well.
U.S. auto sales are expected to show a decline of 2% to 5% for August amid a dialing back of discounting activity, according to the range of forecasts from Kelley Blue Book, Edmunds, J.D. Power, and LMC Automotive. General Motors is poised to report a loss of market share as its plan to cut out fleet sales impacts volume.
Bloomberg estimates the seasonally adjusted selling rate for the month will be 17.2M, down from 17.9M last month.
The sales dip isn't necessarily a bottom line drag for the sector due to reduced discounting and the increasing mix of higher-profit SUVs and trucks. But higher profit hasn't lifted automaker stocks this year, with the group having trouble gaining traction and trading with low forward PE multiples (GM 5.5, Ford 6.8, Honda 10.5, Toyota 10.9).
Tower International (NYSE:TOWR) board authorizes to repurchase up to $100M of the company's issued and outstanding common stock from time to time in the open market. The time period for the buyback is open-ended.
"In view of the Company's previously disclosed strong earnings and cash-flow outlook, in combination with a decline in our stock price to a point significantly below our view of intrinsic value, we believe stock repurchase represents a prudent and appropriate way to opportunistically deploy capital in a highly accretive and low-risk manner," said President and CEO Mark Malcolm.
The company plans to release Q2 results in late July. Currently, revenue estimated to be slightly lower than prior guidance for Q2 and FY2016. Earnings are expected to exceed Q2 guidance based on favorable calendarization and other factors; FY2016 earnings and cash flow are expected to be consistent with prior guidance.