Even Used Car Sales Smacked in the Side of the Head

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By Gary S. Vasilash

This is the sort of thing that can cause someone—employee, investor—to gulp when they read it in relation to a company’s Q3 financials:

“We have taken deliberate steps to support our business for both the near-term and the long-term. We are managing our business prudently, and prioritizing initiatives that reduce costs, unlock operating efficiencies, profitably grow market share and create better experiences for our associates and customers.”

That’s Bill Nash, president and chief executive officer of CarMax, the largest retailer of used vehicles in the U.S.

He went on: “As the market leader, we have spent almost thirty years building a diversified business that can profitably navigate the ups and downs of the used car industry. We believe we are well positioned to effectively manage through this cycle.”

When someone notes they’ve been in this for decades and will consequently be able to handle what is occurring now, it is clear that it is tough.

In the case of CarMax, compared to Q3 last year:

  • Net revenues down 23.7%
  • Total retail used units sold down 20.8%
  • Total wholesale units sold down 36.7%

And so on.

While it is fairly well known that there is an affordability problem in the new vehicle sales business, CarMax notes that vehicle affordability—as well as inflation, increasing interest rates and low consumer confidence—are having a negative impact on its business, as well.

Things may be improving. But probably not as quickly as buyers and sellers would like.

The EV Market May Not Be What Some Think It Will Be

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By Gary S. Vasilash

There must be—and certainly ought to be—some consternation this week at GM HQ.

International consulting and accounting firm KPMG came out with its 23rd Global Automotive Executive Survey, with responses from execs in and related to the auto industry. More than 900 of them from 30 countries.

When asked to rank the companies they think will have a leadership position in electric vehicles by 2030, it went like this:

  1. Tesla
  2. Audi
  3. BMW
  4. Apple
  5. Ford
  6. Honda
  7. BYD
  8. Hyundai-Kia
  9. Mercedes
  10. Toyota
  11. Baidu
  12. Fisker

Look what’s not on the list. And I don’t mean VW, though that is absent, too.

Yes, Apple is on the list. It was last year, too. Then it was in 8th position. Clearly there are more than a few people in the industry that see something that many of us don’t (i.e., Why should Apple bother getting into a low-margin industry? It is unlikely that it could get considerably more in the way of subscription monies than it already has.)

There is another somewhat troubling survey results across the board.

On the question of what percentage of the market battery electric vehicles will have in 2030:

  • U.S.:             29%
  • China:          24%
  • Europe:        24%

While there is some evident optimism regarding the potential uptake of EVs in the U.S., 29% surely isn’t the 50% that is regularly bandied about by domestic OEMs.

And while some may think the 29% average is satisfactory, the median may give them more joy: 35%.

Until they find out that the median number for the percentage of EVs in the U.S. market by 2030 in last year’s KPMG survey was 65%

Toyota’s Approach to Environmentally Appropriate Vehicles

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By Gary S. Vasilash

There is an on-going criticism of Toyota that it is behind other OEMs when it comes to electric vehicles.

Which is true if the companies in comparison are Ford and GM.

At present, Toyota has one full battery electric vehicle, the bZ4X. It also has one hydrogen-powered electric vehicle—generally referred to as a “fuel cell electric vehicle” or “FCEV”—the Mirai.

At present there are no Lexus electric vehicles, battery or otherwise.

The EPA has recently published “The 2022 EPA Automotive Trends Report.” It examines greenhouse gas emissions and fuel economy.

In the report it shows that from 2016 to 2021, the miles per gallon for the aggregate of vehicles produced by the following companies are:

  • Ford:                      22.8 to 22.9 mpg
  • GM:                       22.4 to 21.6 mpg
  • Stellantis:               21.5 to 21.3 mpg

In other words, Ford improved by 0.1 mpg while GM and Stellantis both went in the wrong direction.

Similarly, the CO2 measures are:

  • Ford:                       389 to 385 grams per mile
  • GM:                        397 to 414 grams per mile
  • Stellantis:               413 to 417 grams per mile

In the case of CO2 measures, less is better. Ford got a bit better. The other two didn’t.

Stellantis presently has no full battery electric vehicles. It does have plug-in hybrid (PHEV) versions of the Pacifica, Wrangler and Grand Cherokee.

Ford has battery electrics. The F-150 Lightning, the Mustang Mach-E and the E-Transit. It also has hybrid versions of the Escape, Maverick, F-150, and Explorer. Lincoln offers hybrid versions of the Aviator and the Corsair but no battery electrics.

GM has the Chevrolet Bolt EV and Bolt EUV, Cadillac LYRIQ and HUMMER EV battery electric vehicles at present and no hybrids.

So how does Toyota measure on the EPA metrics?

  • Toyota:                    25.0 to 27.1 mpg

and

  • Toyota:                    355 to 327 grams per mile

Or simply put, in the aggregate, the vehicles that the company put out in the market between 2016 and 2021 are, from an environmental standpoint, better than the vehicles from the other three manufacturers.

And it is worth noting that in 2021 Toyota, with sales of 2.3-million vehicles, was the top manufacturer in the U.S. GM sold 2.2 million, Ford 1.9 million and Stellantis 1.8 million.

It didn’t have the bZ4X last year, so that doesn’t count in its numbers. It did have the Mirai, but the number of those it sells could pretty much fit in the parking lot of a large stadium.

But what it does have are the Prius and Venza and hybrid versions of the Corolla, Camry, Avalon, Sienna, Highlander, Sequoia, RAV4, Tundra, and Lexus ES, UX, NX, RX, LS, and LC.

It could be argued that those vehicles contributed a lot to the “greener” performance of Toyota compared with Ford, GM and Stellantis.

It could also be argued that especially compared with Ford and GM Toyota is some sort of Luddite when it comes to green powertrain technology. . .yet the EPA figures don’t indicate that what it is putting on the road is in any way behind the curve.

On this edition of “Autoline After Hours” we are joined by Jordan Choby, vice president of Powertrain Control at Toyota Motor North America R&D. He joins us from the Toyota Gardena, California campus where fuel cell development is occurring.

Choby explains that, yes, Toyota is working on battery electric vehicles and it plans to have 30% of its global volume be electric vehicles by 2030, but that the company is operating on model that is providing consumer choice regarding the type of engine or motor that is under the hood of their vehicle.

Choby talks with “Autoline’s” John McElory, Tom Murphy of Autoweek, and me.

And you can see the show here.

Your Polestar 3 Is Watching You

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By Gary S. Vasilash

Polestar essentially spun out of Volvo, and if there is one thing that Volvo is associated with is safety. And that came along for the proverbial ride to Polestar.

To that end, Polestar has announced the Polestar 3 EV SUV will be equipped with “two closed-loop premium driver monitoring cameras” and associated software.

The gear is coming from a company named “SmartEye,” which characterizes itself as “the global leader in Human Insight AI, technology that supports and predicts human behaviour in complex environments.”

Or in this case, the Polestar 3.

Polestar 3 (Image: Polestar)

The cameras will track the driver’s head, eye and eyelid movements. Should it appear that the driver is distracted or becoming sleepy, the system detects the situation and then sounds an alert or possibly actives an emergency stop function.

The Polestar 3 has an NVIDIA-based centralized computer that performs the processing for that as well as other driver-assistance systems. Which basically means it is smart.

Thomas Ingenlath, Polestar CEO, says, “This technology addresses some of the main reasons behind fatal accidents and can help save lives by prompting the driver to refocus attention on the road – and can initiate preventive action when they don’t, or can’t.”

While this is undoubtedly laudable technology, it does seem somewhat strange to think that your car is keeping an eye on you.

For a Few Dollars Less: Edmunds Thinks It’s Time to Buy

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By Gary S. Vasilash

Analysts from Edmunds, the vehicle shopping research firm, have discerned some clues in the market that they feel bode well for consumers. (They have also found some not-so-good things, like the unlikelihood of getting a lease deal and rising interest rates, but let’s put those things aside.)

Edmunds found that while the average transaction price (ATP) for a new vehicle hit a record high in November, at $47,681, November was the first month since July 2021 that the ATP was below the Manufacturers Suggested Retail Price (MSRP).

The average MSRP in November was $47,696.

So $15 to the consumer’s side of the ledger.

For buyers of large trucks, there was an average save of $1,210.

However, on the other end of the spectrum, compact cars, there was a price $703 higher than the MSRP.

Go big, save big(gish). Go small, pay more.

The ATP for the large truck was $61,076 and that represents a ~2% saving from the MSRP.

The ATP for a compact car was $26,398, or a ~3% premium over the MSRP.

That said, the folks at Edmunds think that if you’ve been waiting for a time to buy, that time might be right now.

Two Fun Facts About Honda

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By Gary S. Vasilash

  1. Although some think of Honda as a Japanese company—yes, that’s where its HQ is located, so there is that—in 2021 Honda produced 1,300,804 cars, trucks and SUVs in North America and just 615,587 in Japan. Or said another way: more than twice as many in North America.
  2. Honda opened two research facilities in the U.S. in 1975. One in Torrance, California, where American Honda is headquartered, and a test lab in Ann Arbor, Michigan. Even though it has a massive manufacturing footprint in Ohio—Marysville Auto Plant, East Liberty Auto Plant, Performance Manufacturing Center, Anna Engine Plant, Ohio Transmission Plant—the next facility it opened was in. . .Denver, Colorado, in 1980, an operation that focuses on high-altitude emissions tests and catalyst aging. The most recent: this year, in East Liberty, Ohio, HALO: Honda Automotive Laboratories of Ohio. It is a wind tunnel facility that performs aerodynamic, aeroacoustics and racing testing.

(Data from the 2022 Honda Digital FactBook)

Cadillac CELESTIQ Explained

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By Gary S. Vasilash

“Go make something epic.”

That, Tony Roma, chief engineer of the Cadillac CELESTIQ, says was the mandate he and his team received from GM management to develop a vehicle for the brand that is more like an aurora borealis than a mere halo.

This is a full-size uber-lux electric vehicle that customers will commission, not simply buy.

The Cadillac CELESTIQ is an expression of what can be accomplished by a team given a mandate to “make something epic.” (Image: Cadillac)

It is a sedan that has aluminum mega-castings at the base of its overall structure and an exterior skin made primarily with carbon or glass fiber panels. Roma says that the doors are made with SMC—because the material is transparent to radar, and there are radar units in the doors. Yes, the vehicle is also ladened with plenty of technology, including Ultra Cruise, which will allow hands-free driving in multiple driving scenarios, going well beyond the Super Cruise that GM offers in Cadillacs and other brands.

The CELESTIQ has an 111-kWh Ultium battery pack and a two-motor, all-wheel drive system that generates an estimated 600-hp and 640 lb-ft of torque: Roma says that the car goes faster in a straight line than a CT-5 Blackwing—but the vehicle, he says, is powered such that it provides confidence for the driver and is not meant to have performance for performance’s sake.

This is not simply another vehicle in the Cadillac lineup: the companies benchmarked for the CELESTIQ included Rolls-Royce and Bentley. The pricing for the vehicle is on the order of $300,000+.

Roma says that the production rate of the hand-built vehicles—and the building is going to occur not in a factory, but at the GM Global Technical Center in a special clean-room like facility that is called the “Artisan Center.” The company has made an $81-million investment for producing the vehicle. Within the Artisan Center there will be no more than six vehicles being built at any given time.

Speaking of the development of the vehicle Roma says, “This is all-in house. We didn’t write a check [to another company] and put our badge on it.”

The CELESTIQ, in effect, is a vehicle that makes a statement that Cadillac is a brand that is competitive at the highest echelon within the auto industry.

Roma talks about the engineering that goes into the CELESTIQ on this edition of “Autoline After Hours” with “Autoline’s” John McElroy, Frank Marcus of MotorTrend and Richard Truett of Automotive News.

It is arguably one of the most comprehensive insider looks on what will be a landmark vehicle, not only for Cadillac, but for the overall auto industry.

And you can see it here.

All About Jeep

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By Gary S. Vasilash

While Jeeps have been rolling along—literally and figuratively—since 1941, and while the competitors have come, gone, and come back again, it seems that the brand has essentially stuck to its knotting,* building vehicles that allow drivers the freedom to go places where other vehicles would fail to get beyond the parking lot.

Jeeps now come in a wider range than ever, with the iconic Wrangler at one end of the spectrum and the Grand Wagoneer at the other.

Spend some time driving a Wrangler on the highway and you’re going to hope that you get to your destination sooner rather than later—and you’re going to hope that the destination includes some serious off-road driving.

Coming in 2024: the fully electric Wagoneer S–although it will likely have a different name by then. (Image: Jeep)

Spend some time driving a Grand Wagoneer and you’re going to hope that you get to your destination eventually (no hurry)—the comfort and amenities make the term “first class” seem numerically weak.

To help get a better understanding of what is this on-going phenomenon, on this edition of “Autoline After Hours” we talk with Jim Morrison, senior vice president and head of Jeep brand North America.

Morrison was appointed senior manager of Product Marketing for Jeep in 2010 and he has been involved with Jeep in several positions since, getting his current one in 2019.

Like other vehicle brands, Jeep is making the transition to electrification, with current plug-in hybrid versions of the Grand Cherokee and Wrangler (both with the nomenclature 4xe) proving themselves to be well accepted in the market.

Jeep has announced that there will be a full battery electric vehicles coming by 2024, the Jeep Recon and the Wagoneer S (with the latter name being a place holder as the Jeep community is getting an opportunity to provide potential names for the vehicle).

Morrison talks about where Jeep has been—and where it is going—with “Autoline’s” John McElroy, Roman Mica of TFLcar, and me on this edition of the show.

You can see it here.

*While “knitting” is generally the word used, “knotting” seems more Jeep-like robust.

Honda, Fuel Cells & Limited Numbers

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Last year at the Honda Performance Manufacturing Center (PMC) in Marysville, Ohio, there were 124 Acura NSX sports cars produced. That was a smidge off the volume built in 2020, which was 128.

Perhaps because it was the proverbial and actual end-of-the-line for the NSX, through October 2022 there were 236 built.

These numbers are probably useful to keep in mind regarding an announcement that Honda made today:

It will produce a hydrogen fuel cell vehicle (FCEV) at the PMC starting in 2024.

The vehicle will be based on the current Honda CR-V crossover.

In addition to hydrogen for fuel, it will also have plug-in capability.

Gail May, who is the PMC plant leader, said, “This facility is perfect for the production of a new Honda fuel cell electric vehicle, as our small-volume capability enables us to really leverage the skill and expertise of our team to produce quality zero-emissions vehicles here in North America.”

No doubt, there is superb craftsmanship.

But doesn’t the mention of small volume and the numbers of NSXes built give you the feeling that there aren’t going to be a whole lot of FCEV crossovers?

To be fair, however, according to stats from the U.S. Dept. of Energy’s Alternative Fuels Data Center, if you’re looking for a public hydrogen refueling station and you don’t live in the proximity of either San Francisco or Los Angeles, you might wand to find an alternative mode of transportation.

There are 54.

Makes the number of NSXes look big.

The Transformation at ZF

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By Gary S. Vasilash

One of the aspects of the industry’s transition to electric vehicles that doesn’t get a whole lot of attention is that suppliers are responsible for large portions of a vehicle, so as there is the move from internal combustion engines to electric motors, as there is an increase in the importance of software, suppliers need to undergo a transition. . .or they will find themselves under water in short order.

However, making the switch isn’t like throwing a switch.

There are existing competencies within an organization—the things that allowed it to be selected as a supplier in the first place.

But now those competencies, while not completely irrelevant—let’s not lose sight of the fact that internal combustion engines aren’t going away for several more years—are less important within a supplier’s portfolio.

And there is the abiding issue of having the financial wherewithal to make the change, both from the standpoints of people and installed base of capital equipment.

Regardless of what list of the top suppliers you consult, you’ll find ZF right up there.

(Image: ZF)

Going Mobility

Martin Fischer heads up ZF’s operations in North America.

He describes what ZF is now as “a technology supplier to the mobility industry.”

Were you to ask someone in the industry about what ZF is just a few years ago, they’d probably answer, “The company that makes those impressive eight-speed automatic transmissions.”

While the company continues to produce those eight-speeds, Fischer says on this edition of “Autoline After Hours” that they’re not going to be making more investments in eight-speeds.

There are other things on the agenda.

Fischer says the focus today is on technologies related to autonomous driving, electric drive systems and components, and integrated safety, technologies that are both physical and digital.

To help the company move to new places, Fischer says they first started out with small teams that developed products, then integrated those people into the larger company so that everyone becomes involved.

The classic portfolio that ZF has had is undergoing a significant change, with everything from controllers that it is collaborating with NVIDIA on to electric motors to steer-by-wire systems and more. Not the sort of things that one might imagine a “classic” supplier would have the wherewithal to do–at automotive scale and quality.

What ZF is doing is essentially a masterclass in maintaining relevance in a changing industry.

Talking to Fischer are “Autoline’s” John McElroy, Lindsay Brooke of Automotive Engineering, and me.

You can see the show here.