Cars and Drivers

Ford Wrecking Ball Runs Up and Down Auto Sector

Jon C. Ogg

Published: July 28, 2016 1:25 pm

Last Updated: January 13, 2020 5:09 am

What happens when Ford Motor Co. (NYSE: F) has its worst trading day in about five years? The talk is that peak auto has been seen, and this has potentially bad implications for not just Ford. It turns out that parts and component makers, car dealerships, even radio systems and interiors have a lot to worry about. This goes much farther than just being a Ford or a Big Three issue.

24/7 Wall St. already covered Ford’s earnings report in depth. It was a problem of guidance, China and some slowing trends, despite total revenues still being higher than in the second quarter of 2015. The commentary about seeing risks challenging achieving guidance and the entire Ford team working to mitigate the risks started this snowball rolling down the hill.

Ford shares were down 9.6% at $12.50 on 91 million shares after three hours of trading on Thursday. Despite another three and a half hours before the close, that was already almost three days worth of volume on an average trading day.

The real question is what it means further down and up the whole supply and retail chain around auto-makers and their tangent areas. Four stocks stood out, which you might expect, or might not suspect, fell with Ford. As a reminder, the Dow was down less than 0.3% and the S&P 500 was down less than 0.1%.

BorgWarner Inc. (NYSE: BWA) was lower by 5.5% at $32.34, but it was still not at a full day’s worth of volume yet. Its market cap is $7 billion, and its 52-week trading range is $27.52 to $50.51. BorgWarner makes multiple products for automotive systems and components targeting powertrain and drivetrains.

Group 1 Automotive Inc. (NYSE: GPI) was last seen down 2.5% at $57.53, but on light trading volume. Group 1 has a market cap of almost $1.3 billion and a 52-week range of $47.31 to $97.34. Its consensus analyst price target is $72.50. At the end of 2015, Group 1 owned and operated 199 franchises, 152 automotive dealerships and 35 collision centers, and its sales force represented 32 brands of automobiles.

Goodyear Tire & Rubber Co. (NASDAQ: GT) was last seen down 2.1% at $28.48, wiping out half of the prior day’s post-earnings gains. The rationale here seems simple enough: lower car sales, fewer tire sales. Goodyear’s 52-week range is $24.31 to $35.30, and its market cap is $7.6 billion.

Sirius XM Holdings Inc. (NASDAQ: SIRI) is an obvious loser here if we have seen peak auto. Still, it already said it has over 25 million subscribers when it reported. Shares were last seen down 1.5% at $4.33. The market cap is $21.2 billion, and the 52-week range is $3.29 to $4.43. Just keep in mind that Sirius XM is almost 100% a North American play, and as long as consumers are buying some cars, chances are high that the company wins — with Ford or without.