Car auction sale prices are only continuing to rise, Lexus sold almost twice the cars Audi did this past quarter, and IndyCar wants a slice of the Drive To Survive phenomenon. All that and more in The Morning Shift for Friday, October 8, 2021.
1st Gear: Records Are Made To Be Broken, But Maybe Not This Fast
The average value of a car sold at wholesale auction was 27 percent greater in September of this year compared to September 2020. It was even up 5.3 percent compared to this past August. Even though that’s a lot, chances are those prices will balloon even higher before they deflate. From Automotive News:
In a conference call Thursday, Cox Chief Economist Jonathan Smoke said average wholesale prices have increased for eight straight weeks through last week. And they do not appear to be at a peak for 2021.
“Basically, the odds favor more increases between now and spring because we’re still in a very supply-constrained market in total, in both the wholesale market and the new-vehicle market,” Smoke said, adding that relatively high sales conversion rates continue to suggest aggressive buying by dealers.
The sales conversion rate at Manheim was 65 percent last month. It was at 52 percent in September 2019.
Conventional wisdom says there’s an upward limit for how much people and dealerships (which are also people, according to the highest court in our land) will be willing to pay before saying enough is enough. If the pandemic has proven anything, it’s that that limit, if it does exist, happens to be really freakin’ high. And we haven’t reached it yet.
Still, dealers don’t tend to source much of their used stock from auctions, so in that sense this problem isn’t quite as bad as it looks:
But when asked about the high wholesale prices hitting dealer margins, Smoke noted that auctions only represent the most expensive method for dealers to get used cars and trucks. A typical franchised dealer sources only about a quarter of their used inventory from auctions, he said.
Besides, even if dealers are paying through the nose for used cars, they’re making all that money back anyway:
“So don’t worry about their margins,” Smoke said. “While they are being compressed a bit from the most recent trends, their margins are still substantially higher than what they were pre-pandemic.”
I can tell you’re all worried, but stay calm. Dealers are going to be fine, folks.
2nd Gear: Lexus Pulled A Fast One
Lexus had fewer cars on dealer lots through the third quarter of 2021 than its German luxury contemporaries. But it also sold more cars than they did, beating BMW by a slim-ish margin, as well as trouncing Mercedes-Benz and Audi. From Bloomberg:
Lexus sold 81,093 vehicles in the quarter, led by its RX and NX SUVs, which accounted for more than half its deliveries in the period. BMW AG, which counts on its Spartanburg, South Carolina, plant for popular crossovers like the X3 and X5, delivered 75,619 vehicles. It’s still leading the four biggest luxury carmakers in 2021 sales through September.
If Lexus has one advantage — besides Toyota’s logistics knowhow — it’s that the brand’s relatively tighter dealer network perhaps made its inventory appear less scant than it actually was:
“What we have seen throughout the shortage is that Toyota and Lexus have extremely efficient distribution systems,” [Autotrader analyst Michelle] Krebs said. “Despite having the lowest inventories in the industry, they still seem to manage to get vehicles quickly to dealers for sale.”
It helps that Lexus’s dealer network is smaller than those of larger mass-market brands, which Krebs said have to spread limited inventory across a bigger swath of retailers.
As for Mercedes and Audi, they sold 55,130 and 44,019 cars in the same period, respectively. The chip shortage was especially unkind to both brands, but as Bloomberg notes, all four manufacturers have grown sales compared to last year.
3rd Gear: Tesla’s Mythical Charging Adapter Is Coming, But Not For You
It’s been almost a year since Tesla announced it’d release a CCS adapter, so its cars could use public charging networks in addition to its own proprietary Superchargers. Granted, the adapter has only been confirmed to launch in South Korea so far, and the timetable for a North American release is still unclear.
Tesla owners in Korea received emails this week that the adapter would finally be available at the end of October. Here’s what the email said, translated to English via Reddit, by way of Electrek:
Now it’s more convenient to charge your Tesla. With the new CCS Combo 1 adapter, you can safely and quickly charge your vehicle even on public fast charging networks.
[Release Schedule]
10/19 (Tuesday): Sales to owners with preferential purchase tickets (to be announced separately)
10/26 (Tuesday): Tesla Shop official sales start * Release schedule may change depending on product customs clearance There is.
• The CCS Combo 1 adapter can only be used with Model 3 and Model Y.
• It cannot be used in Model S and Model X, and when compatibility analysis with domestic charging infrastructure is completed, information on the release will be provided at a later date.
Sale price: 299,200 (tax included) about $250 USD
It seemed to be a foregone conclusion that Tesla would eventually bring this adapter to the States, but what incentive does Tesla have to do it? The brand accounted for 79 percent of new EV registrations in the U.S. in 2020, according to Experian by way of Automotive News. Meanwhile, in South Korea it was responsible for 43 percent of all EVs sold in the first half of 2021, per Korea JoongAng Daily. That’s still almost half, which is a lot, but it’s not 8 out of every 10 cars. Tesla won’t change until it has to.
4th Gear: In The Future, Every Form Of Racing Will Have Its Own Docuseries
Every few weeks, someone representing a motorsport series that isn’t Formula 1 talks about how great it would be if they had their own Drive To Survive. And then you hear pretty much nothing about it. NASCAR’s take on the format is confirmed to be in the works though, with an especially uninspiring working title: Race For The Championship.
IndyCar is angling to try something similar too, because every executive seems to think they can make their own DTS-like and multiply race viewership overnight. Mark Miles, CEO of Penske Entertainment which owns IndyCar, says it’s going to happen sooner or later. From Racer:
“We want to see that happen, and it’s a regular effort,” Miles said. “This week, a major production company, a producer, spent their own time and money to create a sizzle reel for a series pitch. I’m not going to get into the details, but as recently as this week, in the last 48 hours, a big distribution group was pitched by a great producer, with a sizzle reel and his ideas and concepts for just such a series.
What exact form the production will take, however, is still up in the air:
“So, you will hit sooner or later. It takes investment and work, and we’ve got to get the right potential product in front of the right distributors, right platforms, and then they’ll happen. Ultimately, I don’t think it’s just one ‘Drive to Survive.’ I think it’s maybe scripted, maybe unscripted, maybe documentaries. Maybe there are other examples where it’s not exactly the same.
“But you know, somebody who’s iconic from let’s just say, Europe — I’m making that up — comes over and gets behind the scenes in the way they cover the run-up to the [Indy] 500, and the race. So not live racing, but a story to be told. I think there’s lots of ways to kind of slice and dice the opportunities, and we will be successful.”
I really wish IndyCar all the success in the world on this, because its on-track product is universally more exciting to watch than F1’s. That said, F1’s globetrotting nature and the snootiness, money and high fashion that entails make it ripe for the sort of Nat Geo-like flyovers and montages that sports docuseries thrive on. I’m struggling to imagine the same hype generated for something that looks a lot like F1 to a casual viewer but instead visits, say, Wisconsin on a regular basis.
5th Gear: Opel’s German Plants And Workers In Limbo
Stellantis is mulling over severing Opel’s largest plants from the brand. If the company goes through with the decision, two factories in central Germany, in Russelsheim and Eisenach, would be used for Stellantis’ wider network of vehicles, rather than just Opel exclusively. The Eisenach plant is already planned to temporarily shut down due to chip shortage-related issues next week.
Workers at Eisenach — who have gone from producing some of the first cars in Germany before the turn of the 20th century, to operating under Nazi and then Soviet control, to functioning as part of East Germany, and then on through unification —are concerned they’re being furloughed for the moment just to be laid off in due course, so that Stellantis can move Opel production out of Germany. From Reuters:
The news, reported first by German newspaper Handelsblatt, comes after unions expressed concern that the Eisenach plant could be shut down permanently after the company said it would be closed for three months due to the global chip shortage.
Workers at the plant on Thursday accused Stellantis (STLA.MI), of exploiting Germany’s furlough scheme to move production out of the country.
Union officials fear that Opel, which is bound by an agreement struck last year not to make any workers in Germany redundant until 2025, is placing workers at the Eisenach plant on furlough as a temporary fix that could evolve into a longer-term shutdown.
Until the shutdown is lifted, the Grandland X model being produced in Eisenach will be made at the company’s Sochaux plant in France – but Eisenach workers fear it will be moved there permanently.
“We won’t let this be done to us,” local workers’ council head Uwe Loesche wrote in a statement published on union IG Metall’s website on Thursday.
Reuters adds that Stellantis recently came under fire in France for pulling the same scheme with furloughed employees there. Stellantis’ official line is that production at the German plant in question is expected to resume in early 2022. We’ll find out then how honest the company’s actually been.
Reverse: Andretti Wins It All
On October 8, 1978, Mario Andretti was officially crowned Formula 1 world champion following the conclusion of the Canadian Grand Prix, becoming the only American since Phil Hill to win it all. Andretti technically clinched the championship almost a month earlier at the Italian Grand Prix, a race he finished sixth in. However, Andretti didn’t celebrate at Monza, as his teammate Ronnie Peterson had suffered a brutal accident early in the running; Peterson ultimately died the next morning in hospital.
Neutral: Red Bull Didn’t Throw It Back Enough
Red Bull is running a special livery at the Turkish Grand Prix this weekend to honor its engine supplier and technical partner Honda, who will be officially leaving the sport after this season. The livery looks fine, but I was personally hoping for more of a throwback scheme with fewer logos, which would’ve made for a more faithful tribute to Honda’s F1 roots. NASCAR and sports car racing teams do retro liveries with regularity and the fans love ’em. Would it kill F1 to lighten up for once?
Leave a Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
