Tag Archives: Sales

New Car Sales Down But Prices, Profits Up in December

December 23, 2021 admin

December sales are expected to be lower according to forecasts.

Depressed December new-vehicle sales may have automakers facing a blue Christmas, but retailers are seeing record high transaction prices.

That’s the takeaway from two new reports from J.D. Power and TrueCar. And unlike previous years, don’t expect a big sales blowout to clear the lots.

“Historically, December is a big month for the industry as OEMs and dealerships work to close out the calendar year with strong sales. The last week of the month is also typically the biggest week of the year in terms of sales volumes but it’s unlikely to happen this year due to continued inventory shortages and declining incentives,” said Nick Woolard, lead industry analyst at TrueCar.

December retail sales decline from 2020

A joint forecast from J.D. Power and LMC Automotive forecasts new vehicle retail sales this of 1,105,800 units this month. That’s a 17.4% decrease compared with December 2020, when adjusted for selling days. (This year has one fewer sales day than last year.) Without the adjustment, year-over-year sales dropped 20.4% in 2020.

Similarly, TrueCar predicts U.S. retail deliveries of new cars and light trucks to be 1,024,263 units, down 27% from a year ago and on par with November 2021.

That number excludes fleet sales. Fleet sales are even more depressed, according to TrueCar. The expectation for December 2021 is a 29% decrease in sales from a year ago and decline of 3% from November 2021 when adjusted for the same number of selling days.

Vehicles continue to be in short supply, with nearly 57% of vehicles selling within 10 days of arriving at a dealership. That’s a record, according to J.D. Power, which notes that vehicles remain on dealer lots for a mere 17 days, a record low, and down from 49 days a year ago. TrueCar pegs that number at 18 days, up from previous months, but still near historic lows.

The average new vehicle transaction price is expected to reach $45,743 this month.

Short supply fueling higher prices

The short supply of new vehicles is leading to higher average transaction prices.

“While the inventory situation has improved modestly since November, supply remains well below the level at which consumer demand for new vehicles can be met. Intense demand with this limited supply is resulting in prices continuing to increase,” said Thomas King, president of the data and analytics at J.D. Power.

King notes average transaction prices are expected to reach a record $45,743 this month, 20% higher than December 2020 and the first time that number has passed $45,000.

The higher prices are the result of reduced incentive spending by OEMs, with the average manufacturer incentive per vehicle totaling $1,598, a decrease of $2,291 from a year ago. That’s 3.5% of the average vehicle MSRP, down from almost 5.5% a year ago, according to King.

Automakers have drastically cut incentive spending, leading to higher prices.

TrueCar’s forecast a similar story, with automaker incentive spending down 55%. This is leading to an average transaction price projected to increase 7.5% from December 2020 and rise 2.5% from November 2021.

Incentive spending is tumbling, according to TrueCar. Year over year, General Motors cut its incentive spending 64.7%, the most of any automaker. Nissan cut its spending 57%, Hyundai 54%, Toyota 53.5%, Volkswagen Group 51.35%, BMW 47.3%, Stellantis 46.5%, Ford 41.8%, Kia 41.6%, Honda 40.9%, Daimler 37% and Subaru 31.9 percent. Subaru was lowest by dollar amount of the OEMs examined at $1,006. Daimler was the highest at $2,738.

Who’s benefitting most? Retailers

But retailers are benefitting from current market conditions. Although volume is lower, Dealers’ profit per unit — inclusive of grosses and finance & insurance income — is forecast to hit a record $5,258, up from $3,277 from a year ago. This has led to record dealer profits, which are projected to be up 254% from December 2019, reaching an industry aggregate revenue of $5.8 billion — an industry record.

The higher prices are leading to record retailer profits.

And the strong vehicle demand for new vehicles is fueling record used vehicle prices, which is giving buyers more equity on their trade-ins, with the average trade-in equity for December expected to reach $10,199, up from $4,623 from a year ago, and an 83% increase. That increased equity helps make pricier vehicles more affordable, as has a decrease in the average interest rate in December. It’s expected to decline nine basis points to 4.05 percent.

But increased equity and lower interest rates hasn’t helped fitting a car payment into the family budget. The average new vehicle payment is expected to reach $680, up $78 from December 2020, and a record high, according to Power. TrueCar paints a similar picture, with the average interest rate on new vehicles is 4.3% and the average interest rate on used vehicles is 7.5%. The average loan term for both new and used vehicles is 70 months.

2022 should be better than 2021

When it comes time total calendar year sales, expectations are for an improvement from 2020.

Supply should improve next year, but will remain near record lows.

“Full year 2021 will still show a solid sales increase from 2020. The year-over-year sales declines experienced every month in the second half of 2021 were not enough to wash the record sales pace in the first half of the year,” King said.

But it should improve during the next 12 months.

“Indications are that shipments will rise incrementally as the year goes on, allowing sales to rise from 2021 levels. However, pent-up consumer demand will keep inventory levels near historical lows,” King said.

TrueCar also sees inventories improving, but incrementally.

“We continue to see signals of stability and in some cases, slight improvement. One such indicator, our scarcity measure, shows improvement in recent months for both new and used vehicles,” said Valeri Tompkins, senior vice president of OEM Solutions at TrueCar. “However, questions still remain as to the trajectory of improvement we can expect to see in 2022.”

First Look: 2022 Rolls Royce Ghost Black Badge

October 28, 2021 admin

Who would have thought you could make the Rolls-Royce Ghost look so sinister?

Rolls-Royce revealed a new addition to the Rolls-Royce Ghost line-up in Miami Thursday — the Black Badge — during a North America dealer meeting that saw about 100 retailers meet with the automaker’s top executives.

The automaker revealed the new model to dealers at the Mad nightclub in the hip and trendy Wynnewood section of Miami, and will do the same for customers later this week.

“We just felt this was very Black Badge,” said Richard Carter, director of communications for Rolls-Royce Motor Cars. “It’s very, noir; It’s very alternative; and that’s the essence of Black Badge.”

The Rolls-Royce Ghost Black Badge expands a line-up that began with the Wraith coupe, followed by the Phantom sedan in 2016, the Dawn cabriolet in 2017 and the Cullinan SUV in 2019. The murdered-out Black Badge models now account for more than 27% of Rolls-Royce sales worldwide, including 40% of Cullinan sales.

The darker side of opulence

To realize the Ghost Black Badge’s menacing demeanor, the company uses 100 pounds of the industry’s darkest black paint. The Spirit of Ecstasy and Pantheon Grille are darkened using a chrome electrolyte applied during chrome plating. The new model wears exclusive 21-inch wheels with as many as 44 layers of carbon fiber.

The 2022 Rolls-Royce Ghost Black Badge can be had in more that 44,000 different hues, although most Black Badge customers choose black.

As you’d expect, interior components are darkened including air vents and the wood veneer, along with Black Badge badging and other unique interior touches, although clients are free to specify any number of colors and trim to be used on the car’s interior.

Engineers also contributed, fitting larger air springs to alleviate body roll during assertive cornering. There’s also roughly 29 additional horsepower and a revised transmission to make the Black Badge a bit more athletic. They also reduced brake pedal travel.

A quick turn behind the wheel of pre-production prototypes revealed a car that can be driven more aggressively than your average Ghost. Grip is impressive while cornering, staying firmly planted despite some noticeable body roll. Body motions never become excessive, and rebound over bumps is very well controlled. Yet its agility doesn’t come at the expense of the brand’s legendary comfort.

An idea born in Beverly Hills

The idea of Black Badge occurred in 2014 in Beverly Hills.

“This whole notion of the alter ego of Rolls Royce, the slightly noir, naughty, edgy side of Rolls Royce is something that we were thinking about. We were looking at ways and means of lowering the age profile of our brand,” Carter said.

The Pantheon Grille and Spirit of Ecstasy also receive the Black Badge treatment.

At the time, the brand had one model, the Phantom, and an average buyer’s age of 57. “We were selling one model to a dying set of customers, and there was no future in that,” he said.

At the time, the company was about to release the first-generation Ghost, followed by its two-door spinoff, the Wraith, both of which would attract younger buyers. But the company needed more. They were searching for an idea, but hadn’t settled on anything yet.

Torsten Müller-Ötvös, chief executive officer, Rolls-Royce Motor Cars, was waiting for a car to pick him up at the SLS Hotel in Beverly Hills when a murdered-out Phantom Coupe pulled up. Ötvös was stunned, and asked the owner why he modified his Phantom.

“He told me over the weekend, that he wants to be a different kind of character,” Ötvös said. “For some of the week, he is friendly and nice. But over the weekend, he wants to be something different. He enjoyed playing a different role; how he was dressed, looked and talked.”

A couple weeks later, Ötvös had similar experiences particularly in the United States, particularly in California. This led to the creation of Black Badge at a time where murdered-out cars weren’t mainstream.

A surprising success

The Ghost Black Badge is revealed for the first time at the Mad nightclub in Miami.

Initially, executives expected Black Badge models to have a 10%-15% take rate. But they were mistaken. It turned out to be a stunning success, with a far higher take rate. Currently, Black Badge represents 40% of Cullinan sales. Black Badge, along with new models like Ghost, Wraith and Cullinan, have brought the average Rolls-Royce buyer’s age down to 43, quite a large drop in a little less than a decade.

“We are even younger than Mini as a brand in the BMW Group,” Ötvös said, who then explained that the type of wealthy car buyer has changed.

“When you look into ultra-high net worth individuals, those people who are our target group worldwide, they became younger and younger over time because the way to generate wealth is very, very different from what it used to be 15-to-20 years ago.”

Rolls-Royce sees its Black Badge line as one that appeals to iconoclasts, a type of buyer that the brand has always attracted, particularly during the pre-World War II years, when all coachwork was custom built.

“Black Badge was the most instrumental piece we had in an all-new brand strategy to massively decrease the average age and illuminate the brand in a significant way,” Ötvös said.

Mission accomplished.

First Look: Mitsubishi Outlander PHEV

October 28, 2021 admin

The new Mitsubishi Outlander already has proven to be one of the most important products the long-struggling automaker has launched in its bid to become relevant to U.S. motorists again. Now, Mitsubishi is hoping to gain even more traction with the upcoming launch of a plug-in hybrid version.

2022 Mitsubishi Outlander Hero Image — The gas-powered 2022 Mitsubishi Outlander made its debut in February.

The Japanese automaker claims it will yield more range than the old Outlander PHEV, at an estimated 87 km, or nearly 55 miles, per charge — though that’s using the global WLTP test cycle and will likely come down once the American version is tested by the EPA.

“With low (carbon dioxide) emissions and environmental impact from manufacturing and use,” said Takao Kato, MMC’s president and CEO, “the all-new Outlander PHEV model can be considered the best solution for carbon neutrality today.”

Updated, upgraded drivetrain

The Outlander was first introduced in 2001 and, with the fourth generation, it has become a core part of the brand, accounting for about 20% of its global volume. The first plug-in hybrid version was unveiled at the 2012 Paris Motor Show. It produced a combined 197 horsepower by pairing a 2.0-liter inline-4 gas engine with twin 60-kilowatt electric motors drawing power from a 12 kilowatt-hour lithium-ion battery pack.

The new Outlander PHEV gets numerous powertrain upgrades, though the automaker isn’t releasing hard specs yet. In a statement announcing the new vehicle it said the plug-in gets “an increase of around 40% in the output of the front and rear motors and drive battery.” The lithium-ion pack, it did note, jumps to 20 kWh. The gas engine, added a spokesman, is a “slightly updated” version of the old PHEV’s 2.4-liter package.

Mitsubishi Outlander PHEV charging port 2022 — The new Outlander plug-in hybrid will arrive in the U.S. in the second half of 2022.

Mitsubishi also revealed, “The power drive unit for the front motor is newly equipped with a booster function which bolsters driving force by raising the supply of voltage to the front motor while simultaneously improving electricity consumption by raising the efficiency of the generator.”

Third row added

The automaker also took steps to downsize some of the hardware, notably the rear motor and control unit. As a result, the new plug-in will gain room for a third row yielding space for seven occupants.

The drive system now will allow One-Pedal Driving, as well, a feature that effectively allows motorists to minimize the need to jump from throttle to brake when driving in light to moderate traffic. That feature was found to be extremely popular with EV owners, according to the recent J.D. Power Technology Experience Index.

With only modest tweaks, the plug-in adopts the same exterior and interior design as the gas-powered Outlander. The overall strategy is based on a concept dubbed “I-Fu-Do-Do,” which means “authentic” and “majestic” in Japanese.

New design

Mitsubishi Outlander PHEV badge 2022 — The new Outlander PHEV is expected to travel more than 55 miles in electric-only mode.

The fourth-generation Mitsubishi Outlander adopted a new styling language called “Dynamic Shield.” Up front, it features a more upright nose with a pinched, dual-level grille and stacked headlamps. From the side, the SUV features a more deeply sculpted silhouette with a bit of a floating roof element.

The automaker clearly wanted to give the new Outlander a more solid and robust look, with such touches as 20-inch wheels and tires and what it calls the Hexagon Guard rear end.

The new SUV grew larger in virtually all dimensions, the width expanding by 2 inches. That means the cabin of the new Outlander is both wider and more spacious than the outgoing model, Mitsubishi adopting more upscale materials and features like tri-zone climate controls, real aluminum panels and a 12.3-inch touchscreen infotainment display.

The gas-powered Outlander is powered by a 2.5-liter inline-4 that bumped up power by 8.9 percent. At the same time, it reduced fuel consumption by 2.6 percent.

Pricing TBD

Many of the features from the current model are expected to carry over into the PHEV, though Mitsubishi hasn’t provided specific details. The gas model offers Hill Descent Control and Trailer Stability Assist. A Multiview camera system helps drivers see what’s around the vehicle, whether on-road or off. Other features for the new Mitsubishi Outlander include a power-operated panoramic roof and an electrically operated tailgate that can be opened with a kick of the foot under the rear bumper.

Pricing for the gas model starts at $25,795 — plus $1,195 in delivery fees. Pricing for the PHEV is expected to run higher, though the numbers won’t be released until closer to sales launch. That holds for a variety of other specs, including U.S. range, power and performance.

“Sales will commence in Japan on Dec. 16, followed by Australia and New Zealand in the first half of 2022 and North America in the second half of 2022,” Mitsubishi said in a statement. While it did not offer specifics, that would suggest that the Outlander PHEV will be marketed as a 2023 model in the U.S.

Q&A: Mercedes-Benz CEO Ola Källenius

October 11, 2021 admin

When the Mercedes-Benz EQS rolls into showrooms later this month it will become the luxury brand’s first all-electric vehicle targeting the U.S. market. But it certainly won’t be the last. If anything, Mercedes plans to roll out a broad line-up of battery-powered products, from the little EQB crossover to an all-electric version of the big G-Class SUV.

Kallenius speaking 2021 — Mercedes-Benz Cars CEO Ola Källenius is leading the company through one of its biggest transitions in its history. He talks with TDB.

Until a few years ago, Mercedes put its primary focus on diesel, but it changed direction in the wake of an embarrassing emissions scandal — and in the face of increasingly stringent global emissions standards. By 2025, the goal is to have plug-in hybrid and all-electric models account for 50% of the company’s worldwide sales. By 2030, CEO Ola Källenius announced in July, the target is 100% BEVs “where market conditions allow.”

The Swedish-born executive — the first non-German to helm Mercedes since it was founded — is a true believer in electrification, as he made clear during a virtual interview with TheDetroitBureau.com and a handful of other journalists.

TheDetroitBureau: From your perspective, how has the (industry’s) approach to electrification changed? It appears things are ramping up at a faster and faster pace. Why is that happening?

Källenius: If we look back in history, when one technology replaced another … for the longest time, it seems like nothing is happening. Then, it happens all at once and the whole market flips. It goes very fast. If you miss that point that can be very unfortunate for your business with the development cycles we have in the auto industry. From the first stroke of a pen to have the first vehicles from a completely new architecture (is) usually a four- or five-year process. So, we are now upping the bet.

TDB: But why such a big investment?

Källenius: I’m ever so slightly biased but I think the EQS is a phenomenal vehicle and can imagine what the electric car will look like 10 years from now. I think there’s optimism in terms of the technology, with better energy density on the battery side. Cost are scaling (down) and we’re pushing to an inflection point where the new technology will be superior to what we have now.

Mercedes CEO Ola Kallenus with an assortment of new and upcoming EVs and PHEVs — Källenius with an assortment of new and upcoming EVs and PHEVs.

Drivers of change and acceptance

TDB: Is the shift being driven by new regulations?

Källenius: Partly, it is regulatory driven, but it’s through one common purpose we have as mankind, to solve the CO2 problem. It’s not going to go away. Climate change is real and the Paris Agreement is the right thing to do. It’s a Herculean task for humanity, a complete paradigm shift over to new energy sources. A company like Mercedes, in the luxury car (market), can be on the forefront of such a shift.

TDB: What is the key obstacle to consumer acceptance? Is it the lack of a solid charging infrastructure?

Källenius: Something that could make this happen a little faster or a little slower is the infrastructure. People aren’t going to (drive) less. In fact, we believe people are going to (drive) much more 10 years from now. So, here, industry and government need to work hand-in-hand to put in (a charging) infrastructure. The quicker that happens, the quicker the shift. In markets that don’t do this, it will be an obstacle that makes the transition to EVs go slower.

TDB: It certainly appears investors want automakers to shift to electric.

Källenius: Every conversation that we have with investors, even rating institutes like Standard and Poor’s and Moody’s, the financial markets have made up their minds. It’s going to be increasingly difficult to find capital to invest in (internal combustion) technology, and everybody is betting on the new technology so in a way the market economy and allocation of capital is pushing this forward.

2022 Mercedes-Benz EQS 580 4Matic - by lighthouse — The EQS is leading Mercedes move into the all-electric future, signifying the company’s commitment to that path.

New set of competitors

TDB: Not only do you have to compete with legacy automakers but you have to now start competing with this wave of EV startups, what’s the unique challenge there when it comes to competing with nascent EV makers? How do you compete with them?

Källenius: It’s natural that new players look at a market and enter and so the competitive intensity in this decade will likely be higher than what we have experienced in the past. We are taking the usual suspects seriously, as well as the new kids on the block. You cannot run around like a headless chicken chasing this that or the other company, you’ve got to know who you are. In this situation you cannot rest on your laurels, you have to look forward. So, what we need to do is to double down on technology, primarily electric drive and software and the connected vehicle and autonomous driving. But, at the same time, (we must) deliver what everybody expects from a Mercedes, you know this sublime ride and drive the equation to detail this superior aesthetic quality. If we hit the spot (and) deliver on both innovation and the luxury aspects of the Mercedes brand, that’s how we think we can win the competition.

TDB: You have been a powerhouse in the all-electric Formula-E series. What are your future plans?

Källenius: We won the championship this year and we’re going to have one more season, but beyond that season, we’re focusing everything on Formula One. We’re going to turn to synthetic fuels so we can run the whole race carbon neutral. I’ve been to a few Formula E races myself and enjoyed it as a racing fan, but if you would take one of those cars and go to Spa, you would maybe do a lap and a half and then it would be over. So for those who are, you know, hardcore racing fans at heart, you can’t replace (traditional racing cars with electric).

2023 Mercedes EQE 350 - front 3-4 driving — The new EQE is the battery-powered alternative to the marque’s classic E-Class sedan.

TDB: Can you talk about the role of electrification in motor sports?

Källenius: I actually had the privilege back in 2008 to develop the very first performance hybrid for Formula One. And now we are (more than) 10 years later, and you can’t win the world championship, unless you have the best performance hybrid system. And what we’re now launching in the AMG GT is the first road version of that technology. It will be on many of the AMG cars that we’re going to launch in the next two to three years. Formula One is the most sophisticated high performance Lab in the world.

TDB: This raises the subject of EV performance. It appears that one of the things drawing people to EVs is the great performance they offer.

Källenius: The great thing about an electric motor is that the torque is instantly available, and you have a lot of torque. So, at a red light, we all feel like we’re driving an AMG GT, right. You have this instant punch. Maybe you saw that we bought the UK company, Yasa, that is developing an electric motor with an absolutely phenomenal power-to-weight ratio. So there will be there will be a performance dimension beyond just being quick at the red light.

Advanced technology pros and cons

TDB: You’ve introduced the Hyperscreen in the EQS (which covers virtually the entire instrument panel with video screens). Do you think they’ll ever be a move back towards more simplification for an older demographic that can’t take advantage of most of what it can do?

Ola Källenius with Hyperscreen — Källenius said the the future of vehicles is going to look a lot more like the Hyperscreen than with knobs and buttons.

Källenius: I read an article the other day in a Swedish supercar magazine and the chief editor wrote an article where he says I hate screens. Give me the knobs back, the buttons and the knobs. But I’m afraid that’s probably not going to happen. And it’s not specifically tied to the electric car and we’re not doing some different level of digitization in our combustion based vehicles and our electric vehicles, per se. We need to make (technology) more intuitive and easy to use, but we’re not going back and put 50 different knobs and buttons in the car. I just don’t see that.

TDB: Who is the most difficult person to convince (about) electrification?

Källenius: People that buy a G Wagen, an S-Class, or maybe an E … they usually are technology and innovation-minded, and also appreciate luxury aesthetics. They are naturally going to drift to whatever is the next level technology. I think there is some skepticism, but I think it will recede.

TDB: What are you going to do about recyclability of materials?

Källenius: Next to the challenge of CO2 for us, as an industry, is the circular economy, what we call resource preservation. It’s hugely important. Our vehicles, already today, are 95% recyclable. That doesn’t mean we already use 95% of the material. But we put in in our books to raise the amount for every new vehicle, and for beyond the usual candidates like steel. Recycling has to get into the polymers and other things inside the battery cells, no doubt about it.

TDB: One last question. You have the new EQS sedan, but you’ll also have an EQS SUV next year. And the same with the EQE. Won’t that create some branding confusion?

Källenius: Yeah. There are probably PhD thesis documents in marketing talking about nomenclature on the part of Mercedes. When I was in marketing and sales we said let’s clean this up once and for all, and we thought we did. Could we have done a GL QS or something like that (instead of EQS SUV)? We thought it was so obvious when you see the vehicle, you know whether you’re buying an SUV or a sedan. But maybe we didn’t succeed.

Slow Tease of Fifth-Gen Acura Integra Continues with New Photo

September 28, 2021 admin

Acura’s move back to the future continued today with another glimpse at the next-generation model of the Integra compact sports car. The second photo released by the brand offers a pretty good look at the rear of the vehicle.

2022 Acura Integra Teaser — Acura’s been teasing the return of the Integra in 2022. The first picture was of the headlight above.

From the photo, it’s easy to see that it will definitely come back offering at least a four-door model, although the original came in both two- and four-door versions. This isn’t a compact car that goes fast, this is a compact sports car based on the long, low roof line.

It’s going to look pretty athletic based on the rear haunch of a quarter panel that blends into the taillights that sweep from the side of the car down across the back. That wide almost-expansive look carries over to the rear bumper runs from partway up each side of the car and across in a simple, sharp curve.

Honda’s sports and luxury brand first reintroduced the idea of the Integra’s return in the middle of August, as part of its return to conventional nomenclature.

At an event in Monterey, California leading up to the weekend’s Pebble Beach Concours d’Elegance, the Japanese automaker sent a flock of drones into the sky where they formed into the shape of the original 1986 sports coupe. Moments later, they transformed into a silhouette of what will be the next-generation Integra — and the number “2022.”

Soon afterwards, the automaker confirmed, “The Integra is back,” Jon Ikeda, vice president and Acura brand officer, declared. “I’m thrilled to say Integra is returning to the Acura line-up with the same fun-to-drive spirit and DNA of the original, fulfilling our commitment to Precision Crafted Performance in every way — design, performance and the overall driving experience.”

Chip Shortage’s Cost Doubles to $210 Billion

September 23, 2021 admin

The financial impact of the semiconductor shortage continues to grow and now stands at an estimated $210 billion dollars in lost automotive revenues, according to a new study.

Hyundai Santa Cruz line worker — Automakers are expected to lose even more vehicles to the chip shortage this year.

That’s nearly twice the $110 billion financial hit initially forecast by AlixPartners in May and reflects the increasing likelihood automakers will continue struggling to find the chips they need through at least the early part of 2022. Industry leaders had been hoping the issue would be resolved by this autumn. The continuing shortages will impact car buyers and carmakers alike, experts warn.

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, the co-leader of the automotive practice at AlixPartners.

The impact thus far

Eight General Motors plants — four in the U.S., three in Mexico and one in Canada — were idled this month for two weeks or more due to a lack of semiconductors. Among Detroit’s automakers, Ford and Stellantis have repeatedly idled plants with the shortage routinely impacting some of their most profitable product lines, including full-size pickups like the Ram 1500.

Ford F-150s at Rouge Plant — Ford loses nearly $1B for each 100K F-Series trucks it loses to the chip shortage.

Last month, as Ford again trimmed back operations at its F-Series lines, Morningstar analyst David Whiston estimated the carmaker will lose about $4.7 billion in revenue for every 100,000 of the trucks it has to cut from its production schedule. On an EBIT basis, the loss, he wrote in an Aug. 13 report, will come in at $937 million. Ford has so far lost well over 100,000 of the trucks.

During an event at Ford’s new Electric Vehicle Center in Dearborn, Michigan last week, Kumar Galhotra, president of its Americas operations, said he expects the chip shortage to continue through sometime next year.

Not just local, but global problem

Stellantis Windsor line 2020 — Stellantis shut down its Windsor plant due to the shortage on more than one occasion.

The crisis isn’t limited to the U.S. In fact, virtually every automaker, from Berlin to Beijing, has been impacted. All told, the new AlixPartners study estimates that the gloabl industry will lose production of about 7.7 million vehicles this year. In May, the consultancy put the figure at 3.9 million. Automakers went into the year expecting to build 84.6 million cars, trucks and crossovers, the figure now falling to an estimated 76.9 million.

That comes as a major setback for an industry that saw a chance to recover from the pandemic-fueled recession of 2020 that saw sales briefly fall to deep recessionary levels that spring. In the early months of 2021, demand for new vehicle in the U.S. actually reached some of their highest levels since the Great Recession. But recent months have seen sales tumble sharply.

Dealer inventories are running barely a third of what is considered normal this time of year, with barely 1 million vehicles on showroom lots, according to J.D. Power and other researchers. Toyota sales chief Bob Carter said earlier this month that there is barely a 10-day supply of some of the brand’s most popular models, like the Tacoma pickup. The industry norm runs north of 60 days.

Prices rise on ALL vehicles

Wentzville Assembly — GM’s shut down eight plants in North America due to the semiconductor issue at various points.

The impact on consumers has been nearly as tough as on the auto industry. The average transaction price — what motorists actually end up paying to drive off the lot — has surged to record levels in recent months, around $42,000, reports Cox Automotive. And that’s if consumers can track down what they want, many popular vehicles being all but impossible to find. As TheDetroitBureau.com recently reported, some motorists are paying $5,000 or more above sticker for the more popular products, like the Kia Telluride, the Ford F-150 and the Chevrolet Corvette.

Used car prices also surged to record levels during the first half of this month, according to tracking service Manheim.

Vehicle shortages date back to the two-month shutdown of North American automotive manufacturing in spring 2020 due to COVID-19 lockdowns. At that time, manufacturers slashed orders for semiconductors, anticipating the downturn in car sales would last through at least the end of last year. Instead, as the market rebounded, manufacturers tried restoring orders for chips. But they found the consumer electronics industry gobbled up those supplies. Now, automakers are stuck at the back of the line.

While there has been some improvement, the semiconductor industry isn’t expected to be able to meet automotive demand for months to come.

As bad as the chip crisis might be, “Chips are just one of a multitude of extraordinary disruptions the industry is facing,” said AlixPartners’ Wakefield, “including everything from resin and steel shortages to labor shortages. There’s no room for error for automakers and suppliers right now; they need to calculate every alternative and make sure they’re undertaking only the best options.”

As a result, automotive factories could be operating in fits and starts, the consultancy warned, for some time to come.

Dealers Running Dry, Even as GM Set to Halt Production for Two Weeks

September 3, 2021 admin

The shortage of microchips continues to drag on, forcing General Motors to idle virtually all of its North American production operations for as long as two weeks — though the automaker could yet extend this latest shutdown.

GM is just one on a long list that includes virtually every automaker hit by the shortage — and its impact is being felt just about everywhere, from Stuttgart to Detroit to Beijing.

Industry planners hoped to put the shortages behind them by now. Barely a month ago, GM had signaled it had come up with new sources for some of the chips it needed. But that clearly didn’t meet its requirements.

No light at the end of this tunnel

The automaker will either close or extend closures at plants, such as the one in Wentzville, Missouri producing its Chevrolet Colorado and GMC Canyon pickups, another in Canada building the Chevy Equinox SUV, and the Ramos Arizpe facility in Mexico that assembles products like the Chevy Blazer SUV. All four of its North American brands will feel the heat.

Like some of its competitors, the automaker had been partially assembling vehicles, where possible, and then storing them until it could come up with the missing chips and electronic components. So, in some instances, GM will try to take advantage of the upcoming closures. It has secured enough chips, in some cases, to let it “repair and ship unfinished vehicles,” it said in a statement.

It was not revealed just how much production GM will lose due to the coming closures but some of those plants routinely produce more than 60 vehicles an hour on two or three shifts, many working overtime — when possible — to help rebuild inventories already drawn down as a result of last year’s pandemic closures.

Empty lots

Company officials indicated GM dealers now have barely half their normal stock of cars, trucks and crossovers which, this time of year, would run between 60- and 70-days’ supply.

Among the dealers TheDetroitBureau.com talked to, some indicated they have less than 10 vehicles in stock and are not sure when they will get more, especially when it comes to popular product lines like the Chevrolet Silverado and GMC Sierra pickups.

And they’re not alone. Toyota has barely 10 days worth of some of its most popular vehicles, like the RAV4 SUV. The automaker last month warned it would cut global production by 40% this month, so shortages could, if possible, get even worse. In recent days, Stellantis, Nissan and Ford, among others, have announced further cuts.

GM Ramos Arizpe plant — The company is idling its Ramos Arizpe facility in Mexico where it builds the Chevy Blazer.

Consumers paying the price

In turn, customers have been forced to either wait, extend their search or, in many cases, pay at or above sticker price. Some social media reports have highlighted dealer surcharges ranging anywhere from $5,000 to as much as $40,000 above MSRP.

That helped drive average transaction prices to a record of more than $41,000 in July, according to Cox Automotive, J.D. Power and other analysts. The figure is widely expected to have run even higher in August.

Sales for the month came in at an estimated, annualized rate of about 13.1 million, down from as high as 18.5 million earlier in the year.

The Labor Day weekend is normally one of the busier holidays at U.S. dealer showrooms but there is little hope, according to industry insiders, that it will generate anywhere near the normal levels seen in past years.

Mercedes Confirms U.S. Won’t Get Most V-8 Models for 2022 Due to “Supply” Issues

August 16, 2021 admin

If you’re wanting to buy a new vehicle in the U.S., expect to wait quite a while if you go looking for a Mercedes product with a V-8 engine this coming model year. The automaker confirmed Monday social media reports that it has delayed production of products such as the GLE 580 SUV and E 63 sedan due to supply chain issues.

2021 Mercedes-Benz S 580 best — Mercedes confirmed it’s halting the sale of V-8 models in the U.S. for the 2022 model year due to supply chain issues — except the S 580.

The cuts by Mercedes come at a time when the auto industry, overall, is struggling to deal with shortages of key parts and components. These include not only semiconductor chips, but also some rubber and petroleum-based goods. Nissan recently announced it would halt production at its big Smyrna, Tennessee plant through late August, while Ford revealed deliveries of the Mustang Mach-E battery-electric vehicle could be pushed back by more than a month due to supply issues.

With only a few exceptions, Mercedes has advised U.S. dealers they won’t be getting V-8 models for the 2022 model year. That includes all versions of the G-Wagen SUV, and most — though not all — of the high-performance Mercedes-AMG models.

Only two V-8 models exempted

The news first was reported by a Reddit user citing a notice sent to U.S. dealers last week. It indicated that a broad swath of the product lines sold by Mercedes-Benz USA would be affected, including: the C 63, GLC 63, E 63, G 550 and G 63, GLE 580, GLS 580, GLE 63, GLS 63, and the GLS 600 Maybach.

2022 Mercedes-Maybach S 680 front — The newest Mercedes-Maybach is also exempt from the temporary stoppage on V-8s.

Only two V-8 models sold in the U.S. will remain available: the new S 580 and S 580 Maybach. Those two are critical offerings as they effectively underpin the launch of the latest-generation S-Class line that is just coming to market.

While Mercedes officials declined to go on the record to discuss the issue, several confirmed on background the general accuracy of the Reddit report, and a representative sent TheDetroitBureau.com a statement noting:

The company’s prioritized focus to comply with various global, external and internal requirements, as well as several other factors, including but not limited to challenges in the supply chain, have an impact on the offering of the product portfolio in various markets.
Mercedes-Benz is exploring every opportunity to solve the challenges at hand as soon as possible.
We will be working closely with our dealers and customers to help alleviate any inconvenience resulting from delays.

A body blow to U.S. sales

The 2022 Mercedes-AMG GLC 63 S is a no-go in the U.S. for the foreseeable future.

U.S. dealers have been told stop selling V-8 models. Making matters tougher for retailers, they now must advise customers who have already placed orders that their vehicles won’t be delivered, at least not anytime soon.

Mercedes has long battled for supremacy in the U.S. luxury market with rivals BMW and Lexus. Unless it can convert most customers to vehicles using 4- and 6-cylinder models — or the new electric offerings set to launch later this year — it is likely to become just an also-ran in the American market in 2022. Then again, those competitors have been facing supply issues of their own, particularly when it comes to semiconductors.

For the moment, the problem appears to be limited to the United States, the second-largest global market for Mercedes. It vies with China as the top outlet for V-8 models and, in particular, for AMG-badged products.

Other markets could be impacted

Reports have appeared in several overseas publications indicating other markets may face the loss of V-8 models, as well. The automaker did not comment on whether that might happen.

In the wake of last year’s pandemic-related moves, automakers have been struggling with a variety of issues, including shortages of various materials, parts and components. The chip shortage has been the biggest issue and is expected to reduce global vehicle sales by millions this year. Virtually every manufacturer, large and small has so far been expected. The semiconductor issue is expected to continue through at least late this year, if not well into 2022.

Toyota Giving Avalon Sedan the Ax After ’22 Model Year

August 2, 2021 admin

Toyota spruced up the Avalon with the Nightshade package for 2021. It’s ending production after the 2021 model year.

Everybody’s buying crossovers, sport-utilities and trucks these days, but officials within Toyota’s North American operations consistently maintain the company is happy to remain one of the top producers of sedans — but it’s cutting the Avalon from its line-up after the 2022 model year.

The move, first reported by Automotive News, was outlined in a letter to suppliers, and later confirmed by the automaker. The sedan is built at Toyota’s plant in Georgetown, Kentucky. It will leave the company with four sedans, one of which is the Mirai, the company’s fuel-cell model that sells in very low volume right now.

The Avalon is the Japanese brand’s largest offering in the segment. Refreshed in 2019 and due for an update next year, the fifth-generation model is selling well this year, up 36.6% through the first six months of the year. However, of the five sedans in the company’s line-up, it was the laggard, trailing Camry, Corolla and Prius.

In fact, the Prius sold 28,000 more units through June than the Avalon. However, it did outperform one four-door model: the aforementioned Mirai. However, the fuel-cell sedan — by percentages — smoked the Avalon, seeing a 664.1% jump in first-half sales.

The Avalon’s been the brand’s flagship model for 26 years.

We like sedans

Last week, Toyota’s U.S. sales chief Bob Carter reiterated the company’s commitment to the segment during an online meeting with reporters.

“As a company — both Toyota and Lexus — we sold nearly 70,000 sedans last month,” he said. “Compare that to the other companies out there, that’s a very dominant number. There are consumers out there, even at 20% of the industry we’re looking at 4, 4.25 million sales out there so there is a market.”

Carter conceded the profits may be lower on those vehicles, but “it is a profitable business for us.” However, it’s the large car segment that may be suffering the most in the sedan market, and the Avalon was also a laggard there too, outselling only the Nissan Maxima in the first half of the year. Plus, the top sellers in the very small segment are essentially muscle cars: the Dodge Charger and Chrysler 300C.

New EV and Hybrid Sales Remain Hot But Value Can be Found in Used Market

July 28, 2021 admin

Sales of new electrified vehicle sales jumped more than 200% during the second quarter as gas prices remain high.

2017 Toyota Prius Prime — The Toyota Prius Prime plug-in hybrid is one of the best deals on a used hybrid or EV for $20,000 or less.

With the prices of new vehicles rising across the board, potential EV or hybrid buyers looking for a deal need only wander over to the used car lot, says Kelley Blue Book. The website cobbled together what it views as some of its best deals on used electrified vehicles for less than $20K and $15K.

The average new vehicle sold for a little more than $42K in June and used vehicle prices topped $25,000 that month. Those numbers have been on the rise for all of 2021 and are unlikely to change anytime soon as the chip shortage is expected to continue through the end of the year.

So, if you want to save on gas and on the price of your EV or hybrid, “previously owned” is where its at, say the experts.

Finding a deal

“One of the most underrated deals is to buy a used hybrid, plug-in hybrid, or all-electric vehicle,” said Matt DeLorenzo, senior managing editor for Kelley Blue Book. “Alternative-power vehicles have been on the market for 20 years now, so these models are well-established and have proven reliability.

“There also are plenty of choices out there — an attractive option to consider, since currently there is a major shortage on new-car inventory across the board. Buyers of a used electrified vehicle certainly will save money at the pump, and some can even skip the gas station entirely.”

The 2018 Nissan Leaf can be had for less than $20K and offers a range of 151 miles.

Most of the best deals are on hybrids because they are far more prevalent than EVs, which until recently accounted less than 3% of all new vehicle sales. However, the vehicles making the lists are solid performers in terms of reliability and fuel economy.

Best deals under $20,000

Kelley Blue Book’s 10 Best Used Hybrids and EVs Under $20,000 for 2021 include:

2017 Toyota Prius: Fuel Economy: 52 mpg combined and a range of 588 miles
2017 Toyota Camry Hybrid: Fuel Economy (LE): 40 mpg combined and a range of 680 miles
2016 Toyota RAV4 Hybrid: Fuel Economy: 32 mpg combined and a range of 474 miles
2013 Toyota Highlander Hybrid: Fuel Economy: 28 mpg combined and a range of 482 miles
2015 Honda Accord Hybrid: Fuel Economy: 47 mpg combined and a range of 602 miles
2015 Lexus ES 300h: Fuel Economy: 40 mpg combined and a range of 688 miles
2017 Chevrolet Bolt EV: Fuel Economy: 119 MPGe combined and a range of 238 miles
2018 Nissan Leaf: Fuel Economy: 112 MPGe combined and a range of 151 miles
2017 Chevrolet Volt: Fuel Economy — first 53 miles: 106 MPGe combined; next 367 miles: 42 mpg combined and a range of 420 miles
2019 Kia Niro Hybrid: Fuel Economy: 49 mpg combined for a range of 583 miles

The 2015 Toyota Camry Hybrid was named a best deal under $15K by KBB.com.

Best deals under $15K

Kelley Blue Book’s 10 Best Used Hybrids and EVs Under $15,000 for 2021, including:

2015 Toyota Prius: Fuel Economy: 48 mpg combined and a range of 571 miles
2014 Toyota Camry Hybrid: Fuel Economy: 40 mpg combined and a range of 680 miles
2015 Honda Civic Hybrid: Fuel Economy: 44 mpg combined and a range of 581 miles
2015 Chevrolet Volt: Fuel Economy — first 38 miles: 98 MPGe combined; next 342 miles: 37 mpg combined and a range of 380 miles
2017 Nissan Leaf: Fuel Economy: 112 MPGe combined and a range of 107 miles
2014 Kia Optima Hybrid: Fuel Economy: 37 mpg combined and a range of 636 miles
2015 Hyundai Sonata Hybrid: Fuel Economy: 37 mpg combined and a range of 684 miles
2017 Toyota Prius C: Fuel Economy: 46 mpg combined and a range of 437 miles
2015 Ford Fusion: Fuel Economy: 41 mpg combined and a range of 554 miles
2016 Volkswagen Jetta Hybrid: Fuel Economy: 44 mpg combined and a range of 524 miles