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Runtime: 10:15
0:00 China Likely on Major Restructuring Path
1:25 GM Pays $40 Million to Lure Tech Executive
2:32 Schaeffler Could Be Top Humanoid Supplier
3:31 VW Cutting Production Another 1 Million Units
4:30 Honda & Sony Scale Back JV Even More
5:10 Hyundai’s 1st Compact IONIQ EV
6:29 Young Chinese Ditch German Luxury Brands
7:21 U.S. Interest in Chinese Cars Surges Via TikTok
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This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
CHINA’S AUTO MARKET BRACES FOR BRUTAL RESTRUCTURING
Is China’s auto industry on the verge of a massive restructuring? It sure looks that way. Here’s the problem. The market is saturated. Everyone who wants a car pretty much has one. And sales are falling, down more than 17% in Q1. There are just too many car companies with too many models making too many cars. Gasgoo points out there are 953 different models in China, compared to about 300 each in the U.S. and Europe. 378 of those 953 sold fewer than 5,000 units last year. 95 of them sold less than 10,000 and 219 of them sold fewer than 30,000. In other words, 692 models, or 73% of the total, are not profitable. Chinese auto experts and even the Chinese government has warned that the way the industry is operating is simply not sustainable. NIO’s CEO, William Li, predicts only 5 to 7 Chinese automakers will survive the coming shakeout. We think the collapse will be brutal, but the survivors who emerge will be among the most formidable automakers in the world.
GM PAYS $40 MILLION TO LURE TECH EXECUTIVE
What’s it take to get a Silicon Valley executive to join a legacy automaker? Just a lot of money.
Sterling Anderson, who is now responsible for GM’s software and product development, got a one-time signing package worth up to $40 million to join the automaker. It will be paid out through 2027, and after that he’ll be paid more in line with other executives. Anderson received $16 million in cash and stock last year and he can earn another $24 million if he stays and achieves company objectives. That compares to GM CEO Mary Barra, who saw her compensation rise to $29.9 million. While Anderson’s one-time signing compensation is a bit staggering, we’d point out that’s probably what it takes a legacy automaker to get top Silicon Valley talent, who typically get big stock bundles that can be worth a fortune if a startup succeeds. Anderson co-founded autonomous trucking startup Aurora and he was the former lead of Tesla’s Model X and Autopilot programs.
SCHAEFFLER PARTNERS ON HUMANOID ROBOT COMPONENTS
The German supplier Schaeffler is aggressively positioning itself as a components supplier for humanoid robots, and it just got a partner. VinDynamics, the technology company of VinGroup, which is the parent company of the automaker VinFast, is partnering with Schaeffler. The two will collaborate on the R&D of components for humanoids, optimize the control software and once these parts reach production, they’ll expand into product simulation and validation. And thanks to partnerships like this, Schaeffler is positioning itself as a humanoid robot part supplier, more than any other traditional auto supplier that we can think of.
VOLKSWAGEN SLASHES PRODUCTION TO MATCH SALES
Unless something wild happens to Toyota, Volkswagen probably won’t be a threat to take back the #1 global sales slot by the end of the decade. VW CEO Oliver Blume says the company’s “volume planning of the past is unrealistic,” due to U.S. tariffs, competition in China, a shrinking market in Europe and now the war in the Middle East. Its global production capacity last year was 12 million units, but it sold just about 9 million vehicles. So, VW has already cut 1 million units of capacity in China and now Blume says it will cut another 1 million units, mostly in Europe and mainly through the Audi and Volkswagen brands. That’s a lot of volume that we think will lead to more plant closings, possibly as many as four. But by getting production capacity more in line with sales Blume expects the company’s operating profit margin to roughly triple as well as reduce its overall spending.
HONDA & SONY SCALE BACK AFEELA EV PLANS
Last month, Honda and Sony announced they were ending development and would not launch two Afeela models that were planned for North America. And now, the two companies are scaling back the Sony Honda Mobility joint-venture overseeing that project, sending about 400 employees back to their parent companies. Afeela, which was revealed at CES in 2023, wanted to make low-volume, high-end tech-y EVs but it was scrapped as part of Honda’s EV rollback. Honda and Sony say they plan to continue discussions on the best areas to collaborate, but it probably won’t be in whole-vehicle systems.
HYUNDAI DEBUTS IONIQ 3 COMPACT ELECTRIC HATCH
Hyundai revealed the first compact EV in its IONIQ series, the IONIQ 3, which is about the size of a Ford Puma or VW ID.3. While we see some design resemblance to other IONIQ models, Hyundai calls this an ‘Aero Hatch,’ which we think looks more like the Genesis GV60, although with a bigger duck-tail spoiler. The IONIQ 3 is front-drive only and is offered in two power outputs; roughly 135- and 145-horsepower. It rides on Hyundai’s 400-volt E-GMP architecture, which can accommodate two battery sizes; 42- and 61 kWh. The smaller provides 344 kilometers or 213 miles of range, while the bigger offers just under 500 kilometers or 308 miles of range on the WLTP test cycle. The IONIQ 3 also has some bi-directional charging capability, advanced driver assistance technology and is the first Hyundai model with its new Android-based infotainment system, called Pleos Connect. The model is built at the company’s plant in Turkey and should go on sale in Europe soon, but it’s not expected to come to the U.S.
YOUNG CHINESE BUYERS DITCH GERMAN LUXURY BRANDS
One of the truisms in the auto industry is that kids don’t want to drive the brand of cars their parents drove. Years ago, things got so bad for Oldsmobile that it even launched an advertising cam
paign that bragged that its newest models were “Not your Father’s Oldsmobile.” But it’s almost impossible to change public perception and Oldsmobile ended up going out of business. Well the same thing is happening to the German automakers in China. A survey of young Chinese consumers conducted by Berylls, which is part of AlixPartners, found they are likely to avoid German cars and go with Chinese brands because they’re considered to be more modern and technologically advanced. And it all goes back to that truism that young people don’t want to drive the cars that their parents did.
U.S. INTEREST IN CHINESE CARS SURGES VIA TIKTOK
Meanwhile, in the U.S, young people are becoming enamored of Chinese cars thanks to TikTok and other social media outlets. Chinese automakers like Geely have brought cars to the U.S. and invited social media influencers to drive them and post videos about them to their viewers. A survey by Strategic Vision of American car buyers this year found that one out of three said they’d consider buying a Chinese car, which is up from only 18% five years ago. Thanks to people like Marques Brownlee, millions of Americans have been exposed to Chinese cars. They love the technology and are blown away by their low prices. Ford’s CEO Jim Farley recently warned that if Chinese cars were allowed into the U.S. market they would decimate the American auto industry. And based on this information, it sure looks like he’s right.
But that brings us to the end of today’s show. Thanks for tuning in.
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I’m not surprised that car sales are dropping substantially in China. China has been a growth market, with the number of vehicles in service more than doubling between 2015 and 2025. New sales are largely replacement, rather than market growth in North America and Europe.
I have a lot of respect for the management of the Honda Motor Company over the last 40 years. However, lately they seem to be floundering. They pulled out of a partnership with GM that gave them a cost-effective way to market two successful EV models, with the option to develop more. Instead, they decided to go it alone with several models that ultimately were canceled after expending a ton of capital to develop them. Now they are scaling back on their Sony partnership, leaving them with no EV models since they exited the GM programs early, despite their sales success. This leaves Honda in a strange position in the market. Cutting back on EV marketing and R&D seems prudent, given the current state of the US market. But, EV sales are still climbing in the rest of the world. Seems like re-igniting their partnership with GM would be a prudent way to cost-effectively bring new EV models to market until such a time that EV sales volumes rise to a level where it makes sense for them to go it alone.
I guess I am an outlier, but I always liked the brands that my parents drove, they were Chrysler folks, with my mom having a Plymouth Fury with the 318 and automatic and my dad having a Plymouth Valiant with a slant six and three-on-the-tree. When it came time for my first car I had a Plymouth Duster with a slant six and a three speed manual on the floor, and I only don’t still have it because I T-boned a brand new Trans-Am with it and totaled it (the Duster, not the T/A). I admired Chrysler engineering back then and are saddened that they aren’t what they used to be, but I will always have a soft spot for the old ones whenever I see one, mostly at the Woodward Dream Cruise once a year.
A friend bought a Prologue in time to get the $7500 credit. I rode in it, and it is pretty nice, quiet, comfortable, and fairly quick. I guess it is still being made, but not for long. Reliability is not very good in CR’s survey, which may be part of why the Honda/GM deal is ending. With it gone, Honda will have no EVs at all. I’d think they’d want at least one.
The Afeela thing with Sony never made much sense to me. I don’t think there would have been much market for another ~$100K electric car. Even Tesla is getting out of that market.
Ziggy, my parents were also Chrysler people. Except for a Volkswagen Beetle, I had only Chrysler products until I was a salary GM employee, and was kind of expected to drive GM cars to work. I also had a Duster with a slant six and 3 on the floor. It was a 1974. I had a new Chrysler product fairly recently, a 2015 Challenger R/T with a 6-speed manual, and only recently sold the 1989 Caravan that I bought new.
I was hoping the new Charger would do better, but it apparently isn’t selling very well. At one time in the not too distant past, I might have bought one, the gas version, if they sold it RWD. On “general principles,” I wouldn’t want the complexity, weight, and cost of the mandatory AWD. I like that the Charger is a hatchback, and that a two-door is available.
It’s been said before, China is kind of like America was in the early 19 hundreds, many, many manufacturers vying for car sales, then the conglomeration (over the years) that weeded that number to the Big Three………..and history continuing with what we have here currently. China will see the ‘flock’ culled to the survivors (and move on to a greatly reduced pack of Chinese automakers.
A lot of U.S. car companies went out of business over the 20th century, but only one truly successful new one has started since Chrysler, in 1924. That would be Tesla. It’s too early to know if Lucid and Rivian could truly be considered successful, but they’ve already done better than Bricklin and DeLorean.
Yeah, a lot of Chinese car companies will disappear over the next few years. Maybe some will buy others, as GM did with Buick, Cadillac, Chevrolet, and Grabowsky Motor Company.
$40 million dollars is a looot of money and I would think that the tech executive would be under just as much pressure to deliver, whatever it is that they want him to do!
I wonder if those humanoid robots could eventually replace American foot ball players? They have already shown that they can dance, let’s see them take their moves to the gridiron! How long will it be before we see humanoid robots in the boxing ring? Before long, we may have the CP30 droids like we see in Star Wars, walking among us! While most of this is tongue and cheek, as Kit mentioned the other day, with the talk of expedition to the moon and especially Mars, sending humanoid robots with AI in the place of actual humans makes more since! They will not need pressurized breathing equipment, for the suits the astronauts wear to flight cabins! The experiments they perform in space would be a little more complicated, but if doctors can perform complicated surgeries with the use of robots, there would seem to be a work around.
I’ve had two surgeries using robots. Both were done entirely using operator controls with joysticks, pedals, etc., nothing autonomous. That may change in time.