AD #4305 – Big Downside to China Speed; Ram Getting Compact Pickup & 1st SUV; U.S. Faces Prolonged Engine Oil Shortage

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

GET AN OIL CHANGE, BEFORE THE COST GOES UP
As we reported last week, the U.S. faces a shortage of synthetic oil for car engines. And it could last for a while. According to the Independent Lubricant Manufacturers Association, the synthetic oil shortage will last until at least the middle of next year. That’s because the Middle East supplies 44% of the base oils used to make synthetic oil in the U.S. And with the war in Iran disrupting those shipments, the U.S. is expected to run out of base oils next month. While other base oil producers outside the Middle East normally boost production during a shortage, they’re also having trouble getting oil from the region. Plus, with jet and diesel fuels at 40-year highs, it’s more profitable for producers to make those instead of base oils. And even if the war ended today, according to analysts it would still take months for the supply to get restocked.

TOYOTA IS LATEST OEM WITH A REORGANIZATION
We’ve seen lots of reorganization recently. Ford, Honda, Nissan, Stellantis and more have all made moves they hope will make their companies stronger. Now we can add Toyota to that list. It’s going to shut down manufacturing engineering functions across several organizations and will create a new division, called Production Engineering Group, that will be responsible for engineering, production, including powertrains and manufacturing engineering. Toyota says bringing this expertise together will strengthen its manufacturing capabilities for the future. The company’s current Chief Production Officer will be in charge of the new division, which officially starts operations on July 1st.

           

EV SALES SOAR IN EUROPE, SO DO CHINESE
We’ve got the sales results for April and the European car market is looking better. Automakers sold over 1.1 million vehicles, up a solid 7%. Sales of electric cars hit 255,000 units, up a whopping 38%. PHEVs were up 20% and hybrids up almost 13%. Tesla also had a strong month, up 67% to just over 9,000 cars. And it’s no wonder, gasoline, or petrol prices in Europe are close to €2 a liter, or $8 a gallon. The biggest gainers were clearly the Chinese automakers. Geely, SAIC, BYD and Leapmotor as a group, their sales shot up 55% to more than 91,000 units. And they captured 9.3% of the EU market, up three percentage points from a year ago.

THE DOWNSIDE TO CHINA SPEED
But Chinese automakers face a problem in Germany. Their cars are depreciating far faster than anyone else’s and Automotive News reports that it’s a three-fold problem. Used car buyers are wary that some Chinese brands will go out of business, meaning they won’t be able to get spare parts. On top of that, Chinese automakers have relied heavily on fleet sales, and when those cars get resold, which happens fast, it drags down new car prices. And here’s what we think is the most interesting reason, and it’s one of the downsides to China Speed. As Chinese automakers come out with new models more quickly, it obsoletes what’s already been sold, which also drags down their value.

SCOUT TO MOVE OUT OF MICHIGAN
Scout Motors is moving employees from its Innovation Center outside of Detroit to its new headquarters in North Carolina. Scout says other employees will gradually follow but it says the majority of its engineering and design work will remain in Metro Detroit. However, there’s still concern about the startup’s long-term presence in Michigan. In late 2023, Scout announced plans to invest $11 million and create 200 jobs for its Innovation Center and the state of Michigan provided a $10 million grant toward that. And while Scout has met its job creation commitment, the incentives agreement expires at the end of April 2027, at which point it’s no longer obligated to keep the jobs. Scout plans to start building vehicles at its new plant in South Carolina in 2028, and along with its new headquarters, it may explain why it wants to relocate employees closer to those facilities.

NISSAN TURNS PAINT SHOP WASTE INTO INSULATION
Nissan has come up with a clever solution to re-use waste created during the painting process. The automaker developed a technique to recover calcium carbonate, which is used to filter airborne paint particles. The calcium carbonate is then supplied to the Takayama Group, which will use it to manufacture sound-insulation for buildings. Compared with regular insulation, it’s expected to reduce CO2 emissions by more than 30% and Nissan says the new process will reduce its annual waste by 1,200 tons. The automaker is also exploring other applications for recovered calcium carbonate, including in auto components starting in 2030.

RAM TO GET COMPACT PICKUP, FIRST SUV
Yesterday we reported on the new cars that Chrysler is adding to its lineup as part of Stellantis’ giant reorganization. Today, let’s look at what Ram will add in the US market. There’s the mid-size Dakota pickup, which we’ve reported on before and is based on the Jeep Gladiator and going into the same assembly plant in Toledo, Ohio. But Ram is also getting the Rampage, a compact pickup that’s aimed right at the Ford Maverick. The model is already sold throughout South America and is built in Brazil. It’s a uni-body truck with a 1,000 kilogram cargo capacity, or about 2,200 pounds. It’s currently sold with Stellanis’ new 2-liter Hurricane 4 gas engine with 272 horsepower and 295 pound feet of torque or an optional 2.2 liter diesel that makes 200 horses and 332 pound-feet. Those are paired with a 9-speed automatic transmission and standard all wheel drive. Stellantis says the only thing it will change are the headlamps and bumpers to meet U.S. regulations. Although, we doubt the diesel will be part of the package and we think the U.S. version will be made in Mexico. Ram also gets its first SUV, the Ramcharger, which will be built off the Grand Wagoneer platform and targeted right at the GMC Yukon. This model and the Dakota will have SRT variants as well. Don’t forget about Rumble Bee, its new sport truck lineup. And the brand will add a new ProMaster City to its commercial vehicles. When you put it all together, Ram expects to become the #2 truck brand in the American market by the end of the decade, ahead of General Motors.

HYUNDAI JUMPS ON MOBILE SERVICE BANDWAGON
Like many automakers that operate in the U.S., Hyundai is working with select dealers to launch a mobile repair service. The company will provide dealers one-on-one coaching, offering guidance on integrating a Dealer Management System as well as how to upfit vehicles with equipment and software. While it looks like it’s using competitor vehicles, like the Ford Transit, for now, Hyundai and Kia have their own vans coming to the U.S. market in 2028. With the service, customers will be able to book an appointment through the dealer’s website. A trained technician will then come to their home or work to perform things like oil changes, brake jobs, tire rotations and software updates. That kind of convenience can improve customer retention, which Hyundai says was reflected in a trial program and what gave it the confidence to expand the service. Its goal is to have 150 mobile units by the end of the year.

But that brings us to the end of today’s show. Thanks for making Autoline a part of your day.