AD #4110 – New Corvette ZR1X Has $207,000 Price Tag; GM & Hyundai To Co-Develop 5 Vehicles; Trump’s Tariffs Cost Automakers $12 Billion

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GM & HYUNDAI TO CO-DEVELOP 5 VEHICLES
We’ve got more details on the partnership between GM and Hyundai, which was first announced about a year ago. For the Central and South American market, Hyundai is leading development of a compact SUV, car and pickup truck, while GM is developing a mid-size pickup platform. All of them will have the flexibility to use either an ICE or hybrid powertrain. Design and engineering work is already underway and these models will start launching in those markets in 2028. GM and Hyundai will also launch an electric commercial van in North America, which will be made in the U.S. as early as 2028. Hyundai will lead development of this vehicle as well. But even though they’re sharing the common platforms, the interior and exterior styling of the vehicles will be unique to each brand. They expect to sell more than 800,000 of these co-developed vehicles a year once production reaches full scale.

SUBARU’S NET PROFIT PLUNGES 35%
Just like yesterday, we’ve got more earnings reports and more bad news. Subaru sold 244,000 cars, up a sharp 15%. Revenue rose more than 11% to $8.3 billion. But its operating profit dropped 16% to $518 million and its net profit fell almost 35% to only $375 million. The U.S. accounts for well over 80% of Subaru’s sales and it expects tariffs to cut its profits by 50% for the full year.

SUBARU Q1, 2025 EARNINGS
Sales	244,000	+15.1%
Revenue	$8.3 B	+11.1%
Op. Profit	$523 M	-16.2%
Net Profit	$375 M	-34.7%
Source: Subaru

TOYOTA’S NET PROFIT TUMBLES 36%
Toyota also reported its latest financial earnings and while the top lines look good, the bottom lines look bad. Toyota sold 2.4 million vehicles in the last 3 months, which was up a solid 7% from last year. That drove revenue up more than 12% to $83 billion. But its operating profit dropped almost 11% to just under $8 billion. And its net profit plummeted 36% to just under $6 billion. Toyota says U.S. tariffs cost it over $300 million in the quarter, but expects that to hit $9.5 billion for the full year.

TOYOTA Q1, 2025 EARNINGS
Sales	2.4 M	+7%
Revenue	$83.2 B	+12.2%
Op. Profit	$7.9 B	-10.9%
Net Profit	$5.9 B	-36%
Source: Toyota

TOYOTA TO BUILD NEW PLANT IN JAPAN
You’d think that with tariffs hurting Toyota’s exports to the U.S. it might consider closing a plant in Japan. But it’s doing just the opposite. Toyota plans to build a brand new plant in Nagoya that will be its “plant of the future,” and will help the company maintain its yearly production capacity in Japan of 3 million units. That suggests to us that when the new plant is ready to open, Toyota will close an old plant, like its Honsha plant in Nagoya that opened in 1938. And yet, the new plant will not start making vehicles until sometime in the 2030s. It’s a little weird to hear a car company announce a new plant that won’t open for another 6 or 7 years.

HONDA CONSIDERS 3-SHIFT SCHEDULE IN U.S.
It’s also a little weird to hear a Japanese automaker say it’s going to use a 3-shift operation at an assembly plant and even work overtime on weekends, but that’s what Honda is considering at its plants in the U.S., or at least some of them. 3-shift operations and overtime can greatly increase production, but for Japanese automakers it’s been kind of taboo because it can really wear out people and equipment. And it doesn’t leave much time between shifts either, which is when plants typically schedule maintenance and repairs, which plays such an important role in maintaining quality. Honda is undoubtedly looking to increase U.S. production to offset imports from Japan, Mexico and Canada that are getting hit by tariffs. And it sure looks like it’s ready to break its own manufacturing taboos to get there.

TRUMP’S TARIFFS COST AUTOMAKERS $12 BILLION
President Trump’s tariffs have caused the most losses for automakers since the pandemic. The Wall Street Journal reports that automakers have taken a nearly $12 billion hit so far because of the tariffs and the losses are expected to continue. Net profit for the 10 largest automakers is expected to drop by a quarter this calendar year to the lowest level since 2020. Automakers can raise prices or move production to the U.S. to help offset the tariffs. But so far, companies have been reluctant to boost prices since that will hurt sales. And moving production takes time since it takes years to build a plant and rework the supply chain. So, analysts say automakers could feel the impact of tariffs for years.

TARIFFS COST UAW MEMBERS THOUSANDS IN PROFIT SHARING
And tariffs are going to cost UAW workers thousands of dollars in profit-sharing. They receive bonuses based on GM, Ford and Stellantis’ prior-year financial performance, which averages about $1,000 for every billion dollars in operating profits that the automakers earn in North America. Two years ago, union members at all three companies received more than $10,000 in profit sharing. But according to the Anderson Economic Group, based on the automakers first-half results and full-year guidance, bonuses for GM and Ford workers will drop by $3,000 – $5,000 and UAW workers at Stellantis may not get anything at all.

    

NEW MG4 DESIGN DIALED BACK TO APPEAL TO GLOBAL BUYERS
Overseas buyers prefer sharper, sportier designs compared to people in China. That’s according to the Chief Designer at SAIC, who also holds the unique job of styling cars for MG after the Chinese automaker acquired the iconic British brand in 2007. Rather than designing separate versions for China and overseas markets, which would add production costs, he says the look of the new MG4 was moderated and more restrained to help it appeal to both markets.

GM SIGNS NEW RARE-EARTH SUPPLY DEAL
General Motors is working to reduce its reliance on China for rare-earth magnets and it just signed another deal with a domestic supplier. It formed a multi-year partnership with Texas-based Noveon Magnetics for rare-earths that will be used in components for its full-size trucks and SUVs. GM also has deals with MP Materials and E-Vac Magnetics and thanks to the new deal, GM says the majority of its rare-earth materials will now come from domestic suppliers.

NEW CORVETTE ZR1X HAS $207,000 PRICE TAG
Speaking of GM, Chevy’s 1,250 horsepower AWD version of the Corvette will start at a little over $207,000, including destination charges. The convertible version is $10,000 more than that and the 3LZ package tacks on another $11,000. The ZR1X is made at GM’s Bowling Green plant in Kentucky and will do 0-60 MPH in under 2-seconds, but customers will have to wait until the end of the year to take delivery.

Don’t forget to check out Autoline After Hours at 3PM EST today. We’ll be diving into second half forecasts for car sales and they don’t look good. Plus, we’ll get into other top news stories of the week.

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But that’s a wrap for today. Thanks for tuning in.