The NHTSA is imposing a fine of up to $200M on Japanese air bag maker Takata (OTCPK:TKTDY) for providing inaccurate information about its explosive safety devices that have so far been linked to eight deaths.
Honda (NYSE:HMC) didn't take the news lightly. The automaker immediately dropped its longtime partner as an air bag provider, stating it had "misrepresented and manipulated test data."
Inflator suppliers that could see a boost from the news: Autoliv (NYSE:ALV), TRW Automotive (NYSE:TRW) and Daicel.
The European Automobile Manufacturers Association issued a statement this week in which it forecasts that a "substantial number" of diesel models will have to be phased out earlier than anticipated.
The harsh assessment was mirrored by several heavyweight CEOs at the Tokyo Motor Show. The major focus of the event has been next-gen concepts like hydrogen-powered cars and self-driving features, while execs such as Nissan's Carlos Ghosn have marginalized the future of diesel.
Many automobile industry insiders have noted that diesel was in decline due to the focus on emissions even before Volkswagen (OTCQX:VLKAY) rocked the industry with a cheating scandal.
The mix of technology, EV, hydrogen, and powertrain changes have kept analysts buzzing over the proper valuations to assign to major players. A reset of demand expectations in China also factors in significantly.
Auto supplier stocks look poised for a vibrant rally with global demand strengthening, notes Barron's.
A strong push by automakers to increase capacity and introduce new models with lower emissions could support the industry for years - while the race by OEMs to compete in China presents the group new opportunities.
Innovation in self-driving car technology and the growth in electric vehicles/hydrogen-powered cars might also factor in to help demand.
The auto supplier/parts trade could be relatively short-lived if a forecast from the chief economist from the National Automobile Dealers Association proves correct. Steven Szakaly thinks the U.S. can't support an annual selling rate of over 17M over the long term. Higher interest rates could be a spoiler, he notes.