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0:08 OEMs Prepare for Possible Recession
1:16 China Auto Industry Back to Boom Times
1:43 Foreign Automakers Uneasy in China
2:26 China Faces Possible EV Price War
3:56 Jeep & Ram Unleash SEMA Concepts
5:07 Toyota Pumps SEMA Performance into Supra, 86 & GR Corolla
6:15 Jeep Crowd-Sources New Name for New Jeep
7:42 Ford & GM Struggle to Meet IRA EV Incentives
8:39 Car Prices Start to Ease–Somewhat
9:28 Porsche Subscriptions Only Gets 2,000 Subscribers
This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
OEMS PREPARE FOR POSSIBLE RECESSION
Well it sure looks like the auto industry is starting to batten down the hatches to get ready to ride out a possible global recession. Automakers are looking for ways to slash costs and it’s starting with headcount reductions. Stellantis is offering buyouts to U.S. salaried employees who are over 55 years old. Ford is telling salaried employees that it considers underperformers that they have a choice. They can take a severance package and leave the company, or take a 4 to 6-week intensive training program to boost their performance. Meanwhile, in Germany, Audi wants its hourly employees to take a one-time lump sum payment instead of permanent wage increases. That way it doesn’t bake in higher costs. Last week Ford CFO John Lawler told Wall Street analysts that the company learned its lesson during the Great Recession of 2008 and 2009. Not only is it starting to cut costs before things get bad, it’s built up a war chest of $32 billion in cash and securities.
CHINA AUTO INDUSTRY BACK TO BOOM TIMES
China is a different story. The auto industry there is roaring ahead. LMC Automotive reports that last month the annual rate of sales hit nearly 31 million vehicles, which is impressively strong. And exports are showing explosive growth. That’s because China pretty much has ironed out problems with supply chains and automakers can get the chips and raw materials they need.
FOREIGN AUTOMAKERS UNEASY IN CHINA
But in the longer term, the Chinese car market could be problematic for foreign automakers. Stellantis is letting its joint venture with the Guangzhou Automobile Group go bankrupt. Stellantis CEO Carlos Tavares blamed political influence as the reason why they couldn’t negotiate a better deal. Now, he wants to export cars to China, not build them there. Foreign automakers are looking at how their operations in Russia collapsed after it invaded Ukraine. And they’re worried what could happen to their operations in China if it ever invaded Taiwan. That may be one reason why Tavares doesn’t want to build cars in China anymore.
CHINA FACES POSSIBLE EV PRICE WAR
And some analysts believe that an EV price war could break out in China. Last week Tesla chopped the price of the Model 3 and Model Y by $2,000 or more. And today Ford cut the price of the Mach E in China by up to $3,800. The Mach E competes with the Model Y, so Ford had to respond. And Toyota just introduced the bZ4x in China. The base model, with a 50-kilowatt hour battery, is priced at only $27,800. That’s $14,200 less than the base bZ4x sold in the US, although the US model comes with a 71-kilowatt hour battery. Even so, that means US customers are paying $676 per kilowatt hour more to get that bigger battery.
JEEP & RAM UNLEASH SEMA CONCEPTS
The SEMA show kicks off this week in Las Vegas and we’re getting some more sneak previews ahead of the event. Stellantis teased us with a few of its concepts a few weeks back and now we can start to fill in the details. First up is the CJ Surge. On top of the big off-road tires and suspension and Dana axles, this classic CJ is all-electric. It features a 400 volt, 200 kW electric drive module that’s bolted to the frame and is fed electricity by 24-battery modules. And all that power is fed through a two-speed transfer case for true rock crawling ability. But the best part is this is all a test bed for a future aftermarket kit for classic Jeeps. And it won’t end there. Ram took the TRX, its Hellcat powered truck, and turned it into the ultimate high-performance toy hauler, called the Gold Shot. While the Backcountry X Concept is a Ram 1500 that’s been fitted with a custom cover, which is meant to increase storage without compromising the functionality of the bed.
TOYOTA PUMPS SEMA PERFORMANCE INTO SUPRA, 86 & GR COROLLA
Speaking of vehicles for people who love going off the beaten path, Toyota is taking a version of its GR Corolla and turning it into a rally car inspired by the Yaris’ it races in competition. But it will also have a couple of vehicles that appeal to people who prefer a paved surface. One is a Toyota 86 that’s been transformed into a drift machine, but that can still be used as a daily driver. The others are twin drag racing versions of the Supra, which were originally used as pace cars for NASCAR. It says it’s trying to turn them into 10 second cars, a reference to Fast & Furious that anyone who has seen the movie will get. But kudos to Toyota because it’s trying to show customers how they can upgrade their performance and it’s trying to do it all for $10,000. Aftermarket pieces include a 20-30% bigger turbo, new software programing, HKS suspension and special wheels with drag tires. Engineers say initial tests have been promising.
JEEP CROWD-SOURCES NEW NAME FOR NEW JEEP
Jeep’s upcoming all-electric SUV, that debuted as the Wagoneer S Concept, is a little bit of a head scratcher. First, it wears the Wagoneer name, but it’s actually smaller than the Grand Cherokee. And second, Jeep had no real clear cut answer for what the ‘S’ stands for. It just used catchy words that started with an ‘S’ to describe it like ‘sleek’ and ‘speed.’ Well, it sounds like Jeep is stumped, so it’s looking for your help. Jeep CEO, Christian Meunier says it could crowdsource the name and the plan is to set up a voting system on social media. With reservations kicking off some time in 2023, Muniers says he’d like to settle on a name before the end of the year. So, let us know in the comments what you think it should be.
FORD & GM STRUGGLE TO MEET IRA EV INCENTIVES
It’s not just foreign automakers that will have a hard time qualifying for EV tax incentives under the new Inflation Reduction Act. So will General Motors and Ford. To receive the full credit, batteries must be manufactured in North America and they must use a certain percentage of minerals sourced in the U.S. or with free trade partners. And the amount rises each year until it hits 100% in 2030. And GM and Ford don’t meet those requirements yet. GM CEO Mary Barra revealed that it will take the company two to three years before it can receive the full $7,500 credit and will only qualify for half of it for the time being. Likewise, Ford CEO Jim Farley said that the Mach-E and Lightning will only qualify for up to $3,750 in credits starting next year.
CAR PRICES START TO EASE–SOMEWHAT
Prices for new and used vehicles are coming down but unfortunately car buyers can’t celebrate too much just yet. The average price for a new vehicle was down slightly in August but was still $11,000 above pre-pandemic levels. The average new car now costs $48,000. And it’s the same story for used vehicles. Prices were down 1% last month, but the average price is $31,000 or 50% above pre-pandemic levels. Analysts say prices aren’t likely to come down substantially anytime soon for new or used vehicles because inventory levels are low. That means demand will remain high and so will prices.
PORSCHE SUBSCRIPTIONS ONLY GETS 2,000 SUBSCRIBERS
Several years ago, a number of automakers launched subscription services, where customers pay a monthly fee for their vehicles. Most weren’t able to make it work and have canceled the programs but Porsche is celebrating the fifth anniversary of its subscription service. It’s now operating in 15 cities in the U.S. since it launched in Atlanta in 2017. However, not many people have signed up to use it. Only 2,000 customers have participated but Porsche says 80% of them are new to the brand, so it has helped bring in new customers.
But that’s it for today’s show, thanks for watching and have a Happy Halloween.
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Seamus and Sean McElroy cover the latest news in the automotive industry for Autoline Daily.