Hard to believe it’s August already. But what’s not hot were July sales for Asian carmakers. In other news, Carvana is facing heat from Illinois and a potential class action suit. And be sure to read our look at pending legislation that will completely change, for better or worse, the federal EV tax credit program.
Let's dive in.
Market At A Glance
- Used car prices stay steady
- Bad news for Asian OEMs
Here’s a quick summary of the latest used car info from CarGurus; check out the details .
Asian Automakers Hammered In July
On the new car side of things, Asian automakers got hammered in July, according to company-supplied reports. It’s all tied into never-ending supply chain and inventory issues, and Honda led the pack with an eye-opening 47.4% drop in July sales compared to the same month last year. That number reflects an average of both the company’s Honda and Acura divisions. On its own, Acura sales plummeted last month by 59.1%
At the same time, Mazda saw its sales drop by 28.5%, while Toyota saw a decline of 21.2%. Subaru didn’t go unscathed either, as its July numbers sank by 17.1%. In what might be considered a win, Hyunda i reported that last month’s sales dropped by 11.4% ( Kia saw near identical results with a 10.9% reduction)
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Legal Woes Continue for Carvana
If you missed it, Illinois suspended Carvana’s license last month, alleging title transfer problems and other issues. It’s the second time this year that the online dealer was prohibited from selling in the state. But, a court ruling temporarily reinstated Carvana’s license, pending more court action at the end of the month. And, in case you’re keeping track, Carvana has had similar license issues (and suspensions) in North Carolina and Florida.
But, good news quickly turned into bad news as a shareholder rights law firm began the workings of a class action suit claiming the company made false or misleading statements, among other allegations. Now trading at about $35 per share, Carvana stock has nosedived since its $360 high almost a year ago.
- Chevy Announces All-New 2023 Colorado
- Revamped IIHS Crash Test Is Bad News for Sedans
- Ford Reports Strong July Sales
- Toyota Now Offering to Buy Back Recalled bZ4X EVs
- Tesla Reveals 3-for-1 Stock Split
Federal Beat: Pending Legislation Will Reinvent EV Tax Credits
Among the many features of the pending Inflation Reduction Act bill are measures that will upend how federal tax credits are applied to EVs. The current approach offers up to $7,500 in tax credit for many EVs and PHEVs, but phases out once an automaker has reached 200,000 sales (with Tesla, General Motors, and Toyota already reaching this limit).
If approved, the legislation will:
- Remove the current sales cap plateau
- Limit the credit to individuals with no more than $150,000 annual income (or $300,000 household income).
- Mandate that all qualifying vehicles be manufactured in the U.S., Canada, or Mexico.
- Apply to passenger cars priced below $55,000 or light-duty trucks (including SUVs and vans) below $80,000.
- Offer (for the first time) a $4,000 tax credit on used EVs (or an amount up to 30% of the vehicle’s value, whichever is less).
- Enable buyers to apply the tax credit at the time of sale and not wait for tax time.
Among the most substantial aspects of the proposed changes is that EV buyers can use the tax credit as an instant rebate at the dealer. This is a major rework, as the current arrangement only applies if the purchaser owes money to Uncle Sam. Likewise, a government-sponsored rebate for second-hand EVs could spice up the used car market.
The $55,000/$80,000 price cap adds an interesting wrinkle. The only Tesla passenger car that would qualify is the base Model 3 , and the Model Y SUV would meet these requirements as long as not all the boxes are checked. Many of Rivian’s offerings wouldn’t pass muster. It’s a clear move to encourage automakers to increase the development of mid- and lower-priced EVs. But should the bill pass, don’t be surprised to see loopholes arise. Companies could offer low-option models below the tax credit thresholds while selling over-the-air upgrades after the sale.
Another fundamental shift with the measure is directing the rebate only towards North American-built vehicles. So not only are high-flying EVs like the Porsche Taycan off the table but certain mainstream models will be affected, too. That means the Toyota bZ4X, Subaru Soltera, Nissan Ariya, and other made-in-Japan electric cars won’t qualify. It’s the same for the hot-selling Hyundai Ioniq 5 and Kia EV6; both are made in Korea. In a case of perfect timing, Volkswagen just started U.S. production of the ID.4 .
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