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New Car Sales Down But Prices, Profits Up in December

December sales are expected to be lower according to forecasts.

Depressed December new-vehicle sales may have automakers facing a blue Christmas, but retailers are seeing record high transaction prices.

That’s the takeaway from two new reports from J.D. Power and TrueCar. And unlike previous years, don’t expect a big sales blowout to clear the lots.

“Historically, December is a big month for the industry as OEMs and dealerships work to close out the calendar year with strong sales. The last week of the month is also typically the biggest week of the year in terms of sales volumes but it’s unlikely to happen this year due to continued inventory shortages and declining incentives,” said Nick Woolard, lead industry analyst at TrueCar.

December retail sales decline from 2020

A joint forecast from J.D. Power and LMC Automotive forecasts new vehicle retail sales this of 1,105,800 units this month. That’s a 17.4% decrease compared with December 2020, when adjusted for selling days. (This year has one fewer sales day than last year.) Without the adjustment, year-over-year sales dropped 20.4% in 2020.

Similarly, TrueCar predicts U.S. retail deliveries of new cars and light trucks to be 1,024,263 units, down 27% from a year ago and on par with November 2021.

That number excludes fleet sales. Fleet sales are even more depressed, according to TrueCar. The expectation for December 2021 is a 29% decrease in sales from a year ago and decline of 3% from November 2021 when adjusted for the same number of selling days.

Vehicles continue to be in short supply, with nearly 57% of vehicles selling within 10 days of arriving at a dealership. That’s a record, according to J.D. Power, which notes that vehicles remain on dealer lots for a mere 17 days, a record low, and down from 49 days a year ago. TrueCar pegs that number at 18 days, up from previous months, but still near historic lows.

The average new vehicle transaction price is expected to reach $45,743 this month.

Short supply fueling higher prices

The short supply of new vehicles is leading to higher average transaction prices.

“While the inventory situation has improved modestly since November, supply remains well below the level at which consumer demand for new vehicles can be met. Intense demand with this limited supply is resulting in prices continuing to increase,” said Thomas King, president of the data and analytics at J.D. Power.

King notes average transaction prices are expected to reach a record $45,743 this month, 20% higher than December 2020 and the first time that number has passed $45,000.

The higher prices are the result of reduced incentive spending by OEMs, with the average manufacturer incentive per vehicle totaling $1,598, a decrease of $2,291 from a year ago. That’s 3.5% of the average vehicle MSRP, down from almost 5.5% a year ago, according to King.

Automakers have drastically cut incentive spending, leading to higher prices.

TrueCar’s forecast a similar story, with automaker incentive spending down 55%. This is leading to an average transaction price projected to increase 7.5% from December 2020 and rise 2.5% from November 2021.

Incentive spending is tumbling, according to TrueCar. Year over year, General Motors cut its incentive spending 64.7%, the most of any automaker. Nissan cut its spending 57%, Hyundai 54%, Toyota 53.5%, Volkswagen Group 51.35%, BMW 47.3%, Stellantis 46.5%, Ford 41.8%, Kia 41.6%, Honda 40.9%, Daimler 37% and Subaru 31.9 percent. Subaru was lowest by dollar amount of the OEMs examined at $1,006. Daimler was the highest at $2,738.

Who’s benefitting most? Retailers

But retailers are benefitting from current market conditions. Although volume is lower, Dealers’ profit per unit — inclusive of grosses and finance & insurance income — is forecast to hit a record $5,258, up from $3,277 from a year ago. This has led to record dealer profits, which are projected to be up 254% from December 2019, reaching an industry aggregate revenue of $5.8 billion — an industry record.

The higher prices are leading to record retailer profits.

And the strong vehicle demand for new vehicles is fueling record used vehicle prices, which is giving buyers more equity on their trade-ins, with the average trade-in equity for December expected to reach $10,199, up from $4,623 from a year ago, and an 83% increase. That increased equity helps make pricier vehicles more affordable, as has a decrease in the average interest rate in December. It’s expected to decline nine basis points to 4.05 percent.

But increased equity and lower interest rates hasn’t helped fitting a car payment into the family budget. The average new vehicle payment is expected to reach $680, up $78 from December 2020, and a record high, according to Power. TrueCar paints a similar picture, with the average interest rate on new vehicles is 4.3% and the average interest rate on used vehicles is 7.5%. The average loan term for both new and used vehicles is 70 months.

2022 should be better than 2021

When it comes time total calendar year sales, expectations are for an improvement from 2020.

Supply should improve next year, but will remain near record lows.

“Full year 2021 will still show a solid sales increase from 2020. The year-over-year sales declines experienced every month in the second half of 2021 were not enough to wash the record sales pace in the first half of the year,” King said.

But it should improve during the next 12 months.

“Indications are that shipments will rise incrementally as the year goes on, allowing sales to rise from 2021 levels. However, pent-up consumer demand will keep inventory levels near historical lows,” King said.

TrueCar also sees inventories improving, but incrementally.

“We continue to see signals of stability and in some cases, slight improvement. One such indicator, our scarcity measure, shows improvement in recent months for both new and used vehicles,” said Valeri Tompkins, senior vice president of OEM Solutions at TrueCar. “However, questions still remain as to the trajectory of improvement we can expect to see in 2022.”

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First Look: 2022 Rolls Royce Ghost Black Badge

Who would have thought you could make the Rolls-Royce Ghost look so sinister?

Rolls-Royce revealed a new addition to the Rolls-Royce Ghost line-up in Miami Thursday — the Black Badge — during a North America dealer meeting that saw about 100 retailers meet with the automaker’s top executives.

The automaker revealed the new model to dealers at the Mad nightclub in the hip and trendy Wynnewood section of Miami, and will do the same for customers later this week.

“We just felt this was very Black Badge,” said Richard Carter, director of communications for Rolls-Royce Motor Cars. “It’s very, noir; It’s very alternative; and that’s the essence of Black Badge.”

The Rolls-Royce Ghost Black Badge expands a line-up that began with the Wraith coupe, followed by the Phantom sedan in 2016, the Dawn cabriolet in 2017 and the Cullinan SUV in 2019. The murdered-out Black Badge models now account for more than 27% of Rolls-Royce sales worldwide, including 40% of Cullinan sales.

The darker side of opulence

To realize the Ghost Black Badge’s menacing demeanor, the company uses 100 pounds of the industry’s darkest black paint. The Spirit of Ecstasy and Pantheon Grille are darkened using a chrome electrolyte applied during chrome plating. The new model wears exclusive 21-inch wheels with as many as 44 layers of carbon fiber.

The 2022 Rolls-Royce Ghost Black Badge can be had in more that 44,000 different hues, although most Black Badge customers choose black.

As you’d expect, interior components are darkened including air vents and the wood veneer, along with Black Badge badging and other unique interior touches, although clients are free to specify any number of colors and trim to be used on the car’s interior.

Engineers also contributed, fitting larger air springs to alleviate body roll during assertive cornering. There’s also roughly 29 additional horsepower and a revised transmission to make the Black Badge a bit more athletic. They also reduced brake pedal travel.

A quick turn behind the wheel of pre-production prototypes revealed a car that can be driven more aggressively than your average Ghost. Grip is impressive while cornering, staying firmly planted despite some noticeable body roll. Body motions never become excessive, and rebound over bumps is very well controlled. Yet its agility doesn’t come at the expense of the brand’s legendary comfort.

An idea born in Beverly Hills

The idea of Black Badge occurred in 2014 in Beverly Hills.

“This whole notion of the alter ego of Rolls Royce, the slightly noir, naughty, edgy side of Rolls Royce is something that we were thinking about. We were looking at ways and means of lowering the age profile of our brand,” Carter said.

The Pantheon Grille and Spirit of Ecstasy also receive the Black Badge treatment.

At the time, the brand had one model, the Phantom, and an average buyer’s age of 57. “We were selling one model to a dying set of customers, and there was no future in that,” he said.

At the time, the company was about to release the first-generation Ghost, followed by its two-door spinoff, the Wraith, both of which would attract younger buyers. But the company needed more. They were searching for an idea, but hadn’t settled on anything yet.

Torsten Müller-Ötvös, chief executive officer, Rolls-Royce Motor Cars, was waiting for a car to pick him up at the SLS Hotel in Beverly Hills when a murdered-out Phantom Coupe pulled up. Ötvös was stunned, and asked the owner why he modified his Phantom.

“He told me over the weekend, that he wants to be a different kind of character,” Ötvös said. “For some of the week, he is friendly and nice. But over the weekend, he wants to be something different. He enjoyed playing a different role; how he was dressed, looked and talked.”

A couple weeks later, Ötvös had similar experiences particularly in the United States, particularly in California. This led to the creation of Black Badge at a time where murdered-out cars weren’t mainstream.

A surprising success

The Ghost Black Badge is revealed for the first time at the Mad nightclub in Miami.

Initially, executives expected Black Badge models to have a 10%-15% take rate. But they were mistaken. It turned out to be a stunning success, with a far higher take rate. Currently, Black Badge represents 40% of Cullinan sales. Black Badge, along with new models like Ghost, Wraith and Cullinan, have brought the average Rolls-Royce buyer’s age down to 43, quite a large drop in a little less than a decade.

“We are even younger than Mini as a brand in the BMW Group,” Ötvös said, who then explained that the type of wealthy car buyer has changed.

“When you look into ultra-high net worth individuals, those people who are our target group worldwide, they became younger and younger over time because the way to generate wealth is very, very different from what it used to be 15-to-20 years ago.”

Rolls-Royce sees its Black Badge line as one that appeals to iconoclasts, a type of buyer that the brand has always attracted, particularly during the pre-World War II years, when all coachwork was custom built.

“Black Badge was the most instrumental piece we had in an all-new brand strategy to massively decrease the average age and illuminate the brand in a significant way,” Ötvös said.

Mission accomplished.

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First Look: Mitsubishi Outlander PHEV

The new Mitsubishi Outlander already has proven to be one of the most important products the long-struggling automaker has launched in its bid to become relevant to U.S. motorists again. Now, Mitsubishi is hoping to gain even more traction with the upcoming launch of a plug-in hybrid version.

2022 Mitsubishi Outlander Hero Image — The gas-powered 2022 Mitsubishi Outlander made its debut in February.

The Japanese automaker claims it will yield more range than the old Outlander PHEV, at an estimated 87 km, or nearly 55 miles, per charge — though that’s using the global WLTP test cycle and will likely come down once the American version is tested by the EPA.

“With low (carbon dioxide) emissions and environmental impact from manufacturing and use,” said Takao Kato, MMC’s president and CEO, “the all-new Outlander PHEV model can be considered the best solution for carbon neutrality today.”

Updated, upgraded drivetrain

The Outlander was first introduced in 2001 and, with the fourth generation, it has become a core part of the brand, accounting for about 20% of its global volume. The first plug-in hybrid version was unveiled at the 2012 Paris Motor Show. It produced a combined 197 horsepower by pairing a 2.0-liter inline-4 gas engine with twin 60-kilowatt electric motors drawing power from a 12 kilowatt-hour lithium-ion battery pack.

The new Outlander PHEV gets numerous powertrain upgrades, though the automaker isn’t releasing hard specs yet. In a statement announcing the new vehicle it said the plug-in gets “an increase of around 40% in the output of the front and rear motors and drive battery.” The lithium-ion pack, it did note, jumps to 20 kWh. The gas engine, added a spokesman, is a “slightly updated” version of the old PHEV’s 2.4-liter package.

Mitsubishi Outlander PHEV charging port 2022 — The new Outlander plug-in hybrid will arrive in the U.S. in the second half of 2022.

Mitsubishi also revealed, “The power drive unit for the front motor is newly equipped with a booster function which bolsters driving force by raising the supply of voltage to the front motor while simultaneously improving electricity consumption by raising the efficiency of the generator.”

Third row added

The automaker also took steps to downsize some of the hardware, notably the rear motor and control unit. As a result, the new plug-in will gain room for a third row yielding space for seven occupants.

The drive system now will allow One-Pedal Driving, as well, a feature that effectively allows motorists to minimize the need to jump from throttle to brake when driving in light to moderate traffic. That feature was found to be extremely popular with EV owners, according to the recent J.D. Power Technology Experience Index.

With only modest tweaks, the plug-in adopts the same exterior and interior design as the gas-powered Outlander. The overall strategy is based on a concept dubbed “I-Fu-Do-Do,” which means “authentic” and “majestic” in Japanese.

New design

Mitsubishi Outlander PHEV badge 2022 — The new Outlander PHEV is expected to travel more than 55 miles in electric-only mode.

The fourth-generation Mitsubishi Outlander adopted a new styling language called “Dynamic Shield.” Up front, it features a more upright nose with a pinched, dual-level grille and stacked headlamps. From the side, the SUV features a more deeply sculpted silhouette with a bit of a floating roof element.

The automaker clearly wanted to give the new Outlander a more solid and robust look, with such touches as 20-inch wheels and tires and what it calls the Hexagon Guard rear end.

The new SUV grew larger in virtually all dimensions, the width expanding by 2 inches. That means the cabin of the new Outlander is both wider and more spacious than the outgoing model, Mitsubishi adopting more upscale materials and features like tri-zone climate controls, real aluminum panels and a 12.3-inch touchscreen infotainment display.

The gas-powered Outlander is powered by a 2.5-liter inline-4 that bumped up power by 8.9 percent. At the same time, it reduced fuel consumption by 2.6 percent.

Pricing TBD

Many of the features from the current model are expected to carry over into the PHEV, though Mitsubishi hasn’t provided specific details. The gas model offers Hill Descent Control and Trailer Stability Assist. A Multiview camera system helps drivers see what’s around the vehicle, whether on-road or off. Other features for the new Mitsubishi Outlander include a power-operated panoramic roof and an electrically operated tailgate that can be opened with a kick of the foot under the rear bumper.

Pricing for the gas model starts at $25,795 — plus $1,195 in delivery fees. Pricing for the PHEV is expected to run higher, though the numbers won’t be released until closer to sales launch. That holds for a variety of other specs, including U.S. range, power and performance.

“Sales will commence in Japan on Dec. 16, followed by Australia and New Zealand in the first half of 2022 and North America in the second half of 2022,” Mitsubishi said in a statement. While it did not offer specifics, that would suggest that the Outlander PHEV will be marketed as a 2023 model in the U.S.

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Geneva Motor Show Delayed until 2023

The Geneva Motor Show for 2022 has been cancelled, organizers blaming the ongoing impact of the COVID-19 pandemic.

Koenigsegg Regera Geneva 2020 — Officially cancelled in 2020, the Geneva Auto Show still went on, albeit virtually.

The event was originally scheduled to take place next February. The move came despite shows in Chicago and Detroit occurring in recent months, although the New York International Auto Show elected to cancel its 2021 event scheduled for late August.

“We have pushed very hard and tried everything to reactivate the Geneva International Motor Show in 2022,” said Maurice Turrettini, president of the Comité permanent du Salon international de l’automobile, which organizes the event.

“Despite all our efforts, we have to face the facts and the reality: the pandemic situation is not under control and presents itself as a big threat for a large indoor event like GIMS. But we see this decision as a postponement, rather than a cancellation. I am confident that the Geneva International Motor Show will come back stronger than ever in 2023.”

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Honda Targets 70,000 Annual Sales for Prologue EV — Depending Upon “Fair and Equitable” U.S. Incentives

Honda expects to sell 70,000 of its Prologue battery-electric vehicles annually after its launch in 2024 — but today warned it could fall short if federal lawmakers fail to take a “fair and equitable” approach to the new EV incentive program now being debated in Congress.

Honda’s been teasing its all-electric Prologue sport-utility vehicle.

The Honda Prologue will be one of two BEVs that the carmaker plans to launch mid-decade, both developed and manufactured as part of a joint venture with General Motors. That’s part of its goal of having BEVs and other zero-emission vehicles account for 40% of its sales by 2030. Honda plans to subsequently introduce more BEVs of its own design.

“Launching our first volume BEV in 2024 is the start of an exciting new direction for Honda,” Dave Gardner, executive vice president of National Operations at American Honda Motor Co. Inc. said in a statement. “We are working with our dealers to plan the transition from sales of primarily gasoline-powered vehicles to selling 100% electric vehicles by 2040.”

Honda wants more money from Congress

President Joe Biden recently set a target that would have BEVs, PHEVs and fuel-cell vehicles, or FCVs, account for 50% of U.S. sales by 2030. To get there, the president is asking Congress to help fund a nationwide network of 500,000 chargers. Congress, meanwhile, is working up new EV sales incentives. But that has generated significant controversy as a plan approved by the House Ways & Means Committee would not only extend the current, $7,500 tax credits but add $5,000 for EVs and batteries built in the U.S. using union labor.

Honda last week condemned those provisions, sending a letter to Congressional leaders arguing that the plan “discriminates among EVs made by hard-working American auto workers based simply on whether they belong to a union.”

While a target of 70,000 Prologues may not seem like much compared to Tesla’s numbers, it equates to an average year for the Honda Pilot.

In the statement issued today, it followed up by saying reaching its 40% zero-emission target for the U.S. is “contingent upon fair and equitable access to state and federal EV incentives intended to encourage American consumers to purchase electric vehicles.”

Coming from behind

Honda was a pioneer of automotive electrification. Its original Insight, a high-mileage two-seater, was the first mass market hybrid to go on sale in the U.S., beating the Toyota Prius to showrooms by several months.

It briefly introduced a limited-volume battery-electric model, the EV Plus, in the late 1990s. And it followed up, nearly two decades later, with a battery-powered version of the Clarity line. That low-range model was dropped in 2020.

The automaker has come under increasing pressure to bring out a long-range BEV with key competitors like Toyota, Ford and even Subaru and Mazda getting into the growing electric vehicle market.

In April, Toshihiro Mibe, who became global president and CEO earlier this year, set a goal of having all Honda vehicles powered by some form of battery and hydrogen drive system by 2030. They are expected to generate 40% of its North American sales by the end of the decade, 80% by 2035, and 100% by the end of the next decade.

Honda turns to its partner

The GM-Honda relationship began more than two decades ago.

To speed up the process, Honda turned to General Motors — the two traditional rivals already having several joint ventures in the works, including one focused on fuel-cell technology, another on autonomous vehicles.

“Leveraging strategic partners to achieve scale and mitigate initial investment requirements” will let Honda bring a competitive battery-car to market sooner than it could on its own, Gardner acknowledged during a media briefing in June. “Our zero-emission focus has begun,” he said.

While the 70,000 sales target might seem modest compared to the volumes some new BEVs — particularly those from Tesla — are generating, the figure is roughly in line with annual demand for the Honda Pilot SUV.

A regional approach to sales

When it launched the original EV Plus, Honda focused primarily on the California market, the largest for BEVs. While manufacturers like Tesla, General Motors, Ford and Nissan now are rolling out their battery-electric cars nationwide, Honda plans to continue focusing on select markets with Prologue.

Honda put an end to its battery-electric Clarity sedan in 2020.

“Honda’s initial approach to selling the Prologue will be regional, focusing on California and the ZEV states, including the BEV-friendly Sunbelt states of Texas and Florida,” it said in a statement today. “Honda anticipates these regions will represent the bulk of sales at the onset of launch due to higher customer acceptance and regulatory requirements.

“As EV infrastructure expands and customer interest grows nationwide, the company will rapidly expand sales and marketing efforts to other areas of the country.”

More to come

The automaker has provided no specific details about Prologue’s drivetrain beyond the fact it will share the Ultium battery technology GM will launch later this year, starting with models like the GMC Hummer pickup and Cadillac Lyriq SUV. That would suggest that Honda’s electric SUV will deliver at least 250 miles or more of range between charges.

Honda has been completely mum about the second vehicle to come from its GM alliance. But it did note that subsequent battery-powered cars will rely on its own new e-Architecture. That is expected to follow the same skateboard-style approach used for Ultium, with its batteries and key drive components mounted below the load floor.

Others May be Coming, But Tesla’s Still King of the EV Mountain in U.S.

2021 Ford Mustang Mach-E front driving — The 2021 Ford Mustang Mach-E Premium is a true competitor for the Tesla Model Y.

Much of the talk about electric vehicles lately focuses on the wave of EVs coming in the next 12 to 18 months; however, until then the latest round of electric vehicle registrations shows Tesla’s still king of the EV world, well, at least in the U.S.

According to Experian, which tracks new vehicle registrations in the U.S., sales of electric vehicles are up through the first six months of the year — and up big. There were 255,393 EVs registrations during the time period, equating to an increase of 133% compared to the same period last year. Automotive News first released the registration numbers.

A look at the top 10 EVs registered shows some new names, most notably the Ford Mustang Mach-E. The automaker’s first long-range EV debuted with a splash last fall and, according some analysts, has taken away as much as 10% of Tesla’s sales.

The only electric vehicle that outsells the Tesla Model 3 in the U.S. is the Model Y.

However, the lofty sales number doesn’t appear to be so much Ford conquesting from Tesla, although some of that is happening, the entire market is up, meaning there is plenty to go arounds. In fact, the Tesla Model Y, the vehicle the Mach-E most directly competes with, was up five-fold through July, logging 93,708 registrations.

The reports of my demise …

As the number of options for buyers interested in electric vehicles has grown — slowly — in the last 12 to 18 months, so has the number of predictions about when Tesla will be surpassed as the leading seller of battery-electric vehicles.

If the latest top 10 list of EV registrations is any indication, it’s going to be awhile. Here is the top 10 list of EV registrations in the U.S., according to Experian:

2022 Chevrolet Bolt EUV driving — Despite its current recall, the Chevrolet Bolt was the third-best-selling EV in the U.S. through July.

Tesla Model Y: 93,708 units
Tesla Model 3: 68,448 units
Chevy Bolt EV: 21,898 units
Ford Mustang Mach-E: 13,950 units
Nissan Leaf: 9,445 units
VW ID.4: 8,404 units
Porsche Taycan: 6,071 units
Hyundai Kona EV: 6,069 units
Audi e-tron: 5,473 units
Kia Niro EV: 4,091 units

Some of the non-Tesla vehicles have seen substantial sales gains in 2021, including the Chevrolet Bolt EV and EUV, which is currently the subject of a massive recall due to battery manufacturing problem that has been pinpointed as the cause of more than 10 vehicle fires.

The company’s recalled all of them and shut down the Orion, Michigan plant that produces them as it works with its supplier, South Korea’s LG Chem, to fix the problem. Despite all this, its sales were up 138% during the timeframe, according to InsideEVs.com.

The Launch Edition of the Rivian R1T will begin production and deliveries later this month.

However, the dominance of Tesla is still strong. It holds the top two spots on the list, accounting for 162,156 units. This is more than two times the rest of the top 10 at 75,401 vehicles. What vehicles occupy the No. 11 and No. 12 spots? The Model S and Model X, respectively.

Overall, the company gives new meaning to the term “California King” as it accounts for more than two-thirds of all EVs sold in the U.S. right now.

Change is inevitable

While Tesla enjoys a substantial lead, it seems it’s only a matter of time when the rest of the world begins flooding the U.S. market with new electric options — and that time essentially starts, well, now.

Starting with newbie Rivian and its Launch Edition R1T electric pickup which will begin deliveries later this month, at least 27 brands accounting for nearly 50 distinct vehicles, which TheDetroitBureau.com chronicled in two part story you can read by clicking here for Part I and here for Part II, are scheduled arrive in the U.S. between now and the end of next year.

Tesla’s not twiddling its thumbs, waiting for the wave to come crashing down on it, expanding its production base in the U.S. with Giga Austin, its massive new plant expected to come online by the end of this year or early next to produce even more of the Model 3 while prepping to for the Cybertruck and possibly a less expensive vehicle in the $25,000 range.

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Dealers Running Dry, Even as GM Set to Halt Production for Two Weeks

The shortage of microchips continues to drag on, forcing General Motors to idle virtually all of its North American production operations for as long as two weeks — though the automaker could yet extend this latest shutdown.

Wentzville Assembly — General Motors is basically shutting down its North American manufacturing operations due to the chip shortage.

GM is just one on a long list that includes virtually every automaker hit by the shortage — and its impact is being felt just about everywhere, from Stuttgart to Detroit to Beijing.

Industry planners hoped to put the shortages behind them by now. Barely a month ago, GM had signaled it had come up with new sources for some of the chips it needed. But that clearly didn’t meet its requirements.

No light at the end of this tunnel

The automaker will either close or extend closures at plants, such as the one in Wentzville, Missouri producing its Chevrolet Colorado and GMC Canyon pickups, another in Canada building the Chevy Equinox SUV, and the Ramos Arizpe facility in Mexico that assembles products like the Chevy Blazer SUV. All four of its North American brands will feel the heat.

Like some of its competitors, the automaker had been partially assembling vehicles, where possible, and then storing them until it could come up with the missing chips and electronic components. So, in some instances, GM will try to take advantage of the upcoming closures. It has secured enough chips, in some cases, to let it “repair and ship unfinished vehicles,” it said in a statement.

It was not revealed just how much production GM will lose due to the coming closures but some of those plants routinely produce more than 60 vehicles an hour on two or three shifts, many working overtime — when possible — to help rebuild inventories already drawn down as a result of last year’s pandemic closures.

Empty lots

Company officials indicated GM dealers now have barely half their normal stock of cars, trucks and crossovers which, this time of year, would run between 60- and 70-days’ supply.

Among the dealers TheDetroitBureau.com talked to, some indicated they have less than 10 vehicles in stock and are not sure when they will get more, especially when it comes to popular product lines like the Chevrolet Silverado and GMC Sierra pickups.

And they’re not alone. Toyota has barely 10 days worth of some of its most popular vehicles, like the RAV4 SUV. The automaker last month warned it would cut global production by 40% this month, so shortages could, if possible, get even worse. In recent days, Stellantis, Nissan and Ford, among others, have announced further cuts.

GM Ramos Arizpe plant — The company is idling its Ramos Arizpe facility in Mexico where it builds the Chevy Blazer.

Consumers paying the price

In turn, customers have been forced to either wait, extend their search or, in many cases, pay at or above sticker price. Some social media reports have highlighted dealer surcharges ranging anywhere from $5,000 to as much as $40,000 above MSRP.

That helped drive average transaction prices to a record of more than $41,000 in July, according to Cox Automotive, J.D. Power and other analysts. The figure is widely expected to have run even higher in August.

Sales for the month came in at an estimated, annualized rate of about 13.1 million, down from as high as 18.5 million earlier in the year.

The Labor Day weekend is normally one of the busier holidays at U.S. dealer showrooms but there is little hope, according to industry insiders, that it will generate anywhere near the normal levels seen in past years.

Munich Motor Show to Spotlight Dozens of New Concepts, Production Models

While the Frankfurt Motor Show is no more, Germany retains its role in the hierarchy of automotive events with the debut of the first Munich Motor Show next month — and the event will bring out a broad array of new concept and production models.

IAA Mobility Munich — No longer the massive event it was when it was in Frankfurt, the Munich show is still going to be impactful.

While a number of manufacturers won’t be on hand for the debut Munich Motor Show, a preliminary count suggests those marques that will participate plan to reveal about two dozen new vehicles. And the final number could be even higher as some are expected to roll out a few, last-minute surprises.

As one might expect in Europe, there’ll be a big emphasis placed on new green machines, everything from conventional hybrids to pure battery-electric vehicles — as well as at least one new hydrogen model from BMW.

Here’s a look at some of the most significant announcements that will be made at the Munich Show — also known as IAA Mobility 2021 — during its run from Sept. 7-12:

Audi

The German luxury brand doesn’t plan to produce any new models that will run solely on gas or diesel by 2026. And while it will soldier on with plug-in hybrids through the end of the decade, its longer-term plan is to shift entirely to battery-electric vehicles. We got a sense of what’s in store this month at the Pebble Beach Concours with the unveiling of the Skysphere, one of three cutting-edge concept models. The Grandsphere is next in the series and shows where Audi hopes to go with an all-electric and fully autonomous SUV. The automaker also has two other models set to make public debuts in Munich: the RS3 hatchback and sedan line taking aim at the likes of the Mercedes-AMG A 45, as well as the all-electric Q4 e-tron. It will slip into a space just below the current, gas-powered Audi Q5.

BMW

The Bavarian automaker has had a long-running interest in hydrogen power — though it early on explored the possibility of using the lightweight gas as an alternative to gasoline in its internal combustion engines. BMW abandoned that approach and, like other manufacturers, now sees hydrogen working best in a fuel-cell system. That’s what will power the new BMW iX5. This is not a concept but a production model due out in 2022, albeit at low volumes and targeted for markets where there’s an available hydrogen distribution system. The other green machine is the facelifted BMW iX3 city car. And BMW isn’t ready to give up on gas models. It also plans to show the uplifted X3 and X4 sport-activity vehicles in Munich.

Mercedes-Benz

The German luxury brand is also planning a big showing of all-electric models, starting with the debut of the Mercedes-Benz EQE. It will serve as the company’s all-electric E-Class model and share the same Electric Vehicle Architecture, or EVA, as the larger Mercedes EQS flagship. Speaking of the EQS, the German marque will offer the usual family of variants and they will be getting previewed in Munich. They include an even larger and more luxurious EQS-Maybach model, as well as a more powerful EQS-AMG rumored to make 800 horsepower — taking aim at the Tesla Model S Plaid. Like BMW and Audi, Mercedes isn’t ready to go 100% electric but is continuing to tinker with other green drivetrains. That will become apparent with the debut of the new Mercedes-AMG plug-in hybrid. We’ll also see the high-riding Mercedes-Benz C-Class All-Terrain, and the armored S-Class Guard. Is there a surprise in store? Some reports suggest Mercedes could debut the EQG, an all-electric version of the big G-Class SUV.

VW ID.5 GTX — Volkswagen will brin g a slew of new vehicles to Munich, including the new ID.5 GTX.

Porsche

The sports car company will have a relatively modest presence in Munich — but a significant one, nonetheless. It will reveal a facelifted version of its smaller SUV, the Macan. That will provide insight into the upcoming debut of an all-electric version of the Macan due out in 2023. While they’re expected to have similar exterior designs, the BEV version of the SUV will be based on the new Premium Platform Electric, or PPE, architecture jointly developed by Porsche and Audi. Also on tap: the all-out version of Porsche’s bigger SUV, the Cayenne Turbo GT.

Volkswagen

Cupra EV from Seat — Spanish maker Seat, owned by VW, will show off it’s new electric spinoff, Cupra.

The German giant is planning to invest $86 billion to electrify its line-up and that will be obvious when Munich showgoers see what’s on tap from all of its various marques. As for the VW brand itself, it has a mix of electric and gas offerings to reveal next month. That includes a new electric city car that could be named either the ID.1 or ID.2 if the automaker sticks with its current naming strategy. Then there will be sportier versions of two of its current battery-electric vehicles. The ID.4 GTX is already available in Europe, and while the ID.5 GTX is being described as a “prototype,” a production version of the coupe-like SUV is expected to reach showrooms before year-end. Munich also will bring the public debut of the new Volkswagen Polo and GTI models, the latter unveiled online earlier in August. Completing the list, we’ll get a first public look at the new VW Taigo, a small, coupe-like SUV based on the current T-Cross line.

Other brands

Cupra, the all-electric spinoff of Volkswagen’s Spanish brand Seat, will reveal a battery-powered hatchback based on the VW ID.3. It will share the Volkswagen MEB all-electric architecture but put more of an emphasis on performance than the ID.3.
Dacia will bring out a new 7-seat people-mover.
Hyundai is making an appearance in Munich and is set to give the European public debut of the all-electric Ioniq 5 — but it could have a surprise in store, as well.
Renault will weigh in with a small, all-electric SUV dubbed the Megane E-Tech Electric.

Smart is transitioning to an all-electric brand and is teasing plans to reveal a battery-powered micro SUV. It’s believed to be using a drivetrain developed as part of a joint venture between Smart parent Mercedes-Benz and China’s Geely.

Ford Suffers Setbacks on Big Sellers: Bronco and Mustang Mach-E

Ford’s enduring a tough day, forced to deal with big problems on two of its hottest vehicles: the Bronco and Mustang Mach-E.

Ford Bronco 4-door quality check — The roof problems with the new Bronco are still unresolved, forcing Ford to replace the parts on all owners’ vehicles while halting production.

The long-awaited Bronco’s problems with its removable hardtop still haven’t been resolved, forcing it to replace the pieces on existing models and halt production on new hardtop models to solve the issue. Soft top Broncos will continue to roll down the line.

Meanwhile stopping production is the problem for the Mach-E as it awaits — no surprise — more semiconductors. Perhaps no company’s been hit harder by the chip shortage than Ford. The company’s had to temporarily shut down builds on its biggest sellers, like the F-150, Explorer and now the Mach-E.

Bronco busted

The problem with the Bronco’s roof applies to the removable molded-in color plastic panels only, as reported by the website, bronco6g.com. The color and protective coating applied to the roof pieces is faulty, which becomes apparent a few weeks after the vehicle’s been exposed to the elements.

As a result, the coating comes off on the edges of the panels, which are not smooth. With a bit of time, weather can change the color of the panels. Reportedly, this issue’s plagued the design for some time now.

2021 Ford Bronco 2-Door - in brush — The Bronco roof issues apply to the two- and four-door models, but not soft tops.

The automaker’s telling owners who have already taken delivery of their vehicles that they will replace the panels at no cost. However, the real tough sell is for buyers who haven’t gotten their vehicles yet and will now be forced to wait even longer to get their vehicle — possibly until 2022.

Not only might you have to wait until next year, it may be next year’s model as well, which could make those who felt it was important get the first year offering angry. The exception is for the prospective owners who ordered a First Edition model, those will be 2021 vehicles.

Ford is offering reservation holders $1,100 in reward points, which can be used to buy Bronco accessories for their SUVs. Also anyone who made a reservation before March 21, 2020, are protected from any price increases that could be applied to 2022 vehicles.

Soft top owners are obviously excluded from the problem and are virtually assured of getting their vehicle a little sooner now.

Mach-E matters

2021 Ford Mustang Mach-E side barn — Production of the Mach-E will be delayed six weeks as the company secures more chips.

The Mustang Mach-E, which is sold out through the rest of the year, now faces the same delays that have plagued the F-150, the Explorer and other vehicles, due to the dearth of semiconductors.

According to MachEForum.com, new owners will now be forced to wait six weeks or more for their vehicles. Once the automaker gets the chips it needs, and installs them in the vehicles, it will update the owners via email about when they can expect to get their EV.

To smooth ruffled feathers, Ford is offering 250 kWh of free charging via the “Blue Oval Charge Network.”

The delays are another gut punch for the automaker, which sees the Mach-E’s turn in just 12 days. Not only that, but they’re also big additions to the bottom line as 95% of customers choose the Blue Oval Intelligence software state service. Sales of the Mach-E jumped 15.8% in July compared to June, and this is definitely going to stall that momentum.

The Bronco’s issues also hit the bottom line as they, as the automaker noted in its July sales release, play “a significant role in Ford’s transaction price expansion. Ford SUV transaction pricing in July is a record of $42,000 per SUV, up $6,200 over last year.”

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New Vehicle Prices Set All-Time Record, With No End in Sight to Rapid Rise

New vehicle prices continued an unprecedented rise last month, the upward jump reflecting a variety of factors, including ongoing inventory shortages triggered by the pandemic and problems sourcing critical semiconductors.

Prices on new vehicles are at an all-time high. The average prices of a new vehicle in June was $42,258, according to KBB.com analysts.

The typical new vehicle buyer laid out an estimated $42,258 in June, according to Kelley Blue Book. That was up $928 from May, and $2,527 – or 6.4% — from June 2020.

“New-vehicle affordability continues to decline as the income required to purchase the average new vehicle continues to climb,” said Kayla Reynolds, industry intelligence analyst at Cox Automotive.

Price surge hitting new and used vehicles alike

The recent surge in pricing has been one of the most dramatic in the last half century, with only a few exceptions, notably during the inflation-plagued era of the late 1970s and early 1980s. To put the latest surge into perspective, the typical new vehicle price was around $36,000 at the end of 2019, according to manufacturer data.

And the runup of new car prices, along with the lack of inventory, is hammering used car buyers, as well, with prices for most previously owned products now at record levels, according to industry data. In a number of instances, used products are now going for more than they did when new. And even vehicles with more than 100,000 miles on the odometer are in high demand and commanding record prices, TheDetroitBureau.com reported earlier this month.

“There are a lot of reasons why prices keep going up,” said Stephanie Brinley, principal auto analyst with IHS Markit, “though the pace may settle down” in the coming months.

The rise in new vehicle prices isn’t just because of wildly popular trucks and utility vehicles — midsize sedan prices jumped big last month.

Low inventories play a primary role

Automakers have been hit hard by rising prices for both raw materials and components, said Brinley, though a more severe problem has been the shortage of new vehicle inventory.

Manufacturers were forced to temporarily halt operations in many countries in spring 2020 due to the COVID-19 pandemic lockdowns. As they were racing to catch up later in the year, however, automakers found themselves facing severe shortages of the microchips used for everything from engine control modules to digital infotainment and safety systems. That has led to frequent factory slowdowns and closures this year.

“We came into the year with very, very limited inventory,” and due to “the chip-related shortages we’ve remained at that low level,” Duncan Aldred, the head of the GMC brand, said during a Monday media webinar.

Although sedan prices did jump, the demand for expensive SUVs and pickups continues unabated, which also drives the numbers up.

As a result, both manufacturers and retailers have been far less willing to cut deals. Factory incentives, in particular, have been plummeting. They typically vary by region, but Ford offers a few examples of the current, downward trend. In New York, it currently offers a $3,000 “trade-in assistance” package for buyers of the 2021 Escape crossover. That will drop to $500 at the end of this month. Across the country, Ford is cutting back trade-in incentives for the F-150 pickup by 60%, from $2,500 to just $1,000.

“In June, for the first time in a decade, vehicle buyers were essentially paying sticker price — the manufacturer’s suggested retail price — for new vehicles,” said KBB’s Reynolds.

Buyers also catch some of the blame

New car buyers catch some of the blame for rising prices, however. By the millions, they continue to shift from sedans and coupes to the higher-priced SUVs, CUVs and pickups that now account for more than two-thirds of the U.S. new vehicle market. And they continue loading up with more options, while upgrading to more premium trim packages, industry data indicate.

Fully 50% of GMC buyers are now opting for the brand’s top-line Denali and AT4 models on product lines where they’re available.

Every manufacturer but Tesla showed an increase in new vehicle prices in June compared to a year before, KBB reported. Mitsubishi saw an 18.3% jump, the industry’s highest, with Stellantis up 15.8 percent. The industry average was 6.36 percent.

EV prices were down overall last month, led by the fact Tesla didn’t raise its prices at all in June.

During the past year, some of the biggest price increases hit SUVs and pickups, the market segments that have also seen the biggest increases in demand. Full-size pickups were up 8.7% year-over-year, KBB reported, while prices for midsize SUVs and CUVs rose 6.8 percent.

Prices tumble — but only in this one market segment

Some shoppers shifted plans in recent months, hoping to get better deals by buying lower-demand products, particularly in the passenger car segment. But inventory shortages appear to be catching up with them too.

In June, some of the biggest price hikes came in the midsize car segment, prices jumping 11.3%, while full-size cars were up 10.5 percent. And minivans, which have been losing market share for several decades, saw a resurgence — at least in terms of prices which were up an average 17.8% year-over-year.

Hybrids and other “alternative energy” cars experienced a 9% jump in June compared to June 2020. But the only group of products to post a decline in year-over-year pricing was the battery-electric vehicle segment, down by 13.4 percent.

That reflects the arrival of new, lower cost products, like the Volkswagen ID.4, as well as the industry’s push to hold down pricing to help boost demand for those all-electric models.

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