AD #1543 – Big Money Invests In Autos, January Sales to Thaw, New Raptor Will Have More Bite
January 27th, 2015 at 11:55am
Runtime: 8:21
- Big Money Big Into the Auto Industry
- TI Automotive Acquired by Investment Firm
- January Car Sales Expected to Thaw
- Toyota to Help Produce Mini Mini
- New F-150 Raptor Will Pack More Punch
- You Said It!
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On today’s show… outside money is pouring into the auto industry, BMW & Toyota team up to develop a hatchback and I answer your questions and comments in You Said It! All that and more coming right up on Autoline Daily.
This is Autoline Daily for January 27th, 2015.
BIG MONEY BIG INTO AUTO INDUSTRY
Looks like the automotive industry is starting to shed its image as a rust-belt business. Outside money is starting to pour into the segment like we’ve never seen in a century. Last year Warren Buffett’s Berkshire-Hathaway bought the Van Tuyl Group, the largest privately held dealership group in the U.S. with 75 dealerships. Now, Automotive News reports that George Soros’ investment company is also looking to buy up a big dealership group. When Big Money starts investing in car dealerships you know that the long term future looks bright for that segment.
TI AUTOMOTIVE ACQUIRED BY INVESTMENT FIRM
But wait, there’s more. Auto supplier TI Automotive announced it’s signed an agreement to be acquired by the private investment firm Bain Capital. The deal still needs to be approved by shareholders and financial terms weren’t disclosed. TI’s current management will continue to run the company. Wow! Big Time investors buying up car dealers and parts suppliers. Seven years ago we would have never dreamed that the automotive world would be coming to this.
JANUARY CAR SALES EXPECTED TO THAW
Car sales in the U.S. are expected to be up strong in January. Wards forecasts that sales will hit 1.1 million vehicles, up 8% compared to a year ago. The SAAR should hit 16.4 million units. You watch. Everyone is going to give credit to a growing economy and low gas prices. But we say, remember what was going on a year ago? Last winter snow storms clobbered car sales. So yes, the U.S. economy is running strong and gas prices are dirt cheap, but sales would have looked good compared to a year ago no matter what.
Still to come… BMW and Toyota team up on an entry level car, the Ford Raptor packs a lot of punch, and you sound off in You Said It!
TOYOTA TO HELP PRODUCE MINI MINI
Not long ago we reported that BMW and Toyota would team up to produce a new sports car as well as share fuel cell and carbon-fiber technologies. Well now it looks like the two automakers are expanding that partnership to include an entry-level hatchback. Automobile magazine reports the all-new model would slot into the Mini lineup and carry a price tag in the $15,000 range. So count the Superleggera concept out, but we could end up seeing the Minor make a comeback, whose name dates back to 1959. It may look more like the small Rocketman concept from 2011.
NEW F-150 RAPTOR WILL PACK MORE PUNCH
The new F-150 Raptor is dropping its naturally-aspirated 6.2L V8 in favor of a 3.5L EcoBoost V6. Ford said the new V6 would pack more punch than the 411-horsepower V8, but had not revealed how much more… at least until now. During an interview at the 24 Hours of Daytona Group VP of Global Product Development, Raj Nair let slip that new engine will produce 450-horsepower. The performance truck was able to shed over 500-pounds thanks to its aluminum body. It’s a good time to be living if you’re a fan of super-high horsepower, pony cars and specialty off-road trucks.
Coming up next, it’s time for You Said It!
Richard Wakefield has a question about our Corvette versus Ford GT survey. “Regarding your poll on the Chev. Corvette vs the Ford GT, why didn’t you have an option that the Chevy folks won’t do anything to try and compete with the Ford GT.????” Richard, we did give you that option. What do you think answer Number One was all about? Pull out their hanky and run crying home to mommy.
Marshall heard our report about GM and Ford considering getting back into making continuously variable transmissions. “The people hate CVT’s. All the auto magazines have derided them also. Why not just use a 7 or 8 speed automatic?” Marshall, CVTs deliver better real-world fuel economy than geared transmissions. That’s because they allow engineers to calibrate the engine to run in a relatively narrow rpm range, right in the sweet spot where it gets the best fuel economy. I suggest you forget what the buff books say and try out the latest CVTs from Nissan and Honda. The average driver will not notice the difference between those CVTs and the typical step-gear transmission. Enthusiasts will continue to hate them, but they’re perfect for 90% of all drivers.
Leon Bray wasn’t all that impressed with JCI’s concept for the interior of a semi-autonomous car. “No one wearing seatbelts in the Johnson Controls video. Wonder how much a seatbelt would restrict your ability to access some of those features?” Well, remember, what we showed you was an interior buck, not an actual car. I don’t think that seatbelts would at all restrict anyone from using the features in that concept. And if you take this autonomous concept 20 to 30 years out, I can see the day coming when autonomous cars will not need airbags or seatbelts because it will be almost impossible to make them crash.
Mike has an interesting observation about the way car companies treat suppliers. “Relative to Takata, Diamond Electric, Yazaki, Firestone and others. At greatest issue are the margins the suppliers are ‘allowed’ to make. You start off with 5% and then have to deduct from that the costs of recalls and rejections. The only way to survive is to cut the edges by ‘iffy cost reductions’ or possibly even collusion. This lose-lose proposition is in no one’s best interest.” Well, the best strategy is to build good parts that don’t cause recalls or rejections. But your point is a good one. OEM’s keep forcing suppliers to cut cost and that incentivizes them to cut corners to protect their profit margins.
Thanks for all you letters and comments, especially the ones that force us to think! We truly like hearing from you all.
Also, don’t forget to tune in to Autoline After Hours Thursday night at 6PM eastern time. We’ll provide you with some of the best insider discussions in the business.
But that wraps up today’s show. Thanks for watching.
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Comments (35)
January 27th, 2015 at 12:08 pm
“if you take this autonomous concept 20 to 30 years out, I can see the day coming when autonomous cars will not need airbags or seatbelts because it will be almost impossible to make them crash.”
This will get you some flack, but you are 100% correct. Our concept for safety will definitely change.
January 27th, 2015 at 12:11 pm
Is Toyota simply that good of a manufacturing machine that car companies can create business cases to deal with the “competition”?
What is Toyota getting out of the deal?
NUMMI gave GM quality manufacturing and an opportunity to learn. Toyota got their foot in the door with USA manufacturing, etc.
January 27th, 2015 at 12:18 pm
“Pull out their hanky and run crying home to mommy.” I know this was a “tongue in cheek answer, but I have to agree with Richard, a useful answer was not provided. Ford has repetitively challenged the Corvette (and the Corvette has taken on just about all the competition especially from Ford. Ford won sales with the intro of the T-Bird (but then faded), again challenged with the Cobra (stellar but didn’t last either), Pantera (’nuff’ said), intro of the Ford GT street version (not a real or lasting challenge), and so the list goes on. Not saying all those Corvette’s hit the ball out of the park, just saying that perhaps response #1 was a little condescending.
January 27th, 2015 at 12:36 pm
3 I agree completely about the response “Pull out their hanky and run crying home to mommy,” and the lack of a useful response in the poll.
The Corvette is a semi-affordable sports car that provides near super car performance at less than 1/4 the cost of the Italian exotics, or the upcoming Ford GT. If GM wants to build a $200K+ car to compete with the Ford GT, that’s ok, if they don’t waste too much money on it, but it would not be a Corvette.
January 27th, 2015 at 12:37 pm
If BMW and Toyota want to build a real Mini, they should take a look at one like this:
https://www.flickr.com/photos/pauljudge/15390227368/in/pool-1092905@N21
January 27th, 2015 at 12:45 pm
I’m with you Chuck. To be up front, I’m a Ford Fan, but I felt that with the way the question was phrased the options were incomplete. The problem is the Corvette is playing in a different consumer space. The Corvette is shooting to be a “Best Value” Super-car challenger, the Ford GT is a Super-car shooting for “best value” hyper-car. They aren’t really competitors in my mind. IF a mid-engine Corvette comes out I would be surprised if they would aim for the same target audience.
January 27th, 2015 at 12:53 pm
Crying
Same here. GM does not give any F@&$
January 27th, 2015 at 12:55 pm
Re Ford Raptor-with so much money to be made in the specialty vehicle market, especially trucks, why has GM been M.I.A. for so long.
January 27th, 2015 at 1:32 pm
Lets see Toyota has teamed with Subaru, now with BMW. Who’s next Isuzu or Mitsubishi. Is Toyota trying to rebuild Scion with other car companies cars?
January 27th, 2015 at 1:51 pm
I agree with Chuck,but it was more then a little condescending imho.
Ford Raptor: Over compensating for a lack of……
January 27th, 2015 at 1:52 pm
CVT – Comment that CVT “allows engine to run in narrow RPM band also applies to new automatics with 8, 9, or 10 speeds. Will probably evolve down the road to value (combination of cost & performance which includes fuel economy)
January 27th, 2015 at 1:56 pm
Sales margins – Perhaps in a good capitalistic economy, a supplier’s long term margin should not be at the discretion of the OEM. Since the OEM’s should be purchasing on value, if one supplier can make a margin of 30% due to their efficiency vs their competition, what is wrong with that?
January 27th, 2015 at 1:59 pm
3,4,6, & 7 – Agree with statements regarding Corvette being a somewhat affordable (& good value) sports car. The mid-engine Corvette has been in & out of the model plan since at least the 1971 model year. Believe the Corvette needs to remain in its current & long term market position.
January 27th, 2015 at 2:06 pm
I suspect the Raptor is more of a “halo vehicle” than a money maker, given the low volume. If Chevy made something like that, it would just split the market for factory made off-road racing pickups even more.
January 27th, 2015 at 2:19 pm
I don’t see the GT as competition for the corvette. The cost of a ford is $400 thousand versus what the corvette costs there won’t be that many fords around.
January 27th, 2015 at 2:21 pm
#9
Remember Toyota owns ~16.5% of Subaru. So joint cars between them is a little different.
January 27th, 2015 at 2:25 pm
15 Also, if the upcoming Ford GT is like the last Ford GT, it will be produced for about two years. That’s a lot different from the Corvette, which has been produced continuously for more than 60 years.
Viper is closer to a Corvette competitor, though it is pricier, and not nearly as practical as a daily driver.
January 27th, 2015 at 3:24 pm
The ford gt is a beautiful/powerful limited production investment car,as evidenced by this past Barrett-Jackson auction.It in no way poses any kind of threat,or competition to the vette,or vice versa.It would be like comparing a mustang gt to La Ferrari.
January 27th, 2015 at 3:41 pm
When GM shows its own mid-engine Vette/Caddy halo super car, then let’s see who’s eyes well up.
January 27th, 2015 at 3:41 pm
Kit, I vaguely remember Corvette skipped a model year. I believe it was 1983.
January 27th, 2015 at 3:48 pm
They skipped the ’83 model year, but the ’84 model year was a very long one. There was more “down time” than normal during the ’82-’84 change over, but not a lot, considering the huge difference between the C3 and C4 cars.
January 27th, 2015 at 4:37 pm
IMO: Pony Car wars and this attempt to create Corvette vs Ford GT war is silly.
Maybe if I was a Baby-Boomer, born into a cold war and told there is Communists, then us. I might think more readily in terms of us vs them or Ford vs Chevy.
Instead my enthusiasm goes to the GTR and upcoming NSX. I don’t compare the two as they are each great in their own ways.
The Ford GT is great in its own way. The Corvette is the best (IMO) it has ever been, but still nothing that attracts my attention.
January 27th, 2015 at 4:51 pm
I see Buick plans to compete with the Fiat 500. Also, the Cheby Trax is to compete with the larger 500 and the Liberty, which it is buit upon. Sounds like GM really has a bug up their butt for both brands. Really! Who would want any car as small as the 500 or Spark size car when the next size up dominates for almost the same price?
January 27th, 2015 at 5:21 pm
23 Some of us just like small cars. I certainly could have gotten “more car” for the price of my MINI, even though my MINI is a near zero option car.
As far as the small CUV thingies, I suspect people buy them because they are easy to park, and easy to maneuver in tight places, like the row garages at my condo. It takes two hitches to get my Corvette straight enough to go into the garage, but with the MINI, I just drive in.
I wouldn’t buy one of those mini CUV’s, but I don’t buy any CUV’s. The type of space I need is a long floor, without much height. A Prius liftback has that.
January 27th, 2015 at 5:30 pm
24 when I was a tot and my parents wanted me to go to sleep, they’d take me for a ride in their mini cooper. That’s my excuse, Kit. (not kidding)
January 27th, 2015 at 5:40 pm
…and that was a REAL mini cooper.
January 27th, 2015 at 6:28 pm
I have always liked small cars as well, I had 2 Beetles back when gas prices was not an issue at all, it was all about getting around in a small, crowded city with all the inherent problems associated with them. I used to like a larger vehicle for long trips, but now with all the improvements in even the smaller ones, that is not an issue any longer.
January 27th, 2015 at 6:29 pm
I just wanted to add my “two cents” to say that you guys are right that the Corvette is not a Ford GT and vice versa… While I am not a fan of domestic cars in general (mostly due to quality issues), I have a real appreciation for the Corvette and for what it provides for the price… It is a real value for all it provides!!
My only criticism is that the Corvettes have been over styled for some of their models, especially the new one!!! Although the new one looks to be a great car, I liked the simpler styling of the last two series much more…
If I were in the market for a Corvette, I think I would choose a pristine used one from those last years instead..
It seems to my taste that too many of GM’s vehicles are over styled with toooooo many styling gimmics, and I imagine that will hurt them when they try to compete with the European makers…
January 27th, 2015 at 6:54 pm
28 I’ve read the they wanted to attract more younger people to Corvettes with the C7. I’ve heard that half of the buyers of new Corvettes in recent years have been over 65, or something like that. Maybe they went overboard, and made the C7 appeal too much to 12 year olds, but they are selling well.
January 27th, 2015 at 7:03 pm
GM should take a styling lesson from Porsche and apply it to the ‘Vette, those Porsche classic lines still look fresh today even after all these years with minimum changes.
January 27th, 2015 at 7:04 pm
Can some of you Ford fans answer a question for me? Do potential buyers of the GT and Raptor want a high boost turbo V6 in those vehicles, or is Ford using that engine just to demonstrate that they can get a lot of power from a turbo V6?
January 27th, 2015 at 7:05 pm
The original 2 seat T bird slaughtered the Vette each year they directly competed . Ford got greedy and made the T-Bird a 4 seater. Since then Ford really hasn’t had a serious 2 seater.They had the EXP escort which was a 2 seat econo car . Fun ,but no where close to a sports car. Then they had the new 2 seat Bird which was a luxury 2 seater and not a performance sports car. Then they had the GT which was a exotic supercar. The new GT will be the same. the only true competitor is the Viper and it is on life support.
January 27th, 2015 at 7:17 pm
They are lowering the price of Viper by $15K, to $85K MSRP. It would compete with a “loaded” Corvette. Still, it is probably on life support. I guess it’s no longer outrageous enough to find a niche.
January 27th, 2015 at 7:58 pm
Those Hellcats will most likely push the Viper over the cliff for good.
January 27th, 2015 at 8:42 pm
The Viper V10 has less power than the Hellcat engine, but the Viper is much lighter than the Hellcat equipped cars. The pushrod V10 is a trademark of the Viper, but the supercharged V8 get the hype. Amazingly, the Viper has been around more than 20 years, but it seems unlikely to be around much longer.