Tag Archives: S&P Global Mobility

Tariff Time

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The price of eggs still hasn’t come down and soon the prices of vehicles are going up. . .

By Gary S. Vasilash

If you were thinking about buying a new vehicle, you might hurry given the application of tariffs on vehicles imported from Canada and Mexico.

No, it won’t mean that the price will go up 25%. But they will go up sufficiently such that you’ll more than notice it on your loan payments.

Anderson Economic Group has figured that vehicle prices will rise on the order of $4,000 to $10,000.

Now, of course, this pass through of pricing isn’t going to be instantaneous.

But it is going to be significant.

According to Stephanie Brinley, analyst at S&P Global Mobility, the vehicle manufacturers are going to be building some 20,000 fewer vehicles per day.

Brinley, speaking to the Automotive Press Association, also pointed out that there is a whole lot of trade going back and forth across the borders, and this is not only parts being produced by suppliers.

Say you want to buy a Ford F-150. Those trucks are built at plants in Dearborn and Kansas City. No problem there.

But say you want a V8.

That’s built in Windsor, Ontario, Canada.

EV sales are already tough.

Chevy has a hit with the Equinox EV. A large part of that is undoubtedly that it is a 315-mile range EV that starts at $41,900. For now.

It is built at the GM plant in Ramos Arizpe, Mexico.

So are the Chevy Blazer EV and the Cadillac Optiq.

Let’s say you want to buy a Ford Mustang GT, which ranks highly in the 2024 Made in America Auto Index from Kogod School of Business.

What’s the likelihood that if the price of other things in the showroom go up (the Mustang Mach-E is built in Cuautitlan, Mexico) the price will be held on the Mustang GT with the gas engine?

Low, I suspect. After all, not only are there going to be fewer vehicles to sell, they’re going to want to make something, and there’s only one way that’s going to happen.

Sure, maybe the vehicle manufacturers will eat the costs. For a while.

But if the trade dispute carries on, there will be little appetite for that.

The Shift in Gearbox Preference in the U.K.

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No, not everyone drives a manual in the U.K.—a lot do, but the number is declining

By Gary S. Vasilash

One of the things that isn’t often taken into account when looking at the number of vehicles sold in a given time period is that that number is additive to what exists on the road at that time.

Last year S&P Global Mobility calculated the average age of light vehicles in the U.S. was 12.6 years old.

From the standpoint of vehicles in operation (VIO) last January there were 286 million vehicles rolling around in the U.S.

So making a change (e.g., percentage of overall EVs in operation) will take a considerably longer time than might be thought.

An example of this are numbers from a British automotive data company, cap hpi, on types of transmissions in vehicles on the U.K. roads.

It found that at the end of 2024 automatic transmissions are in 29.3% of the U.K. car parc.

Which means more than two thirds of the vehicles are still manuals.

Yes, they found there is a considerable uptake in the number of automatics and a decrease in those buying vehicles with manuals: over 1.5 million new vehicles with automatics registered in 2024; 274,000 with manuals registered.

And the trend toward automatics is seemingly going to continue.

Unlike in the U.S. where a driver’s license is a driver’s license, in the U.K. there are differences in terms of the gearbox.

Stacey Ward, senior data director at cap hip, noted, “Additionally, more new drivers are opting for automatic-only driving licenses. In 2012, there were just 550,000 drivers with automatic licenses. In 2022, there were over 1.1 million, with this figure expected to continue to increase. Estimates suggest that by next year, a quarter of learners will qualify with a license limited to automatic cars only.”

The proverbial die has been cast.

Why You Want to be Friends with a Car Mechanic

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Let’s face it, as things age they need more work. . .

By Gary S. Vasilash

Although there is considerable attention paid by the industry and industry observers on new vehicle sales—for the former it is simply because that is where their money is made (or not) and for the latter, new things tend to be more interesting than things that have been around the block more than a few times—turns out that so far as the public is concerned, the vehicle they’ve had in their garage is probably going to continue to serve them for some time to come.

S&P Global Mobility has run the numbers based on registration information and discovered that the average age of cars and light trucks is at an all-time high: 12.6 years.

This means that the new-car smell that was wafting through the interior in 2011 may be gone but the set of wheels isn’t.

As of this past January, according to S&P Global Mobility, there were 286 million vehicles on the roads of the U.S. They term it “vehicles in operation” (VIO).

Of that, some 70% are between 6 and 14 years old. And that percentage will hold, it is calculated, for about the next five years.

And no vehicle analysis would be complete without looking at electric vehicles.

S&P Global Mobility says the average age of EVs in the U.S. is 3.5 years.

However, there is still some bullishness:

“We started to see headwinds in EV sales growth in late 2023, and though there will be some challenges on the road to EV adoption that could drive EV average age up, we still expect significant growth in share of electric vehicles in operation over the next decade.”– Todd Campau, aftermarket practice lead at S&P Global Mobility

But there is something that provides some perspective about the number of EVs on the road vis-à-vis the total VIO.

There are 3.2 million EVs in operation in the U.S.

That means 1.1% of the total VIO.

Given the amount of attention garnered you’d think that at the very least the decimal point would be shifted one place to the right.

The Cost of Cars & a Considered Alternative

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By Gary S. Vasilash

According to the most-recent numbers from Kelley Blue Book, the average transaction price paid for a vehicle in May 2023 was $48,528. And this is even though, KBB found, the average price paid was $410 below sticker, not some wild figure well above it, which people were paying as a result of the pandemic: KBB notes that in May 2022 the price paid was $637 above sticker.

S&P Global Mobility reports that account-level delinquency rates of auto loads 60+ days past due are now up 26 basis points from Q1 2021, from 1.43% to 1.69%.

While that is a non-trivial jump, the folks at TransUnion and S&P Global Mobility point out that this is a situation that is being faced by a segment of the consumers and lenders, those who are in the subprime category and more than likely to be buying a used car.

So since that $48,528 MSRP may not apply to those people, know that according to Cox Automotive, the average used vehicle listing price in May was $27,256, “the highest since early January.”

Meaning, new or used, vehicle are pricy.

But this statement related to the loan delinquencies is somewhat startling:

“The interest rate rise is squeezing the monthly budget for the average American consumer. Consumers set aside money monthly for housing, vehicles, and insurance, but may not pay other obligations with the same frequency, such as medical bills and credit cards. People need their vehicles to get to work to make money and pay their obligations.”–Jill Louden, product management associate director for S&P Global Mobility

Something of a vicious cycle: buy a car, go into debt, use the car to go to work, pay for the vehicle and other things, but rack up even more debt for things like health care and presumably things like food.

If some company comes to market with appealing vehicles that have a low price—and this might be a Chinese company, 25% tariff notwithstanding—then this industry could be upended.

Presumably there is a considerable percentage of people who use their vehicles strictly for transportation and not as a signifier of their wealth or coolness. If the vehicle can do the job and do so reliably–without seeming like vehicular penance–then being able to acquire such a vehicle would be the way to go.

Let’s face it: not everyone—even those who are well above subprime—can afford an electric vehicle, which Kelley Blue Book found had an average transaction price of $55,488 in May—down 14% compared to May 2022, but probably because of Elon Musk adjusting the prices of his cars in a way that is completely uncharacteristic of traditional OEMs, so probably not something that can be counted on going forward.

Everyone talks about the transition to EVs and OEMs are tripping over one another to make this change to their showrooms.

But consider: How many people will be left by the side of the proverbial road by OEMs those consumers could once count on for reliable, affordable vehicles?

Tesla Dominates S&P Global Mobility Loyalty Awards: How Come?

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By Gary S. Vasilash

Tesla is a phenomenal company in many respects, not the least of which are captured in the most recent S&P Global Mobility Loyalty Award assessment. The firm has been doing this for 27 years, so it has a good handle on what’s going on.

Based on 11.7-million new vehicle registrations in 2022, the loyalty determination is made on whether a household with a particular make, model or manufacturer in the garage goes out and buys a new vehicle that repeats the same. So a Tesla loyalist might have a Model 3 in the garage and gets (additive or replacement) another Model 3 or a Model Y or S or X.

Of the eight overall categories, Tesla took five:

  • Overall Loyalty to Make
  • Ethnic Market Loyalty to Make
  • Most Improved Make Loyalty
  • Highest Conquest Percentage
  • Alternative Powertrain Loyalty to Make

The other three are:

  • Overall Loyalty to Manufacturer: General Motors
  • Overall Loyalty to Dealer: Subaru
  • Most Improved Alternative Powertrain Loyalty to Make: Mercedes-Benz

As for those three: Tesla couldn’t have won the Manufacturer award because that goes to a firm with multiple brands, and Tesla just has one. It doesn’t have dealers, so that’s out. And the “Most Improved” goes to a brand that has historically had one type of powertrain (e.g., ICE) and is now adding EVs to the mix.

All of which is to say that Tesla is dominant.

On this edition of “Autoline After Hours,” Vince Palomarez, who manages and develops the Loyalty tools at S&P Global Mobility, talks with “Autoline’s” John McElroy, Jeff Gilbert of WWJ-950, and me about Tesla’s performance as well as how other companies did in this latest assessment.

Realize that, for example, GM has taken the Manufacturing award for eight years running and has taken it 19 times out of the possible 27, so it isn’t like it is withering from the Tesla onslaught.

That said, when you think of the OEMs spending literally billions of dollars on advertising (according to Statista, Ford spent $1.98-billion in 2021 on advertising in the U.S. to persuade people to buy its vehicles—those who already own a Ford or Lincoln and those it hoped to conquest) and Tesla spent $0, how it is accomplishing its domination of the Loyalty awards is something that is essential for some to know and just fascinating for the rest of us.

And you can see it here.

What the IRA Means to the Auto Industry

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By Gary S. Vasilash

According to the U.S. Energy Dept., the Inflation Reduction Act of 2022 is “the single largest investment in climate and energy in American history.”

And in the automotive space, the IRA means a continuation of tax credits for consumers who buy electric vehicles (up to $7,500, though the math gets tricky) and even for OEMs and other companies that get into the business of making batteries.

Blue Oval City, the $5.6-billion, 3,600-acre campus for EV and battery production Ford is building in Stanton, Tennessee. (Image: Ford)

As for that battery money:

It provides tax credits of $35 per kWh for the cells. And if another company organizes those cells into battery modules, it gets $10 per kWh. So if there are two companies involved and they each produce portions for a 100-kWh battery for an EV, then the cell manufacturer would get $3,500 and the module maker $1,000. And if a single company did both, then that’s $4,500.

So if you wonder why vehicle manufacturers are investing billions in battery plants (like Ford’s recent $3.5-billion announcement) perhaps that makes it even more understandable.

Not only do they make money by selling vehicles, but they also make money by producing the batteries that go into those vehicles.

On this edition of “Autoline After Hours” we’re joined by Devin Lindsay, who is responsible for Alternative Propulsion forecasting at S&P Global Mobility, Mark Barrott, principal with Plante Moran’s strategy and automotive practice, and Mike Martinez, who covers Ford for Automotive News.

The topic is the multi-billion dollar effect of the IRA on the automotive industry.

The IRA is essentially industrial policy. The aforementioned tax credits that consumers can receive are only possible if the vehicle in question not only falls below a price cap, but if the vehicle’s manufacturing—including the batteries—has sufficient domestic content. This puts companies that do make electric vehicles but don’t make them in the U.S. (think Audi, for example) at a competitive disadvantage.

While an objective is to make EVs more accessible to more people—right now EVs account for 5.6% of the market—it isn’t entirely clear that the 50% mark that the Biden Administration hopes to achieve by 2030 (and that several OEMs seem to be capacitizing themselves to provide) will happen: Do consumers really want EVs?

These and other questions are explored on the show.

And you can see it here.

Tesla’s Loyalists

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By Gary S. Vasilash

Tom Libby, associate director and loyalty principal, S&P Global Mobility, thinks that what are ordinarily considered “conventional” or “traditional” automakers have a problem. This isn’t a problem that happened yesterday or last week. It is a problem that has been there for a few years now. A problem that execs at those companies talk about a lot and have made efforts—and for a long time these efforts were not much beyond lip-service—to address it. A problem that is now garnering sufficient attention, though results will vary.

The problem is Tesla.

Tesla vis-à-vis owner loyalty.

Libby charts owner loyalty to a brand. With regard to luxury brands including BMW, Mercedes, Audi, Lexus and Tesla, owner loyalty has been declining. Yet Tesla’s decline still puts it in a position that is much higher than the others. People who buy a Tesla often by another Tesla. The same isn’t as much the case with others. Tesla even takes market share from a number of mainstream brands, as well.

The loyalty rate for the Tesla Model 3 this past March was 76.6%, the sort of figure that program managers at other OEMs wish they had.

Libby says, however, that the Porsche Taycan, which has been available on the market for a few years and the Mercedes EQS, a new entrant, are gaining loyalty.

But if you take into account all of the other models being offered by other OEMs—remember: both luxury badges and well as mainstream—then the dominance of Tesla is rather astonishing.

A question that arises is whether, as other OEMs come out with more-compelling EVs (e.g., while the Cadillac LYRIQ has much to be said for it, remember that GM also foisted things like the Spark EV on the market as though it had relevance when things like the Model S and Model X were on offer: not that there was cross-shopping between those two Teslas and the tiny Chevy, but keep in mind that people were aware of what was being put out there by whom, so Tesla gained share of mind) whether Tesla’s loyal following will peel off.

Let’s face it: there is something to be said about gravity.

You can see the conversation with Libby on this edition of “Autoline After Hours” with “Autoline’s” John McElroy, Joe White of Reuters and me here.

Why You May Not Be Getting That New Vehicle Anytime Soon

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“The preliminary assessment from S&P Global Mobility for global auto production and sales levels continues to develop, but the current geopolitical events put pressure on an already delicate auto industry situation. Given additional uncertainty surrounding some important raw materials used in the production of semiconductors out of Ukraine and Russia, an initial assessment results in an assumption that several semiconductor plants will be forced to run intermittently at suboptimal speeds between the third quarter of 2022 and the second quarter of 2023, which in turn results in a further downgrade of global light vehicle production levels.  Lower production levels will create an even more untenable new vehicle inventory situation resulting in a downgrade to US light vehicle sales expectations.  As reflected in the S&P Global Mobility March 2022 forecast release, our initial impact removes approximately 250,000 units from our CY2022 US sales expectation and just over 300,000 units from our CY2023 projection, resulting in expected annual volume totals of 15.2M and 16.6M respectively.”– Chris Hopson, manager, North American light vehicle forecast, S&P Global Mobility

Maybe next year. . .