AD #4326 – Lack of All-New Cars Sends Quality Up; Toyota Could Steal GM’s U.S. Sales Crown; Gas Vehicles Losing Market Share Fast

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

TOYOTA COULD STEAL SALES CROWN FROM GM
It is a bit of a long shot, but Toyota has a chance to overtake General Motors in U.S. sales this year. According to Cox Automotive, Toyota’s market share in the first half of the year is projected to increase to 15.8%, thanks to growing demand for hybrids, which we’ll have more on later in the show. Meanwhile, GM’s market share is expected to dip 1% to 16.8% in the first half. If that trend continues for the rest of the year, Toyota has a chance at taking the sales crown from GM. But Cox’s senior economist says GM will fight to keep the top spot, likely with incentives. GM has been #1 in U.S. sales every year since 1931, with the exception of 2021, when it was crippled by the chip shortage and Toyota took the crown.

SLATE IN LINE TO MAKE PROFIT
We’ve got more on Slate because John was at a media event it held yesterday to provide a deep dive into its vehicles and the company itself. He got to talk with the CEO, the president, the CFO, the head of engineering, the head of manufacturing, the chief engineer, head of fleet sales, and more. He got so much information that we can’t possibly squeeze it into this show, so more to follow later. But here’s some top line items. At $24,950 for the base truck, $29,950 for the SUV and $31,950 for the fastback, Slate is in line to make a gross profit. But it will rely on selling accessories to turn that into a net profit. There’s also going to be a destination charge, which we estimate will be about $1,400. We talked to several analysts at the event and their consensus was the average Slate would sell for $33,000-$38,000. Slate opened its web portal yesterday and quickly booked over 10,000 pre-orders. That’s a pretty good start, but we’ll have to see how it does in the long run.

LACK OF ALL-NEW CARS SENDS QUALITY UP
Ford brought out all the top brass yesterday to brag that it shot up the chart on JD Power’s IQS, which stands for Initial Quality Survey. It was a red letter day for the company because it’s been posting record amounts of recalls over the last couple of years and was earning a public reputation for poor quality. Porsche topped the JD Power list, followed by Genesis, but Ford was the top-rated mass-market brand, coming in 3rd place overall. The company made significant changes to improve, including the creation of cross-functional teams to tackle problems and with keeping a closer eye over supplier quality. Ford is especially concentrating on long-term powertrain durability, running its dynos 24/7 and testing everything for more than 300,000 miles. Even so, Lincoln was 15th on the list, and below the industry average. JD Power says that as a group, automakers made one of the greatest improvements in quality it has ever measured. So here’s our Autoline Insight. The overall improvement is largely due to a lack of all-new products coming into the market. With so many EV programs getting cancelled, and automakers trying to breathe new life into their older ICE vehicles, we’re not seeing as many all-new models coming down the assembly lines. And when you keep making the same old products over and over again, the quality tends to get better.

GAS VEHICLES LOSING MARKET SHARE FAST
Last year vehicles that solely ran on gas power made up 73% of new car sales in the U.S., but according to AlixPartners, which is a sponsor of Autoline, that number will drop to 50% by 2030. And it will mainly be hybrids stealing that market share. Last year the powertrain, including mild hybrids, accounted for about 18% of new car sales, but that’s expected to jump to 23% this year and 34% by the end of the decade. U.S. buyers now have nearly 50 hybrid models to choose from and more are on the way. An analyst from Cox told Automotive News “hybrid is no longer a bridge technology, it’s becoming a core volume strategy.”

WEAK YEN BRINGING RELIEF TO JAPANESE AUTOMAKERS
Japanese automakers are getting hammered by U.S. tariffs but they’ll get a bit of relief thanks to a weaker yen. The yen is at a 40-year low and Bloomberg reports if it stays at its current level Japanese automakers will see combined earnings of $5.8 billion based on forecasts from those companies. Toyota had previously warned that its earnings could be negatively impacted by rising oil and material costs. But now that the U.S. and Iran have reached an agreement, oil prices have fallen and along with the weaker yen, analysts believe Toyota could revise its forecast upward.

VW RAISING €7.4 BILLION IN ASSET SALE
Volkswagen has entered an agreement with Bain Capital to sell a majority stake in its subsidiary Everllence, which makes diesel engines for ships and stationary generation as well as heat pumps, turbines and turbochargers. The deal still needs approval but Bain is in line to purchase 51% of Everllence for 7.4 billion euros, which VW says it will use to “strengthen its own financial position.” And it sounds to us like VW could sell off more if it needs to. Everllence used to be the Energy Solutions division of manufacturing and engineering company MAN before it was sold to Volkswagen when MAN merged into Traton. Then it was renamed to Everllence last year. And a company like Bain is probably interested in Everllence because it’s less likely to be impacted by AI.

CHINESE EXPECTED TO GROW EUROPEAN MARKET SHARE
As we reported earlier in the week, Chinese automakers accounted for most of the increase in European sales in May. They were up 63%, capturing nearly 9% of the market. And according to a new study from AlixPartners, Chinese market share will grow to 16% by 2030. This should especially concern German automakers. A survey of consumers found that 36% of Germans between 18 to 34 prefer Chinese brands over German ones.

I know this sounds crazy, but could over the air updates soon become obsolete? What if automakers could use on-board AI to fix problems in cars? That’s one of the things we want to ask Mark Wakefield from Alix Partners about. He’ll be on Autoline After Hours this afternoon. So will Del Costy, the President of Siemens Digital Industries for the Americas. We’ll be talking to him about new ways of using computer simulation and using that to get up to China Speed. Joe White, from High Speed Rodeo, will also be on the show, and we invite you to join the action when it gets going at 3 pm eastern time today.

But that’s a wrap for this show. Thanks for tuning in.