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Runtime: 11:20
0:00 U.S. Repos Surging
1:02 Biden Admin to Shut Door on Chinese Connected Car Tech
2:00 Valeo To Sell 3 Facilities in France
3:20 CDK Paid Hackers $25 Million
4:52 CATL Battery Lasts For 2 Million KM
6:08 Cybertruck Gets Jumpseats, Bike Protector
6:47 Fisker Dumping Oceans For $16,500
7:38 EU to Lower Tariffs on VW, BMW EVs From China
8:18 Cadillac Escalade Gets Major Refresh
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U.S. REPOS SURGING
New car repossessions in the U.S. are up 23% this year. High interest rates, inflation, and high car prices are squeezing some consumers enough that they’re skipping car payments. Cox Automotive says buyers’ budgets are being squeezed at the same time that car payments are soaring. Edmunds says the average interest rate for a new car is 7% and 11.5% for a used car. That translates to average monthly payments of $739 for new cars and $549 for used ones. A big problem is subprime lending. Fitch Ratings says the percentage of subprime borrowers who were at least 60 days late was 5.6% in June, just slightly down from the record set in February.
BIDEN ADMIN TO SHUT DOOR ON CHINESE CONNECTED CAR TECH
When the Biden Administration added 100% tariffs to imported EVs from China, it left the door wide open for Chinese cars and parts that are made in other countries. As we reported yesterday, 29 Chinese suppliers are investing $7 billion in Mexico to make parts that they hope to also ship to automakers in the U.S. To close at least part of the loophole, the Commerce Department is likely to impose limits on connected cars and software technology made by Chinese automakers, no matter where the vehicles are made. Connected cars have internet access that allows them to capture and upload a lot of information it gets from the car itself, from the onboard cameras and from devices paired to the car. The Commerce Department says that poses a national security risk and is working on rules to prevent Chinese connected car tech from being sold in the U.S.
VALEO TO SELL 3 FACILITIES IN FRANCE
The European auto industry is going through tough times. Here are two stats that help tell the story. The EU has a population of almost 450 million people and last year sales of new cars, trucks and vans hit 10 million units. Compare that to the U.S., which has a population of almost 335 million, or 115 million fewer people, but last year new vehicle sales hit 15.5 million, which is significantly higher. In recent times, almost as many new vehicles were sold in the EU as in the U.S. But the European car market never recovered from the Covid disruptions, and now we’re starting to see the consequences. In a move that would have been unheard of just a few years ago, French supplier Valeo wants to sell two manufacturing plants and an R&D center in France, which collectively employ about 1,000 people. Last week we reported that Audi is looking to close an assembly plant in Belgium. And car production in Italy is down 36% so far this year. We think this is the tip of the iceberg and that we’ll see a lot more layoffs and plant closings coming over the coming years.
CDK PAID HACKERS $25 MILLION
CDK paid way more for the cyberattack that took out its dealer software management system than we expected. Initially when the attack first happened in June, Bloomberg reported CDK was ready to pay millions of dollars, but it was really tens of millions of dollars. CNN reports it paid the hacker group BlackSuit roughly $25 million by sending it roughly 387 bitcoins. That was then split up and moved around, following a common path of money laundering.
CATL BATTERY LASTS FOR 2 MILLION KM
Could concern over battery life become a thing of the past? CATL says its long service-life battery, likely its LFP pack, employs technology like low lithium consumption and a self-repairing electrolyte to help extend the life of the battery. In fact, it claims the packs can last up to 16 years or 2 million kilometers, which is over 1.2 million miles. Knowing a battery could last that long could make used EVs more attractive. But to be fair CATL’s battery warranty is about half of its claims at 8 years or 800,000 kilometers or about 500,000 miles, which is still quite good. Tesla is also looking at ways of extending the life of batteries with a manganese-rich cathode material, which are cheaper, have a high voltage and a lower environmental impact. However, they would degrade fast. But Eletrek reports that Tesla filed a patent for doped manganese-rich cathode active materials that provided better capacity retention in tests. The amount of charge and discharge cycles was pretty low, so more work will need to be done before we see an EV powered by one of these batteries.
CYBERTRUCK GETS JUMPSEATS, BIKE PROTECTOR
Speaking of Tesla, we saw it’s offering a couple of accessories for the Cybertruck that are kind of interesting. It must have found that owners were damaging the tailgate when transporting things like a bike because there’s a new tailgate shield. It wraps around the entire tailgate with straps and features large pads to protect from strikes or scratches as well as loops on the backside to fasten stuff to. That includes new tailgate jumpseats with enough loops to put three sets side-by-side. And when you’re not using them, they zip up into their own little pouch.
FISKER DUMPING OCEANS FOR $16,500
Fisker sold its remaining Ocean inventory for a fraction of its original price. The electric SUV originally sold for $39,000 – $70,000 but a bankruptcy court judge just approved the sale of 3,300 Oceans for as much as $46.25 million to American Lease, a company that leases vehicles to Uber and Lyft drivers in New York City. The judge said vehicles “in reasonably good working order” can be sold for as much as $16,500, while Ocean’s requiring at least $5,000 in repairs can be sold for as little as $2,500 each. Fisker filed for bankruptcy last month because it ran out of cash and it’s making this deal to clear out its remaining inventory.
EU TO LOWER TARIFFS ON VW, BMW EVs FROM CHINA
Good news for Volkswagen and BMW. The European Commission is considering lower tariffs on the automaker’s imported Chinese-made EVs. BMW builds electric Minis, while VW produces the Cupra Tavascan EV in China. Those models were automatically slapped with the highest 37.6% tariff because they weren’t included in the EU’s investigation into imported Chinese-made EVs. But now the EU is considering lowering the tariffs for the Minis and Cupra to 20.6%. However, a final decision isn’t expected until later this year.
CADILLAC ESCALADE GETS MAJOR REFRESH
Three years into its product cycle, the Cadillac Escalade is going through a major refresh. There are some minor exterior styling changes, including a bolder front end with different lighting. But the real upgrades come inside, including a massive 55-inch display that stretches from pillar to pillar, like the Celestiq. About 63% of that display is for the driver, with the remainder for the front passenger, who can look at content that would otherwise distract the driver. Another novelty is radar sensors built into the doors that can open at the touch of a button or via the central display. The radar prevents the doors from hitting something or somebody. SuperCruise, GM’s hands-free driving system, is now standard, as is the latest version of magnetic ride control. Power continues to come from a 6.3 liter V8 with 420 horsepower, while the V-Series adds a supercharger that bumps that up to 682 horses. By the way, Cadillac says it will increase production of the V-Series when the refreshed model goes on sale later this year.
PURE FORGE ROTORS LAST FOREVER
Earlier in the show we talked about CATL making a battery that can last for 2 million kilometers. Well, would you be interested in a new brake technology that prevents the rotors from wearing out? That will be one of the topics on Autoline After Hours, when Gordon Heidacker from PureForge will be on to talk about their metallurgical treatment that can make rotors last for the life of a car. Alan Amici from the Center for Automotive Research will also be on the show. So be sure to tune in tomorrow.
And that’s a wrap for this show, but thanks for tuning in today.
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Just another indicator the economy isn’t as rosy as main-stream media keeps promoting it is. Automotive repo’s up 23%. Thats huge and a direct conflict with things turning around.
I know it probably wasn’t possible to keep a secret, but I bet CDK would prefer it not be made public that they paid 25 million to hackers. If that doesn’t provide hackers with an incentive idk what does.
Lambo,
Repos have been trending upwards for 2 years now. They just took a huge tick upwards more recently so journalists are finally starting to notice. The data has always been there, but the journalists have never been interested in it until it became a raging forest fire of repos.
This time it is all those people who overpaid during covid with insane dealer mark-ups and with little to zero credit worthiness. They started upside down on their loans, and now that used car values have collapsed, they are severely upside down on their loans and basically stuck with the car for the loans full term. Typically when people find themselves in these situations they can take advantage of buying a new car and using the OEM “incentives” to cover for the amount that they were upside down. Only this time interest rates are high enough that even with OEM incentives(almost 15K on a Ram truck) they can’t get an affordable payment. So….It makes more sense to let them be repossessed and start all over again.
Delinquent loan rates were higher in 2019 than in March of this year. I suspect repo rates were too.
https://ycharts.com/indicators/us_auto_loans_delinquent_by_90_days
It is nothing new that people overspend on new vehicles they can’t afford. I don’t have any experience with it, but doesn’t having a vehicle repossessed destroy your credit rating for years, or decades? I’d think people who overpaid would be better off to make payments and keep the vehicle, than have it repossessed, unless they just want to buy something old that they can pay for without a loan. When a vehicle is repossessed, is the person still at least partly responsible for the amount they are “under water”?
Merkur- I used to repo vehicles in the Detroit/Toledo area (long ago) and most people don’t know that if they call their creditor, they will likely work out something to have a lesser impact on their cost and credit. Even if it’s just turning the vehicle in themselves that can save the borrower the cost of the repossession. Because typically, the repo is ordered after your behind 90 days and then after the bank recovers the vehicle, they send it to auction where it typically sells for less than wholesale. (they don’t care because they are in the business of loaning money not selling cars) Then they sue the borrower for the remaining balance difference from the sale and what was still owed, plus the repo fee, plus the storage fee until auction and any auction fees. So rather than just take a minimal loss on the vehicle a person will likely get sued for a big loss and additional $1000 or more in repo related fees. But most people at that point are just trying to maintain a mode of transportation as long as possible. They know it’s coming, and it becomes a game of cat and mouse.
I do wonder if there is a statistic that includes defaulted loans that were possibly turned in but not repo’s. Or are all defaults considered repossessions?
BMW has certainly done well with all the versions the mini it has turned out. But calling something that large mini?
Its a shame that those macho CyberTrucks are so fragile. Good thing they spent their engineering effort on bulletproof glass rather than rounded door edges that won’t cut the occupants and a tailgate that will stand up to normal use. I guess that is what happens when you start with a silly idea and then pursue it against all logic and existing market intelligence.
Merv, the Mini 2-door, which I have, is still very small as US market cars go, 152 inches long, but huge compared to the 1959-2000 pre-BMW Minis.
The Countryman, though, is 170 inches long, and only a little smaller than the platform mate X1.
GM Vet, I suspect Cybertruck was conceived to attract the Tesla fan boys of a few years ago, but now that Elon is a hard core MAGAt, the Tesla fan base has changed. Several Cybertrucks are sitting around near where I am, waiting for buyers.
Kit- I doubt that Elons political affiliations sway many buyers from the CT. If they want the truck they’ll buy the truck. I just don’t believe the demand is, or ever has been as high as what was touted. I believe the pre-orders was a publicity stunt to spur stock value and those orders will never result in a fraction of actual sales. Add in the fact that the multiple delays to launch the truck allowed the newness to wear off and competition to catch up. The other automakers CEO’s support the Democratic party in fact Henry Ford was an Anti-Semite but that didn’t seem to slow Ford sales back in the day. Most people buy the products based on value and what they want regardless of who the CEO supports or how they might adversely impact the economy. They don’t care where the stuff is made or what political party they support and have even proven to buy products that exploit child labor. If it’s out of sight, it’s out of mind. What goes on in other countries isn’t their concern as long as they don’t know.
Once in a while a product becomes the target of cancel culture when bad business practices are made public. But only the left side seems to care enough about political support to try and cancel anything. Which seems funny the party of “tolerance” is proven to always be intolerant when it comes to not having the same political belief. If they were tolerant and acceptant they would never let politics affect their buying decisions.
Yeah, the Cybertruck “reservations” with no real commitment didn’t mean much. It’s too early to know how well it will end up selling. So far, the cheapest ones are $82K. It will need some big price cuts to sell very well.
As far as Musk, he is a “special case,” more than most people. Only someone like him could, and would spend $44B for twitter, mostly to make it safer for lies and misinformation.
I don’t know how much the word would have been out regarding Henry Ford in the 1920s, before TV, and when a lot of people didn’t even have radios. Also, his views may have been popular at the time. In 1923, a KKK rally about three miles from where I am now drew ~200,000 people. https://www.digitalresearch.bsu.edu/digitalcivilrightsmuseum/items/show/110
BTW, it was the right that “cancelled” Bud Light. Of course, they started buying other similar stuff, much of it from the same company.
Sorry about getting off-topic.
Well Henry didn’t exactly hide it as he ran a newspaper called the Dearborn Independant filled with antisemitic articles. It was a weekly publication that shared his views until he was sued for liable by Aaron Sapiro. Some dealerships refused to carry the paper, but it was in circulation for years before the lawsuit caused it to finally be shut down.
Also Bud light was not boycotted over a political party. That was a social conflict. Like boycotting over child labor. As for X the biggest source of misinformation is our own media orgs anymore. So being against censorship is a good thing. Yes, people make up stories always have and always will. The sad part is people have become dumb and unable to think for themselves. If it’s on the internet it must be true. But censorship is not the answer. Because then you only get the narrative that the censor wants you to hear. That becomes your truth right or wrong.
Maybe somewhat off topic but it’s a day late and still related to Elon and CT sales.
My parents were young kids when Henry’s newspaper was going, but at the time, half of Indiana, including the governor and senators were KKK members, who would have liked Henry’s views. The Henry Ford thing I remember my dad mentioning, was the hired thugs to keep the union out. My parents were in their early 20s at the time.
Yes, the Bud Light boycott was not specific to a political party, exactly, but essentially all of the boycotters would have been of the same party.
The biggest source of misinformation is NOT our own media orgs, if you mean broadcast TV, newspapers, etc. It is social media. You can put any lies you want on nearly all of the platforms. At one time, twitter was somewhat of an exception, with their moderation, but no more.
For years there have been movies showing spies torturing people to obtain information out of them. Instead of using fists as a form of torture, they can show the CT frunk closing on their fingers and stating that they will stop closing the frunk if they give information.
Kit- If you go to Yahoo and in the comment section you attempt to put in “Trump 2024” it gets flagged and denied for posting. Yet if you try and post “Biden 2024” it will post. Not exactly sure how one is more offensive than the other but it’s clear censorship. Twitter and such were doing the exact same thing and any true American should have a problem with that type of activity. Censoring out proven mis-information is much different than censoring to favor a particular political position. I would be upset if were reversed as well. We need to maintain the ability to express our opinions even when they are not a popular opinion.