AD #2948 – Tight Inventory Helping to Boost Profits; Chevy Will Offer eCrate Package; Tesla Opens More Service Centers
October 29th, 2020 at 11:39am
Listen to “AD #2948 – Tight Inventory Helping to Boost Profits; Chevy Will Offer eCrate Package; Tesla Opens More Service Centers” on Spreaker.
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Runtime: 10:21
0:07 Volkswagen Returns to Profitability
0:34 Ford Adds to Its Cash Pile
1:12 Tight Inventory Helping to Boost Profits
3:32 Traton & Hino Jointly Developing EV Trucks
4:12 Masks Makes F&I Managers’ Jobs Harder
4:44 Genesis GV70 Features Unique Styling Elements
6:00 Nikon Improves Its Laser Radar Units
6:55 Chevy Performance Will Offer eCrate Package
7:57 2021 Ford Edge Gets Giant Center Screen
8:26 Ford Announces Electric Transit Debut
8:38 Tesla Opening More Service Centers
9:24 FCA CEO Confirms Electrified Ram Truck
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This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
VOLKSWAGEN RETURNS TO PROFITABILITY
When the COVID-19 pandemic clobbered the auto industry earlier this year, we thought that 2020 would be a year of record losses for automakers and their suppliers. But Q3 financial results show it’s not turning out that way. At Volkswagen, production fell, sales fell, and revenue fell. But VW returned to profitability after a miserable second quarter and it posted a €2.7 billion net profit.
FORD’S THIRD QUARTER RESULTS
At Ford, the numbers are even more interesting. It sold fewer vehicles globally in the third quarter, but revenue actually went up — I’ll have more on that in a minute. Ford posted a net profit of $2.4 billion, which would be a good number even in a good year. And here’s the number that just jumped off the balance sheet at us. Ford’s cash pile shot up by $6 billion. It now has over $44 billion in cash and securities, and that means it should easily be able to pay off all the money it borrowed earlier this year when it expected doom and destruction.
TIGHT INVENTORY HELPING TO BRING IN PROFITS
So how come automakers, suppliers and dealers have seen their profitability come roaring back? Here’s our Autoline Insight. All around the world, car dealers are running on tight inventory. Cars are selling as fast as they can get them off the truck. So dealers have slashed their floorplan costs. Remember, dealers buy their cars from the car companies, and the faster they sell, the faster dealers can pay off their car loans. That saves them a ton of financing costs. And because inventory is tight, they don’t have to offer sales discounts. That’s why Ford’s revenue went up even though sales went down. We think the auto industry, especially in the U.S. market, is going to re-evaluate why it normally keeps very high levels of inventory. And one more thing. How come automakers, like Ford, are generating so much extra cash? Well, that’s what happens when you shut down for over 40 days and don’t have to pay your suppliers.
It all seems almost too good to be true. And it might be. We’re now seeing a second wave of Covid-19 spreading through the world. Could that cripple the auto industry’s comeback? That’s what John and Gary will be talking about later this afternoon on Autoline After Hours. Their special guest is Charlie Chesbrough, the chief economist for Cox Automotive. Mike Austin from Hemmings will also be on the show. And you are invited to join the action later today at 3 pm eastern time.
TRATON & HINO WILL COLLABORATE ON EV COMMERCIAL TRUCKS
The two largest automakers in the world are partnering up… well sort of, it doesn’t have anything to do with cars. Volkswagen’s and Toyota’s commercial vehicle subsidiaries, Traton and Hino, are going to develop battery electric and fuel cell trucks and components as well as creating common EV platforms, including software and interfaces. Why both BEVs and fuel cells? Well, the companies say they are convinced both will be needed in the future. Traton and Hino will develop the technology in Sweden and Japan. The tie-up will allow them to get products out in the market faster but more importantly they’ll save money on development costs.
MASKS MAKES F&I MANAGERS’ JOB EVEN HARDER
Car dealership Finance & Insurance managers have to be good at picking up on visual cues from customers while they’re selling. But Wards reports the pandemic is making that more difficult. Customers wearing masks or turning off their cameras during a video conference are making it harder to be able to “read” their facial expressions and body language. Since F&I managers are the last person a car buyer sees in the buying process, they have to know how customers feel, so they don’t turn them off and blow the sale.
GENESIS GV70 HAS INTERESTING STYLING DETAILS
We have more details about the new Genesis GV70 crossover. As you can see, the styling of the grille and lighting signatures ties right in with the rest of the lineup. The rear end is interesting. It’s very curved, which creates a unique shape for the rear side window and the dual character lines at the rear makes a stacked effect. Not sure that I’m a fan of it, but it will certainly stand out on the road. The interior stands out too. A long, skinny infotainment screen sits high on a stacked dashboard, the lower half housing the HVAC controls in a long, thin oval that flows past the steering wheel. This fat, two-spoke steering wheel also has some visual interest and it looks as though a number of non-traditional interior colors will be offered as well. Two months of final testing still needs to take place in Korea before the GV70’s official launch.
NIKON IMPROVES ITS LASER RADAR UNITS
Nikon is famous for the cameras it makes, but did you know it also makes laser radar units for inspection systems? Automakers use devices like this to measure the body-in-white of a vehicle after they are welded in the body shop. Nikon calls its device APDIS, or Accurate Precision Distance Scanning. And its newest version is significantly lighter and smaller than before. The laser provides very precise measurement without the use of jigs or fixtures. That allows it to be placed right next to the assembly line, though it can also be used off-line for measuring other assemblies such as doors, hoods and hatches. Nikon got into the measurement business in 2009 when it bought a Belgian company called Metris, and renamed it Nikon Metrology. And metrology, in case you haven’t heard that word before, is the science of measurement.
CHEVY PERFORMANCE WILL OFFER eCRATE PACKAGE
There’s been a rising trend of converting old gas-burners to run on electric power and that’s exactly what Chevrolet is doing for this year’s virtual SEMA show. It gutted the engine, transmission, fuel lines and exhaust from a 1977 K-5 Blazer and stuffed it full of electronic components from a Bolt EV. Those include a 200 horsepower electric motor, all the controllers and wiring harness and a 400-volt battery pack with 60 kWh of usable energy. It’s also equipped with a 4-speed transmission. But the rest of the drivetrain is untouched. And unlike most SEMA show cars, this is not a one-off motor build. Chevy Performance will offer the setup as a eCrate package, which is expected to hit the market in the second half of next year. Pricing was not revealed. But if things go well, Chevy says it’s looking at expanding the eCrate packages, including using its Ultium drive technologies in the future.
2021 FORD EDGE GETS GIANT DISPLAY SCREEN
It used to be the battle of the cup holders. Now it’s the battle of the big screens. So the refreshed 2021 Ford Edge gets a standard vertically mounted 12-inch display, with over-the-air update capabilities. The Edge also offers 9 different styles of wheels, two new paint colors, and new interior trim options, including cloth. The ST model is also sticking around and gets a number of unique touches inside and out.
FORD ANNOUNCES ELECTRIC TRANSIT DEBUT
Speaking of Ford, it announced that the all-electric Transit is going to debut on November 12th. Time or place wasn’t revealed, but you can be sure we’ll cover it right here.
TESLA TO OPEN MORE SERVICE CENTERS
Tesla’s sales are booming and the company has sold more than 1 million cars. But there’s one problem with that success, it doesn’t have enough service centers for all those customers. Over the last 12 months, Tesla’s sales have grown 50% but in the same time it only added 12% more service centers. So to close the gap, Electrek reports the company will add 52 new service centers in 2021, about one a week. Tesla currently has 466 globally and unlike most automakers, the company owns and operates all of its service centers worldwide. As Elon Musk has said in the past, the best way for Tesla to sell more vehicles is to grow its service center and Supercharger network.
FCA CEO CONFIRMS ELECTRIFIED RAM TRUCK
In other EV news, it’s finally official. Ram is going to get an electric pickup. During a third quarter earnings call, FCA CEO Mike Manley confirmed that the automaker will introduce an electric truck but he did not provide any details. Everyone knew Ram would have to jump on the bandwagon. GM and Ford, have already announced plans for EV pickups. So have Tesla, Rivian, Lordstown and Nikola. FCA’s strategy all along has been to wait for the EV market to develop and then bring out its own. And it obviously decided its time has come.
And that wraps up today’s show, thanks for watching and please join us again tomorrow.
Thanks to our partner for embedding Autoline Daily on its website: WardsAuto.com
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Comments (37)
October 29th, 2020 at 11:54 am
Aren’t factory incentives down, helping profitability for the car companies? Car production is down, partly because of precautions in the factories to prevent the spread of COVID, but the wealthier people, those who always bought new cars, are still buying new cars.
October 29th, 2020 at 12:02 pm
The Hyundai-Kia pretend Luxury “Genesis” breadvan looks from the back like the failed (miserably) CHrysler Crossfire weird coupe. (it failed so badly few, if anybody, remembers it today)
Ford Edge, 8 years after the Model S pioneered the vertical 17″ screen, gets a much smaller 12″ one. Monkey see, monkey do. Reminds me of that crook who resigned in Disgrace from GM’s BEV partner, who could not come up with any good name for his fraudulent company, so he stole TESLA’s first name. Pathetic…
In other news, the trends in Europe are ALARMING re the COVID Pandemic. Look at the FT Chart and compare the exponentially growing deaths in EUROPE ( the various blue bands). THey are more than double and on their way to TRIPLE the US deaths which remain constant. AND India somehow is reducing their daily death toll. Euro nations are shutting down, and their stock markets are plummeting. In case some ignorant Joe sixpack comments, “why do I care”, look at your 401k, fool. US stock markets ALSO fell, just one point less (3% vs 4%). What, you don’t have a 401k? I’ not surprised one bit. Maybe you should cut back on them sixpacks and start saving before you starve when you grow old.
https://www.ft.com/content/a2901ce8-5eb7-4633-b89c-cbdf5b386938
Look at the graph’s maximum deaths world-wide which happened in Europe’s prior peak. IT is going to get replaced by a much worse peak soon.
October 29th, 2020 at 12:14 pm
Sean: Cant wait to hear Ram’s version of an EV truck. Thinking with all the possible contenders they should consider a small or mid-sized truck. They could be in a segment all to themselves. Also Ive seen some of the Ester-eggs of the Ram TRX. Much like Jeep they have a few and the engine cover was probably the best. Has a T-rex with a Raptor in its mouth. So aggressive Easter eggs. going after the Ford Raptor.
October 29th, 2020 at 12:17 pm
1 Here we go again, Ground Hog day. It is NOT just the wealthy who buy cars, EVERYBODY will use cars more intensively as they REFUSE to use mass transit, which, as I quoted the other time the guy from Spain, are like being in a coffin and nailing the lid shut. So in Spain the “poor” have raided the junkyards and get plenty of VERY affordable 1000 and 500 Euro clunkers, so they can go to work SAFELY. FEW everyday items are more affordable than cars, esp in the US where gas is cheap etc etc. Groundhog day…
October 29th, 2020 at 12:20 pm
I believe many people including ALD addressed the high inventory levels that US manufacturers carried prior to Covid. Hopefully they have learned from this and can learn to run leaner in the future. Its nice to see a positive come from this 2020 mess. Lots of things will be different from now on and never go back so lets hope this is one of them.
October 29th, 2020 at 12:29 pm
Vehicles offering larger display screens is a recipe for disaster, as it can’t help but normalize the practice of people taking their eyes off the road while driving to use their screen. Safe driving requires undivided attention on the road ahead and it’s a full time job.
October 29th, 2020 at 12:38 pm
4 Larry, can’t you read? In post #1, I said, and I quote, “the wealthier people, those who always bought new cars, are still buying new cars.” Note that I said NEW cars, which is what Sean’s discussion was about.
October 29th, 2020 at 12:39 pm
1 moreover, new cars are affordable to ALL, even when you don’t have the meager amount to buy a corolla or a civic (both new) you can and many make PAYMENTS. ALSO, you can LEASE them. MOST poor people HAVE a car, but don’t have a HOME. and I see poor people ALL the time who foolishly buy a car above their means and have it repoed, because they did not want the $20k econobox they NEED but the idiotic breadvan on stilts they WANT.
October 29th, 2020 at 12:40 pm
5 If only cars companies would encourage people to order cars, and again offer actual choice, like in the ’60s and ’70s, there’d be no need for large inventories.
October 29th, 2020 at 12:42 pm
@Larry #4 & #8 – Then why are new car sales down and used car sales way up? Remember this was going on before the pandemic.
October 29th, 2020 at 12:43 pm
2 – The Europeans just need to decrease their testing.
October 29th, 2020 at 12:44 pm
1 and finally, read “The millionaire next door”. the authors claim that the typical such person drives a BEAT UP TRUCK. ANd make it MULTI-Millionaire in today;s environment, where the $ is worthless.
So the old wives tale “the rich buy new cars and the poor cannot afford them” might be true in the… 1930s, but is not true today. MANY wealthy people, they did NOT become wealthy wasting their $ on Depreciation, and refuse to pay $120,000 for an S Class when they can buy it in 5 years for LESS than $20,000, less than the lousiest KIA. But.. a fool and his money are soon parted, aren’t; they.
October 29th, 2020 at 12:50 pm
Looks very very good, but i say/ask again, why can’t Lincoln, Cadillac and Chrysler produce sedans and SUV/CUV/Crossovers (with exceptions to The Aviator, Navigator and Escalade) as compelling? Smh! They may sell a lot of them on looks alone (one caveat being the G90) and should they have the chassis engineering, appointments and quality to support those looks, look out Lexus and the German Three!
October 29th, 2020 at 12:51 pm
Loving that new Genesis GV70. I already had my eye on that GV80 SUV, but this one’s looking pretty good too.
October 29th, 2020 at 12:52 pm
Here is some actual info on the demographics of new car buyers:
https://hedgescompany.com/blog/2019/01/new-car-buyer-demographics-2019/
October 29th, 2020 at 12:54 pm
2 The Crossfire was a bargain, a Benz at Chrysler prices. The convertible was the good one. It looked more “normal,” a good thing to many people, and was a competent cruiser, for those who wanted such a car.
October 29th, 2020 at 12:58 pm
10 My take on the used cars sales being up is 1) Cost on new cars has gotten crazy expensive.
2) Cars last a long time now and a nice 3 year old car has a lot of life left at half the price.
3) Uncertainty in the future of job security shut downs and layoffs may have pushed people toward a used car they can pay off in 3 years as apposed to sighing up for a 5 or 7 year loan.
Just a thought and have no data to support my opinion.
October 29th, 2020 at 1:00 pm
If you establish a relationship with your salesperson, the F&I process can be straightforward and quick to conclude. When I picked up my truck in 2018, the salesman had already given the F&I manager the heads up that this guy won’t be buying anything, so make it the watered down sales pitch. In return, I paid the F&I manager every courtesy and kept the process completely amicable. The process of buying a vehicle doesn’t need to be distasteful, and the customer doesn’t need to walk away feeling ripped off, given the wealth of resources available online to educate yourself.
October 29th, 2020 at 1:04 pm
Sad that F&I managers will not be able to ripoff customers more easily. That job is a customer service joke.
e.g. Do you want to buy insurance for your transmission on your new vehicle?
Let me see if I can confuse you to spending $10 more.
Tesla have bought common sense to buying cars. Haggling is pathetic for 90% of folks.
Be interesting when Genesis tries to raise prices in a couple of years. Their latest designs look interesting.
October 29th, 2020 at 1:30 pm
Having spent most of my career in or around automotive at a retail level, not sure how you are tying Dealer’s being successful with floorplan and higher margins relates to OEM profitability. Dealers are obviously taking all of their allocations because they are low, now that helps. And as mentioned likely lowering of incentives also helps.
October 29th, 2020 at 1:35 pm
Sean McElroy Says:
October 29th, 2020 at 12:42 pm
@Larry #4 & #8 – Then why are new car sales down and used car sales way up? Remember this was going on before the pandemic
First of all, give me CREDIT for repeatedly disagreeing with all your ‘experts’ who predicted gloom and doom, I explained that people will use their cars, new or used, more, and do more miles, and replace them more often, under the pandemic.
New cars had reached an average MSRP of $37k, which to me is just LUDICROUS for the little car you get for it, when you can buy a used S class in great shape for HALF that, MAYBE after the financial experts saying that only FOOLS buy new cars, some people finally GOT IT and now buy used.
Give me a TON of credit for always making fun of the old wives tale that a 60 day inventory is somehow “optimal”. It is NOT. GM went bankrupt and had huge inventories while TOYOTA taught LEAN to the WHole industry (except the unrepentant Detroit 3) and has regularly 40-20 day inventories. Esp the luxury brands. AND as Kit said in 1, when you have TIGHT inventories you do NOT need to waste $10,000 incentives per hippopotamus SUVs and pickups and Caddys that don’t sell.
ONE reason new car sales are TEMPORARILY down is an obvious one, due to supplier and parts delays, many car buyers just don’t find what they want exactly, and then realize what damn fools they were to buy new, and go b=uy an excellent low mile low year Certified Used instead.
BTW as you may know but most here do NOT, used car sales historically are FOUR TIMES as big as new car sales, so there is little new today.
October 29th, 2020 at 1:41 pm
The used S-Class can be a very attractively priced option for a used car buyer, until they need to get it repaired. The astronomical price of the parts and the much higher labor rates of trained technicians for these complicated cars erase the financial advantage they enjoyed at purchase. There are some other vehicles that fall into this same category, but the S-Class is mentioned here SO OFTEN that I thought it provided a good example.
October 29th, 2020 at 1:43 pm
#1 – Kit – I believe Sean may have been including reduced factory incentives in his comment that “They don’t need to offer Sales Discounts”.
At least that is how I interpreted it.
October 29th, 2020 at 1:46 pm
18 John I did the same thing, and explained to my sales guy that due to my purchase being a lease there was absolutely no interest in an extended warranty even though I plan to buy-out my lease. If I have any issues I will simply turn the vehicle in at the end of the lease. If it proves to be a trouble free lease I will proceed with buying and decide on an extended warranty at that time. Which I already know that I’ll pass even then. F&I guy understood and spent 5 minutes just covering the standard paperwork and I was done. Very simple and enjoyable purchase for me.
October 29th, 2020 at 2:04 pm
23 Yeah, that could be.
24 I’ve never leased a car, but as you mention, leasing gives you time to decide if you’d want to keep the car, if it might be a “lemon,” etc. I guess the end-of-lease price could be a good or bad deal, depending on whether the residual value was over, or under estimated at the start of the lease.
October 29th, 2020 at 2:55 pm
24 & 25 – Every time I calculate the cost of lease + purchase at lease end vs. purchase new, I find a 3-5% penalty for hedging. So, I do my homework about the vehicle and buy CPO… skipping the steepest part of the depreciation. If my wants/needs are so specific that I can’t find a CPO match, I buy new.
21 & 22 – I do a fair amount of shopping for 25-50 year classic cars… sometimes just to stroll down memory lane. M-B made some great vehicles in that era, but today’s survivors can’t sell at a fraction of the price of an American or Asian vehicle. Why? GM-V hit the nail on the head… service and maintenance costs.
Which brings me to my definition of an engineer. An engineer optimizes multiple constraints while maximizing multiple functions/attributes. Is the engineer who is not constrained by costs and serviceability a better engineer than those that LD constantly criticizes? I think not. I can respect both engineer scenarios as each has a different set of attributes and constraints to optimize. Consumers indirectly do the same thing, which is why people aren’t all driving the same vehicle. LD, can you respect that?
October 29th, 2020 at 4:21 pm
26 It seems that the main survivors of older German cars are VWs and Porsches. Both the VWs and air cooled Porsches are relatively simple, and the Porsches may not have been used much as year-round daily drivers in the road salt. From my memory, the ’50s and ’60s Benzes and BMWs rusted even worse than most American cars of the time. Now, I suspect any mechanical parts for ’60s Benzes would be hard to come by.
October 29th, 2020 at 4:48 pm
Body parts would be even harder to come by.
October 29th, 2020 at 6:45 pm
I too have a deep passion for old European classics. While it is true many classics, mostly German, are more expensive to repair and to find parts, it is often worth the effort for those who love the art of the challenge. This is why these cars also see higher resale prices.
When you see a body style designed soooo attractive, there is an instant “Bang!!” In ones heart that says this is a piece of art, not just a car. There are a lot of people willing to pay big money to own one of these “Bangs!!”. I am one.
October 29th, 2020 at 7:35 pm
29 The ’50s to early ’60s SLs seem to be great as collector cars, both for value, and they probably drive pretty well for cars of that vintage. When I was in the navy in Scotland, a couple friends had MGs, a B and a Midget. I drove both of them, and they were fun cars. I don’t think anyone at my station had a C, though.
October 30th, 2020 at 7:59 am
I love that they are coming out with the e-crate motors. I plan to eventually do a Ford Model A as a daily driver and the E-Crate motor would be perfect for that. Kind of expensive at an estimated price of $25k though.
October 30th, 2020 at 8:19 am
26 @Drew that penalty is probably about right. My main reason for leasing with the plans to buy out stemmed from me really wanting to buy used and forgo the huge depreciation of buying a new vehicle. However as I shopped for most used trucks no more than 4 or 5 years old they either were still over 30K or had over 100k miles and were still in the mid 20s.
Having family in the Jeep plant here in Toledo I get employee discount and was able to lease a 52K truck for $258 a month for the next two years. At the end of the two years I will know if I really like the truck and if I’ve had any issues with it. If at that time I still want it the buy out is like 30k, which for a 2 year old truck with under 20K miles is pretty good price. Then I buy my used truck that I know was taken care of hasn’t been beat or used to tow more than it should.
My brother was planning to do the same thing and while at work a co-workers car caught fire and melted a good portion of the side of his truck. Insurance covered the repair and everything was fixed but you just know its never the same and the paint didn’t look that great to me. So he turned in his lease and as what happens with most it went to auction and go moved who knows where and sold as a used truck for far more than what it was worth.
October 30th, 2020 at 8:45 am
32 Was your brother charged for his truck’s having sustained fire damage when he turned it in at the end of the lease? How do things like that work with leases?
October 30th, 2020 at 9:17 am
33 No cause it was fixed by the dealership to their OE specifications. For all intents and purpose everything worked as it should and probably most people wouldn’t be able to tell the extent of damage that was done.
From my perspective though it was hot enough that it melted the driver side rear tire which they replaced but I always wonder what was the long term affect to things like the brake caliper seals and lines. Stuff I’m sure they didn’t replace but longevity may have been affected.
October 30th, 2020 at 9:36 am
Also, the repaired body may not have been “as good as new” either. I remember years ago, a quarter panel was replaced on my parents’ ~3 year old car. When the car was ~6 years old, the newer, replaced panel was rusting at the bottom, and the original was not.
October 30th, 2020 at 11:03 am
From my recent experience, incentives for leasing are still out there for the looking. Just check out sites like Jeep.com. Inventories are strong as I saw when looking to replace an expensive Grand Cherokee lease from last year. Lots of discounts in the $7k range on lower level Jeeps (Renegade, Compass, and Cherokee). Surprisingly, most are 2021s.
As for those vintage cars and trucks mentioned, I know of two locations for those old vehicles that might of interest. Seems that the elder LaFontaine took over a bowling alley a few miles south of M-59 on Milford Road where I see a lot of older vehicles. A couple of Corvairs and even VWs come to mind. Another location is right here in Milford, at Main and Huron. Location was a new car dealer over the years, but too small for modern times. Was refurbished into used cars (and some interesting pickups) recently. No, I don’t get anything for the mention, but I too like the oldies from my youth, so a source might be interesting to others here. Not sure how vintage a Pontiac Solstice is, but they have one.
October 31st, 2020 at 3:06 pm
Regarding Sean’s suggestion that manufacturers should limit inventory in the future, two problems come to mind immediately.
First, that would not work absent an illegal cartel agreement. If Ford limited F150 inventory while GM and FCA did not limit Silverado and Ram 1500 inventory, GM and FCA would be in a position to take market share from Ford, while Ford would not be able to raise its prices significantly.
Second, it makes individual manufacturers more vulnerable to supply disruptions, strikes, etc.