AD #3029 – GM Wants Another Battery Plant; Volvo Backing Off Sedans & Wagons; Attitude of American Car Buyers Changing

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

GM WANTS ANOTHER BATTERY PLANT
One is not enough. General Motors wants to build a second battery plant in the U.S. with LG Chem. According to the Wall Street Journal, it will be located in Tennessee. The two companies have already invested $2.3 billion to open a battery factory in Ohio. But it’s pretty obvious why GM needs another one. By 2023, it’s going to have five assembly plants dedicated to electric vehicles. That includes Detroit-Hamtramck or what’s now called Factory Zero; Orion, Michigan that makes the Bolt; Spring Hill, Tennessee; CAMI in Ontario, Canada; and Ramos Arizpe in Mexico. By 2023 or 2024 GM should be able to build around 1.5 million EVs a year. And that’s why it needs another battery plant.

OLD CHIPS MACHINES IN HIGH DEMAND
With this global chip shortage, why don’t they just get more machines and make more chips? Turns out it’s not that easy. The chips themselves take 6 months to make from start to finish. And getting the machines that make them can take even longer. The auto industry mostly uses older, less advanced chips, which means the machines to make them aren’t being produced anymore. So people are searching the country for old chip factories that shut down to get their equipment. Prices for that used equipment shot up 20% over the last 6 months. That’s not good news for automakers. GM, just made more production cuts.

VOLVO BACKING AWAY FROM SEDANS & WAGONS
So many car enthusiasts love station wagons, and Volvo is one of the few that still makes them. But not for long. CEO Hakkan Samuelsson says Volvo will make more utility vehicles. He told Autocar, “We need less variants of sedans and wagons. We have a lot of wagons today… We will still have them in the future, but probably not as many.” Volvo currently has the S60 and S90 sedans and the V60 and V90 wagons, along with their Cross Country counterparts. If you had to guess, which ones do you think will stick around and what goes away?

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KIA GIVES K8 A PREMIUM INTERIOR
Kia recently showed off the exterior styling of the all-new K8, which replaces the K7 also known as the Cadenza and now we’ve got the interior. You’ll notice a wrap around design with two large 12-inch display screens, but the real story is the much more premium look the sedan has been given. That really shows through in the diamond stitched and perforated leather. Even the speaker grilles have a diamond pattern. The all-new K8 will start hitting the market later this year.

RENAULT JOINS FASTBACK SUV CRAZE
As car buyers around the world continue to shun sedans, we’re seeing more mass market companies jump on the fastback SUV craze. And now you can add Renault to that list. It’s launching in France next week the all-new Arkana, a sporty-looking crossover that’s only offered with a hybrid powertrain. It rides on the same platform as the Captur, so you’ll see a lot of design similarities, but the Arkana has less aggressive rear end styling. Power comes from a couple of different sources. There’s a full hybrid option that produces 145 horsepower and two micro-hybrid setups, one that makes 140 horsepower and another that makes 160 horsepower. Micro-hybrids are a 12-volt system rather than a 48-volt system. Renault’s system features a 12-volt starter/alternator, which provides stop/start functionality and helps reduce fuel consumption by 8%. Prices for the Arkana start just under 30,000 euro, including taxes.

REPAIR CUSTOMERS CARE MOST ABOUT PRICE
It’s extremely easy for an automotive repair shop to lose a customer and according to a survey from Upswell, only 34% of consumers are always satisfied with their auto-service provider. What’s the biggest factor that plays into a customer’s satisfaction? Same as most things, price. Nearly 80% of people surveyed said that perceived fair pricing is more important than good communication, honesty, timeliness and respect.

FORD RUNNING INTO MUSTANG MACH-E PRODUCTION ISSUES
Looks like Ford is running into production issues with the Mustang Mach-E. It sent a letter to some customers telling them their delivery was delayed. And while it didn’t say why, it’s giving them an additional 250 kWh of free charging at Electrify America stations, or free charging and a thousand bucks if they have to wait longer.

MUSTANG MACH-E SALES ALMOST MATCH TESLA MODEL 3
Too bad deliveries were delayed. The Mach E almost caught up to the Tesla Model 3 last month, only 334 units behind. But it was over 1,000 units behind the Model Y. That makes the Mach E the third best selling EV in the US market. But we don’t expect it to outsell the 3 or the Y. Ford will only build 50,000 electric Mustangs this year, and some will be shipped to Europe and other markets.

U.S. EV SALES SHOOT UP
Overall, sales of EVs shot up 72% in the U.S. market last month. But that’s less than 20,000 units and only represents 1.6% of total sales.

Coming up next, John has something to say about the changing attitude of American car buyers.

 

ATTITUDE OF AMERICAN CAR BUYERS CHANGING
Interesting article in the Detroit Free Press about F-150 owners complaining about rusty bolts, brackets and differentials under their trucks. It’s really surface rust that doesn’t affect how the truck drives, but it sure looks ugly.

 

These are owners who paid $50,000 to $70,000 for trucks. And they expect them to look like they were made with brand-new, shiny components, not with parts that look like they were pulled out of a junk yard.

This is not a new issue and Ford’s not the only one with it. What’s changed is buyers’ expectations. These trucks cost as much as luxury cars and those kinds of buyers have higher standards—even when it comes to getting down on their hands and knees to admire the frame and underside.

You know, car buyers in other countries have always been more discriminating than Americans.

One of the reasons why Saturn failed in Japan back in the 1990’s is that customers saw rusty bolts on the exhaust manifold. No one here cared about it because few customers ever looked under the hood, and it had zero impact on the durability or reliability of the car. But the Japanese press had a field day with it, and that killed sales of Saturns.

Honda once told me that Saudi Arabian buyers are actually the pickiest in the world. Honda dealers there put new cars on a 45 degree ramp so owners can inspect the underbody. If there’s the slightest hint of rust or imperfect paint on the rocker panels or in the wheelwells, customers reject it. In fact, Honda actually had to change its paint process at its U.S. plants so that cars it shipped to the Middle East had perfect underbody paint and no rust.

And so this is a word to the wise. Things have changed. If you’re a car company or dealer, you better take the time to make sure the car or truck you’re delivering looks brand spanking new in every nook and cranny–even if you’re selling them to Americans.

And that wraps up this show. Thanks for watching.