With summer’s unofficial end, it’s time to dive into some car business. Used car prices continue to drop (ever so slightly), and fleet buyers were busy last month (except for rental car companies).
We also examine why Buick dealers may get a check to walk away from the GM family and the details of the upcoming Porsche IPO. And as expected, some foreign carmakers are gearing up to produce vehicles that qualify for the new EV tax credits.
Market At A Glance
According to the CarGurus index, used car prices may have only dropped by $7 since last week, but that’s still a decline no matter how you do the math. The numbers also mark the first time (in recent history) that the descent reflects data for 90 days.
- EPA fines two suppliers $10 million for emissions cheating devices - Autonews
- Ford Broncos winning again with high accessory take rates - Autonews
- Tesla attempting to strip $5,500 from battery manufacturing costs - Saltwire
- Bugatti reveals new model, the W16 Mistral, at Monterey Car Week - J.D Power
- 7 Tactics for increasing your dealership's service revenue - DataOne
- How to be a good car salesperson - Hubspot Blog
- Three sourcing strategies for low inventory levels - Dealer.com
- Tips for car dealers on best ways to get pre-owned inventory - Wards Auto
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GM Buying Out Buick Dealers
Buick dealers not wanting to take the ride to an all-electric future can expect a buyout offer from General Motors. According to a Wall Street Journal report, Buick chief Duncan Aldred said that all the brand’s 2,000 U.S. franchise dealers will be eligible for a payout.
“Not everyone necessarily wants to make that journey, depending on where they’re located or the level of expenditure that the transition will demand,” Aldred told the WSJ. “So if they want to exit the Buick franchise, then we will give them monetary assistance to do so.”
There’s no word yet on how many Buick retailers might accept the offer, but the move isn’t without precedent. In 2020, 320 of 880 Cadillac dealers took the money and ran, rather than spend six figures or more on upgrading showrooms and service departments for the move to EVs. CNBC reports that the Caddy buyouts at the time ranged from roughly $300,000 to more than $1 million.
Porsche Moving Forward With IPO
While not quite as interesting as an episode of Succession or Billions, the saga of the Porsche IPO heads to its next chapter. With a valuation possibly hitting $85 billion, the move will be one of Europe’s largest initial public offerings when shares start trading in the coming weeks.
At the same time, the Porsche family and its namesake auto brand will have greater freedom from its corporate overlord (VW), and VW can restock its coffers with as much as $10 billion (about the same as the entire value of the Porsche family holdings).
The effort is a marked turn from then-independent Porsche’s 2005 attempt to take control of the much larger Volkswagen empire through the discreet acquisition of stock. But the subsequent global financial crisis caused things to blow up on Porsche, ultimately leading to VW’s 2009 revenge-seeking purchase of the legendary sports car brand.
- 2022 Kia receives excellent performance review of their tech experience - J.D. Power
- 2024 Chevrolet Equinox EV with reported 300 miles of range and optional AWD - MotorTrend
- Chevrolet introduces the Silverado ZR2 Bison into the lineup - J.D. Power
- Maserati says GranTurismo Folgore EV will hit nearly 200 mph - Autonews
August Fleet Sales Rise
New estimates from Cox Automotive report that year-over-year fleet sales rose 14.6% in August. That reflects combined numbers for commercial, large rental, and government fleets. And while sales were up for commercial and government fleets (37% and 28%, respectively), similar transactions with rental operators dropped by 18%. On a month-over-month basis, August fleet sales rose by 0.8% or 128,464 units.
GM and Ford benefited most from the uptick among major automakers, while fleet sales at Stellantis took the biggest hit.
Honda and Toyota Investing Billions in U.S. Battery Production
With so many manufacturers being locked out of EV tax rebates under the new Inflation Reduction Act, it’s unsurprising that there’s a rush to start or ramp up domestic EV battery production. The new law mandates that 40% of a qualifying EV’s battery materials be sourced from North America by 2024. That requirement will rise to 100% by 2029.
Honda is investing $4.4 billion and partnering with LG Energy to launch a new battery production factory in the U.S. The location hasn’t been disclosed, but it’s a safe bet it will be near one of Honda’s auto plants in Alabama, Indiana, or Ohio. The automaker is this battery expecting production to come online by the end of 2025
Likewise, Toyota is ramping up its U.S. battery manufacturing capabilities. The company announced late last month that it’s pumping another $2.5 billion into its new North Carolina battery factory. The extra output is also anticipated for 2025. In this area, things can’t happen fast enough for Toyota, as zero of the company’s EVs and PHEVs qualify for EV tax credits under the new rules.
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