Gas prices are the highest they’ve been since 2014, dealers love Lexus, and Volvo. All that and more in The Morning Shift for November 30, 2021.
1st Gear: It’s Not A Gas
The gas tax should be higher, though it should come in conjunction with bigger EV subsidies and much higher spending on public transportation. (Both are something I don’t foresee happening any time soon and something that is much more ambitious than the federal policy currently on the table.)
Still, maybe that will happen one day and maybe it won’t, but, in the meantime, we are in an uncomfortable middle. Gas prices are currently up because of market forces and drivers are still stuck with gas cars that aren’t very fuel-efficient in an America where owning a car is a necessity of life for the vast majority.
The Wall Street Journal recently caught up with some drivers who are being squeezed.
Rachel Gould spends $50 on gas taking her two special-needs children on the three-hour trip from her home in Central Illinois to a hospital in St. Louis. That is roughly a 60% increase from the same time last year.
“You have to have gas and have to pay for it either way you look at it,” said Mrs. Gould, who drives a Dodge Caravan that gets 23 miles to the gallon.
[...]
For Mrs. Gould, filling the Caravan’s roughly 20-gallon tank costs somewhere around $70. She’s also paying higher prices at the grocery store and even their occasional stops at McDonald’s—part of a broad increase in consumer prices that is making it harder to budget.
“Unfortunately, there is just not a lot we can do about it,” said Mrs. Gould, who is spending around one-third of her family budget on gas. Though her husband’s compact gets better mileage, it cannot fit two wheelchairs.
[...]
Isaac Jackson changed his strategy when making runs for Uber, DoorDash and Amazon Flex, which mostly pay a flat rate. He began bundling up smaller trips, while avoiding those longer than 10 miles.
“The number one thing me and the other drivers talk about is gas prices—and how ridiculous they’ve gotten,” said Mr. Jackson, a Columbus, Ohio, resident where prices are roughly $3.20 a gallon.
The conversation about high gas prices today is much different than what it was in 2008, when gas prices reached their highest point on record, at an average of $4.11 per gallon. Back then, automakers were rushing to make small, fuel-efficient cars and EVs in response to market demand, until they weren’t.
Nowadays, automakers are rushing to make EVs again, but they are not talking at all about small, fuel-efficient gas cars, unless they are Mazda. This, also, is an uncomfortable middle, given that EVs are still too expensive and good new small fuel-efficient cars are actually getting rarer in the U.S., not more plentiful. Someone please just make a desirable $20,000 EV already.
2nd Gear: Auto Executives Only See Brightness
Automotive News, which is a publication designed to assuage the anxieties of automotive dealers, has published the results of a new survey of automotive executives. The executives are optimistic that the industry will be profitable in the next five years. This will be welcome news to dealers, who are currently fretting over supply chain issues and the switch to electric.
According to KPMG’s 2021 Global Automotive Executive Survey, 53 percent of respondents said they were extremely or somewhat confident that the industry would achieve more profitable growth over the next five years, compared with 38 percent who said they were concerned. KPMG surveyed 1,118 executives around the world in August, ranging from CEOs to department heads at automakers, suppliers, startups and other companies.
“With all of the massive changes expected to happen in our industry, there is this sense of dynamism in the industry that I feel like is there now,” said Gary Silberg, global head of automotive at KPMG International.
Executives in the U.S. and China appeared to be the most optimistic about profitability moving forward, the data showed. Silberg attributed the optimism among American executives to the growth of EV and mobility startups around the country and investments in those areas by traditional automakers.
“You see a big delta in the views of the world around optimism and profitability when you get into Europe, India and elsewhere,” he said.
Every CEO I’ve ever met is the kind of person who only wants to associate themselves with optimism and success, almost as a pathology. Automotive executives are no different.
3rd Gear: Meanwhile, Dealers Say Their Favorite Brands Are Lexus And Toyota
This is according to a survey by the National Automobile Dealers Association, and is based on the simple measure of how much dealers like dealing with their parent automakers. Lexus finished first, followed, in order, by Toyota, Honda, Subaru, and Porsche.
From Automotive News:
BMW, Kia, Audi, Acura and Mazda rounded out the top 10 in the latest survey. BMW climbed two spots from the winter survey to No. 6, Kia slipped one spot to No. 7, and Audi rose one spot to No. 8. Mercedes-Benz and Volvo, which had taken top 10 spots in the winter survey, fell out.
NADA queries dealers on their satisfaction with overall automaker performance and a brand’s “willingness to listen to and consider dealer input in their business decisions,” the organization said. The summer results have been shared with automakers.
NADA would not disclose the complete summer ranking, where the brands that fell out of the top 10 landed or from what positions marques rose to enter the top 10.
NADA said it will survey dealers in January for its winter 2022 ranking.
This all scans, as the top ten brands are also brands that you don’t hear an excessive amount of consumer grumbling about. Some consumers, like Porsche buyers, even claim to like their dealers and the buying experience.
4th Gear: Volvo’s Revenue Down Slightly
The Swedish carmaker has been suffering from supply-chain issues, but the good news is that, like other automakers, supply is its issue, and not demand.
From Reuters:
“The supply situation has improved going into the fourth quarter, but we expect the industry-wide shortage of semi-conductors to remain a restraining factor,” Chief Executive Hakan Samuelsson said in a statement.
Volvo’s initial public offering (IPO) on Oct. 29 was the biggest in Europe so far this year, a sign of strength for the European automotive industry which is in the midst of a challenging transition towards electric vehicles (EVs). read more
The chip shortage has forced many automakers around the world, including Volvo, to cut production. Chief Financial Officer Bjorn Annwall said he expected that to be the major issue in the fourth quarter.
“No extra lockdown related problems,” he told Reuters.
5th Gear: VinFast!!!!!
VinFast is a Vietnamese automaker that has grand ambitions for the American market, which I am personally excited about, even if I am the only one. According to Reuters’ sources, VinFast’s parent company wants around $1 billion to further its car ambitions.
Vietnam’s largest conglomerate Vingroup is in talks with investors, including Qatar’s sovereign fund and BlackRock, to raise about $1 billion in equity for its car unit, three sources aware of the matter told Reuters.
[...]
“Electric vehicles are the topic of the year and there’s huge investor interest,” said one of the sources.
Vingroup is in discussions for the fundraising ahead of VinFast’s potential U.S. listing that could take place as early as next year, said the sources, who declined to be identified as negotiations are still ongoing.
They said the company could finalize the private fundraising deal as early as next month. Vingroup is also in talks with global private equity firms.
The sources said Vingroup is in advanced talks with Qatar Investment Authority (QIA), the country’s $300 billion sovereign wealth fund, which has been diversifying its investments from its core European and U.S. markets towards Asia.
The potential Qatar investment is notable if only because they seem well-aware that demand for oil won’t be around forever. Anyway, VinFast also has the best name in the business.
Reverse: At Any Speed
Neutral: How Are You?
The fridge is still full of enough Thanksgiving leftovers to feed a small army, despite my diet of nothing but turkey, stuffing, and potatoes for days. This is how it should be.