+++ BYD is exploring establishing an EV factory in Mexico to enhance its supply chain efficiency and reduce export costs to the North American market. Zhou Zou, the head of BYD Mexico, highlighted the strategic significance of overseas manufacturing and identified Mexico as a critical market with substantial potential during an interview on February 09. This initiative aligns with BYD’s strategy to create export hubs in Mexico that could serve the United States and other international markets. Under the agreement between the United States, Mexico and Canada, at least 75% of auto parts must be manufactured in 1 of the 3 regions to benefit from potential tariff benefits. Furthermore, the U.S. Inflation Reduction Act imposes specific assembly location requirements and stringent criteria for battery sourcing to be eligible for a $7.500 tax credit. Mexico has emerged as an attractive destination for EV manufacturing, with several major automakers, including Kia, BMW and Stellantis, announcing their plans to produce electric vehicles in the country. Tesla also revealed its intention to build a gigafactory in Nuevo León state. BYD has already introduced a range of EV products in the Mexican market, including models such as the Han, Tang, Atto 3, Dolphin and Seal. Considering a new EV factory in Mexico is part of BYD’s global expansion strategy, which already includes overseas factories in Thailand, Uzbekistan, Brazil, Hungary and Indonesia. BYD wants to implement a dual-core strategy in the North American and Latin American markets: “We regard Mexico as the core of the North American market and plan to improve the supply chain and establish factories in Mexico”, a spokesman said. In addition, it acquired a Ford plant in Brazil to supply the Brazilian local market and other Latin American regions. +++
+++ ELECTRIC VEHICLES sales have been a hot topic lately, with discussions revolving around the apparent slowdown in global demand. It seems that automakers, who were struggling to meet the soaring demand for EVs just a year ago, have now shifted gears, tapping the brakes on their once-booming electric ambitions. To put things into perspective, let’s dive into the world of numbers: global electrified vehicles sales saw a year-on-year rise this past January, but experienced a sharp dip from their peak in December. This shift can be attributed to a variety of factors, including subsidy cuts, stricter regulations, or simply a seasonal slump in sales, particularly notable in key markets like Germany, France and China. While I don’t have separate figures for EVs and PHEVs, data from Rho Motion indicates that a total of 1.1 million pure electric and plug-in hybrid vehicles were sold globally in January. This marks a significant 69% increase from the 660.000 units sold in January 2023. While a solid result, it also reflects a 26% decrease in sales from December. Additionally, January’s EV/PHEV sales were down compared to those in June, August, September, October and November 2023. Charles Lester, a data manager at Rho Motion, explained that EV sales in Germany plummeted by approximately 50% in January compared to December 2023 after the nation withdrew subsidies. A similar decline was observed in France as the country tightened its requirements. However, Lester remains optimistic about the future, anticipating that this downturn will be short-lived. He notes that car manufacturers are likely to increase spending on new EVs and PHEVs in response to the stricter CO2 limits set by the European Union. “What is really going to spur on sales is the EU emission standards for 2025”, he said. In January, sales of EV and PHEV models surged by 41% in the United States and Canada compared to the same month last year, yet saw a 14% decline from December 2023. A similar trend was observed in the European Union, European Free Trade Association and the UK, where sales rose by 29% last month compared to January 2023, but dropped by 32% from December 2023. In China, sales nearly doubled in January but again, experienced a 26% decrease from December. Unfortunately, Rho Motion has not published figures for only battery-electric vehicles. One of the most interesting announcements made in the EV/PHEV space in recent weeks came last month when General Motors said it will start selling select vehicles in the U.S. with plug-in hybrid powertrains, allowing it to comply with more stringent fuel economy and tailpipe emissions standards. This move could prompt a rise in sales of hybrids in the U.S. as they serve as a good stepping stone between a traditional combustion-powered car and an EV. +++
+++ Struggling electric vehicle startup FARADAY FUTURE owes the landlord of its Los Angeles headquarters nearly $1 million after missing the last 2 months’ rent. The landlord, Rexford Industrial, filed a previously unreported lawsuit against Faraday Future this week in Los Angeles Superior Court that accuses the startup of missing its January and February lease payments, as well as associated maintenance fees and taxes. Rexford claims the startup owes it $917.887.26 as a result and is seeking to take possession of the building. Faraday Future is also being sued by the landlord of an office it has leased in San Jose since 2022. That previously unreported complaint, filed by BXP Realty in Santa Clara Superior Court on January 31, alleges that Faraday Future stopped making lease payments in December, leading to an outstanding balance of $127.311.16. BXP says it applied Faraday Future’s $99.518 security deposit to the balance in January and asked the company to pay the remainder; the startup did not pay that sum. As a result, BXP is looking to boot the startup from the premises. The missed payments are the latest sign of trouble for the startup, which only recently began shipping its first luxury SUVs to employees and hand-picked celebrities after nearly 10 years and more than $3 billion in losses. Faraday Future warned shareholders in a December regulatory filing that its ongoing fundraising efforts continue to face major hurdles and that without a cash infusion, the startup may not have “sufficient resources” to continue operating and “will likely have to file for bankruptcy protection and its assets will likely be liquidated”. Faraday Future became a publicly traded company in 2021 after merging with a special purpose acquisition company. Faraday Future reported just $8.5 million in cash at the end of September 2023. The startup is also under investigation by the Securities and Exchange Commission. Faraday Future has survived a series of crises over the years as it attempted to develop and ship its luxury electric SUV, the FF 91. In 2019, after a messy breakup with one of its financial backers, Faraday Future sold the Los Angeles headquarters to generate cash and leased it back from a subsidiary of New York real estate firm Atlas Capital. Rexford assumed Faraday Future’s lease in 2022 after buying the building for $64.3 million. Faraday Future managed to survive long enough to merge with Property Solutions Acquisition in 2021, a transaction that netted Faraday Future $1 billion in fresh funding. But Faraday Future has spent the intervening years mired in more drama centered around its billionaire founder, Jia Yueting. +++
+++ For most Americans, the Chinese electric vehicle boom, much like Covid in December 2019 and WWII before Pearl Harbor, is just something that’s happening somewhere else. But FORD bosses know better than to put their heads in the sand. They describe the threat posed by cheap Chinese EVs as ‘colossal’ and think it’s inevitable that they’ll eventually be offered for sale in the U.S. Ford, and the western auto industry, is already struggling to deal with a cooling EV market resulting from a second wave of potential buyers remaining unconvinced about the value and practicality of vehicles that cost more than combustion alternatives and are backed up by a less than stellar charging network in some parts of the U.S. But Ford is concerned that Chinese automakers may win over customers with incredibly aggressive pricing, as the Koreans and Japanese did before them. “They are ahead of us in this technology”, Marin Gjaja of Ford’s EV division Model e, told. “We look at that and say, ‘That’s coming here eventually, so we’d better get fit now and better get going on EVs or we don’t have a future as a company’ ”. Though the U.S. government has implemented tariffs to try to curb an influx of Chinese-made cars, Gjaja is in no doubt that they’ll ultimately find a way in, potentially through Mexico. “If I was sitting in China right now running a Chinese OEM, I’d be looking for land in Mexico”, Gjaja said, citing the low cost of construction, labor and the tariff-free access to North America via the USMCA trade agreement. “They’re going to come here, just as the Japanese ended up here, the Koreans ended up here and the Germans ended up here. It’s a big market”, Gjaja said. And it sounds like Ford, realizing the magnitude of this challenge, is open to joining forces with other Western carmakers to fend it off. Ford CEO, Jim Farley, warned attendees at a conference that automakers who “cannot compete fair and square with the Chinese around the world” risk losing 20-30 percent of their revenue. That’s why Ford has created a special engineering team to design a, small, ultra-affordable electric car to compete with the $11.000 BYD Seagull. And it’s why Farley is open to collaborations to help bring manufacturing cost of major components, such as the batteries, down as far as possible. “We can start having a competitive battery situation”, Farley said at the conference. “We can go to common cylindrical cells that could add a lot of leverage to our purchasing capability. Maybe we should do this with another OEM”. Ford has projected it will lose $5 billion to $5.5 billion on its EVs this year. The company has launched a dedicated “skunk works” team (separated from the company’s main engineering operations) to design a small, low-cost EV that could compete with BYD’s Seagull model, the CEO said. BYD can produce its small Seagull EV for $9.000 to $11.000 in materials, Farley said. Wolfe Research analyst Rod Lache said he estimates Chinese production costs are 30% lower than Western automakers’ costs. “Last year, 25% of all vehicles sold in Mexico were sourced in China”, Farley said. “The world is changing”. Farley said he has ordered Ford engineers to develop a new affordable EV “which has to make money in the first 12 months. If you can’t make money we aren’t launching the car”. +++
+++ Electric Vehicles are terrific and they may very well be the future, but given the infrastructure challenges of both public and at-home charging, they are not realistic for a great many at this time. Their high costs also represent an iffy financial decision when you start running the numbers on EVs versus comparably sized hybrids and plug-in hybrids: yes, you’ll save money by running on electricity, but probably not enough to counter the much higher cost of entry. Because of both the infrastructure and financial challenges, hybrids and plug-in hybrids are an obvious bridge technology to the full EV future. This was obvious years ago and it’s obvious today. And yet, car companies mostly eschewed hybrids and plug-in hybrids in favor of a full EV push. Why? Electric cars are really expensive to develop. Investing in a bridge technology at the same time as the ultimate goal … well, speaking of iffy financial decisions. As such, the only companies selling cars in the American market and really making hybrids these days are those who were making them before the recent EV push: Toyota/Lexus, Honda, Ford, Hyundai/Kia, BMW and Porsche. The company formerly known as Chrysler is the rare exception to this as it has more recently invested in and introduced new plug-in hybrids. One company not listed there, of course, is GENERAL MOTORS . It dove head-on into electric and swore off hybrids apart from the recently introduced Corvette E-Ray. GM, however, not only had hybrid technology, it had exceptional hybrid technology. The Chevrolet Volt came out in 2010, and while the car itself was flawed, the powertrain and its general concept were exceptional. The non-plug-in version of the Voltec hybrid powertrain was also very good, but it wound up in virtually nothing. I’m one of only a handful of journalists who ever tested a 2016 Chevrolet Malibu Hybrid, and you know what? It was really good! That was the most perplexing thing about GM’s decision several years ago to move beyond hybrids. How could it not see that EVs were not going to be for everyone? How could it not see the short-sightedness of the decision? Those were questions myself and many others covering the automotive industry were asking back then. And it’s why I have nothing to say but “well, duh” when GM recently announced it was throttling back on EV development and dusting off their hybrid tech from the vault. This is just the latest example of General Motors completely bungling its electrification strategy. The engineers have done their jobs over the years, but the combination of miscalculations, missed designs and mistakes has rendered those efforts pointless. In the beginning, General Motors came up with the first electric car in basically a century. Then they killed it … both the EV1 and the general idea of producing an electric car. A decade later, General Motors effectively invented the plug-in hybrid, the Chevrolet Volt. Its roughly 65 km of electric range would still be among the best on sale today (the second generation topped 80 km) and the well-executed powertrain’s overall concept had the same benefits as modern PHEVs: Run on electricity for your commuting and daily errand running, have the gas engine on hand for longer trips. It worked and it worked well. Good job engineers! However … As cool as the original Volt concept was, the eventual production model was decidedly not, disappointing everyone. It was also cramped with 4 seats only, thereby limiting its widespread appeal. The second generation was better-looking and more conventional, but that also meant it wasn’t able to declare its greenness to the world. Both further suffered from minimal marketing support and dealers uninterested in selling something more complicated than “V8 makes truck go”. Meanwhile, the only other vehicle the Voltec plug-in powertrain found itself in was the Cadillac ELR, a tiny 2-door coupe with a price tag so outrageously high we all thought it was a joke (OK, so there was also the Fisker Karma. There was eventually a more compelling Cadillac CT6 plug-in hybrid capable of 50 km of e-range, but it was on sale for roughly 28 minutes before GM axed it. Come to think of it, GM also axed the CT6’s almost-mythical Blackwing engine option, so it’s not like curious about-faces are limited to the electric realm). Hindsight is 20/20, of course, but it always seemed like Voltec could be a winner: it just needed the right kind of vehicle surrounding it as well as marketing support. An Equinox-sized SUV with Voltec and unique styling seemed like a recipe for at least greater success than the Volt, even if it would need a bigger battery. The demand for the Toyota RAV4 Plug-in Hybrid and Kia Sportage PHEV would indicate it wouldn’t have been foolhardy. Eventually, GM pulled the plug on the Volt, plug-in hybrids and regular hybrids, such as the Malibu, that effectively had the Voltec powertrain concept with smaller batteries and no electric-only range. They basically operated like Honda’s system. I suppose that’s what they can bring out from mothballs now, so they’re certainly restarting from a good spot. But let’s also not forget that GM co-developed a hybrid system for its full-size trucks and SUVs, and although a bit underbaked as an overall concept, it was still something to build upon. GM could very well have a Silverado/Sierra answer to Ford’s excellent F-150 Power Boost hybrid today, but nope. And that’s just hybrids. Let’s talk about the actual EVs. The Bolt was the first affordable EV that didn’t make you bite your nails with range anxiety the second you pulled out of the driveway. While the Leaf and e-Golf all had ranges in the 160 km vicinity, the Bolt blew them all away with about 400 km. It was also quick and reasonably fun to drive. Unfortunately, it was a tall, awkwardly styled dorkmobile of a hatchback that only the most ardent EV evangelists would desire. Dealers hated it even more than the Volt ‘cause they couldn’t charge you an arm and a leg for oil changes, etc. A successful refresh largely corrected the dorky styling and the stretched EUV version satisfied the needs of more family-oriented customers. With a big help from lower prices, the Bolt found finally found success. And then GM killed it. To be fair, the Ultium platform shows great promise. It’s more advanced and allows for the mixing and matching of components to make various vehicles for various brands, including Honda and Acura. Unfortunately, there will be a gap between the Bolt and whenever its next-generation, Ultium-based replacement arrives. And also whenever the cheapest Equinox EV arrives. That’ll leave potential customers with nothing. And speaking of nothing, that’s been a half-decent estimate for how many other Ultium-based vehicles have been produced. The Hummer EV and Cadillac Lyriq have been trickling out, while the Blazer EV fell flat on its face the second it jumped over the boards. Even then, Chevrolet was delaying the rollout of its various trim levels, with pricier ones coming first and cheaper ones coming in 2020-something or other. Honda to its credit is not doing that with the mechanically related Prologue. At some point in that history lesson, I probably should’ve suggested putting on circus music or “Yakety Sax”. Or banging a gong. Or dropping a gif of Captain Picard putting his forehead into his palm. It’s just been a mess. So much promise utterly wasted. One almost expects some sort of calamity or poor decision to befall the Corvette E-Ray any day now. And yet! GM can still salvage this snowball of mismanagement. Even with Voltec covered in dust and Ultium firing out error codes like a Gatling gun, they’re in a vastly superior position to that of other car companies. It’s easy to see a very promising future filled with compelling plug-in hybrid SUVs, hybrid trucks and, yes, all the wonderful EVs we’ve already gotten a glimpse of. Can GM actually get out of its own way and make it happen? Well, that is the question, isn’t it? +++
+++ It seems that hybrids are emerging as the new star of the electrification game, following the recent concerns about the prospects of the EV market. GENESIS doesn’t want to miss out on the increasing customer demand, and will reportedly launch hybrids next to its existing lineup of ICE and EV models. Hyundai Group previously announced that all new Genesis models set to debut from 2025 will have fully electric powertrains. However, a new report suggests that the company is hesitant in making the EV switch, and could use hybrids as an in-between step. The fully electric range of Genesis currently comprises the GV60, Electrified GV70 and Electrified G80, but only the GV60 rides on an EV-dedicated platform. This could mean that the ICE-powered lineup of G70, GV70, G80, GV80, and GV80 Coupe, are all potential candidates for adopting hybrid technology. While Genesis never offered a hybrid model, parent company Hyundai Group has all of the technical expertise. The new Genesis offerings could feature an electrified 2.5-liter engine, which would offer better fuel efficiency compared to ICE models, without the dependency on the charging network that is associated with fully electric models. The same report adds that US dealers are asking for a plug-in hybrid Genesis, but the initial roll-out could be limited to vehicles with self-charging hybrid tech. A look at the sales numbers over the past few years suggests that Genesis buyers are not yet ready to make the switch to a fully electric vehicle. In 2023, Genesis sold 225.189 vehicles and only 18.846 were EVs. These are only slightly more compared to the 18.759 EVs sold in 2022 among 215.128 units. The situation is not much different in the overall sales of Hyundai Group when we compare the Q4 stats of 2022 and 2023. The EV share dropped from 5.7 percent to 5.3 percent, while the hybrid share increased from 7.1 percent to 10.6 percent. +++
+++ The HYUNDAI MOTOR GROUP has once again moved up the launch of its new US plant solely dedicated to producing electric vehicles to October this year, 3 months ahead of its current schedule, to enhance its readiness to toughened subsidy rules. “We’re pulling ahead because everybody knows how important it is because so far we don’t qualify for federal tax credits”, Hyundai Motor America CEO Jose Munoz said during an interview. Munoz explained that initiating production sooner will enable Hyundai to capitalize on the $7.500 federal tax credit for EVs manufactured in North America with specific battery components and minerals. Construction of the $7.6 billion EV and battery complex, called Hyundai Motor Group Metaplant America, began in October 2022 in Bryan County, Georgia, with the initial completion date moved from the second half of 2025 to January 2025, and now to October 2024, marking the second advancement of the timeline. Hyundai officials reported last year that over 2.000 workers are engaged in the construction every week. The urgency to begin production stems primarily from the Inflation Reduction Act, which incentivizes the production of EVs in North America. Hyundai has so far adapted to these stipulations by increasing the lease proportion of its vehicles in the US, navigating around the requirement for North American assembly to qualify for subsidies. The recent tightening of EV subsidy qualifications in January has led to even stricter restrictions on battery component sourcing, disqualifying suppliers associated with certain foreign nations, most notably China. The metaplant is slated to produce 6 models across Hyundai’s 3 brands: Hyundai, Genesis and Kia. Although the first model to be manufactured remains unspecified, Munoz confirmed the lineup would include the much-anticipated 3-row Ioniq 7, aiming for a 2025 launch. The plant is designed with an initial production capacity of 300.000 EVs annually, scalable to 500.000 units depending on demand. Adjacent to the vehicle assembly plant, a $4.3 billion joint venture with Korean battery maker LG Energy Solution will focus on battery production with an annual production capacity of 30 gigawatt-hours. Operations are expected to commence in late 2025. Until then, Hyundai plans to source batteries from other US plants to meet its production needs. Additionally, Hyundai has partnered with another Korean battery maker SK On to construct a $5 billion battery plant in Bartow County, Georgia, aimed to begin operations in the second half of 2025, with a 35 GWh annual capacity, supporting Hyundai’s factory in Montgomery, Alabama and Kia’s plant in West Point, Georgia. The decision by Hyundai to expedite an already accelerated timeline from January 2025 contrasts with General Motors and Ford’s recent slowdowns in EV and battery factory investments. Munoz said Hyundai continues to see strong EV sales. “There are very few Hyundai dealers in America that are still not selling the Ioniq 5 and Ioniq 6, and we are telling them to please hurry up because we are going to continue to bet on electric vehicles”, he said. Last year, the Hyundai Motor Group emerged as a leading player in the American EV market, second only to Tesla, with sales totaling 94.340 vehicles. +++
+++ The transition to electrification appears to be meeting some resistance. Now, with interest rates up, U.S. buyers are backing away from high-end models too. As a result, MERCEDES has announced plans to pivot its focus towards entry-level cars, incorporating a greater mix of combustion-powered vehicles in its lineup. Several automakers went to a margin-focused strategy in the years surrounding the pandemic. Supply was short, demand was somehow out of this world, interest rates were often close to zero and making high-end luxury cars worked well for many brands. Now, that strategy isn’t as effective since supply is up and interest rates are too. To keep sales figures up, Mercedes reportedly told dealers at a meeting in January that it would change its supply mix placing a greater focus on lower priced models and less on EVs. First on order will be more entry-level cars like the GLC. In addition, it’ll ramp up production of combustion cars and hybrids to meet the demand of customers in the USA. That’s not all too different from what Nissan is doing too. Analysts appear to have a positive view of this change. “Mercedes is keeping in touch with reality instead of trying to alter it”, Edmunds Insights director Ivan Drury told. “The past year has shown that you can only fly so high before you become out of touch. Entry-level vehicles allow consumers to get a taste of what is to come if they can afford to stay within the brand’s family”. To hear dealers speak, it sounds as though they’re not particularly thrilled about stocking electric vehicles. “The carrying expense is choking me”, said a dealer. “I’d rather have entry-level vehicles with a turn rate of less than 30 days that I can make a small profit on than carry $100.000 electric vehicles for half a year and lose money on”. Another says that even customers near the top of the pile prefer gas over electric. “I don’t think the space for Mercedes is there”, one exec said. “Most of our high-end clients seeking performance-oriented cars will pick a gasoline engine over an electric motor”. Focusing on lower-priced non-electric models could give Mercedes the sales boost it needs to continue growth throughout 2024. Mercedes has notified its U.S. dealers of plans to increase the availability of traditional combustion and hybrid vehicles this year bringing 25 new and updated models to the market. This includes expanding the lineup of S-Class and GLE models with plug-in hybrid variants, as well as introducing an electrified GLC crossover by the fall. “Before the end of this quarter, we’ll see a big change in the inventory mix with ICE supply being more than electric”, a dealer told. “We’re very happy to bring into the market what is needed, which is the right balance of ICE products, electric products and now also adding PHEV into the mix”, stated Senol Bayrak, Sales Director at Mercedes-Benz USA. +++
+++ Along with other Western automakers, Stellantis stopped exporting vehicles to, and building them in, RUSSIA in 2022. However, consumers there can still buy some of its vehicles new, thanks to the help of the company’s Chinese partner Dongfeng. There is no suggestion that Stellantis is circumventing trade sanctions with Russia. Instead, the nation appears to using what it calls “parallel imports” to keep its automotive industry afloat after it fell into disarray, following its invasion of Ukraine. Initially, Chinese companies exported their vehicles to the country, and now they appear to be propping up Russia’s manufacturing sector, too. In December 2023, a Russian company called Automotive Technologies imported 42 or more kits to assemble the Citroën C5 Aircross at a plant in Kaluga. Reuters cites dealers who spoke on condition of anonymity, who said the kits were coming from Dongfeng, which has a commercial partnership with Stellantis, through which it can sell the Euro-American company’s vehicles in China. The first batch of kits was said to be part of a pilot project and the Kaluga plant (which is technically still majority-owned by Stellantis, but no longer controlled by them) will start mass production in 2024. Dealers said they were told they would soon start receiving C5 Aircros cars assembled from kits at the Kaluga plant, but it was not clear if they would continue to be branded as Citroën. In 2022, Russia revived Moskvich, which sold rebranded JAC Motors vehicles that were assembled in Moscow using kits purchased from China. The re-launch of C5 Aircross production highlights the loss of control Western companies have experienced over their brands and property in Russia. Stellantis said that despite owning 70 percent of the Kaluga plant (the other 30 percent belongs to Mitsubishi) among other assets in the country, it concluded in December that it had “lost control of its entities” there. The automaker said that, as a result, it had recognized €144 million in losses. As Western companies lose control, Chinese automakers are stepping in, and make up more than 56 percent of the market. That appears to be plateauing now that domestic manufacturing is recovering slightly. +++
+++ The Volkswagen Group’s all-electric SCOUT MOTORS is making strides, breaking ground Thursday on its new assembly plant in Blythewood, South Carolina. The company plans to build off-road capable pickup trucks and SUVs inspired by the International Harvester Scout produced from 1960 to 1980. This $2 billion electric vehicle plant will span 1.600 acres and bring 4.000 jobs to the area. It will be the home for Scout’s next-generation trucks and rugged SUVs. Scout president and CEO Scott Keogh told : “What we’re doing here is relaunching an American icon and we’re doing it here in South Carolina, and we couldn’t be prouder of doing it here in this beloved place”. This new production facility (which will have 3 key components: an assembly line, paint shop and body shop) will be able to produce more than 200.000 Scout vehicles a year. According to WLTX, Scout’s chief production officer, Jan Spies, talked about how the company will also be working toward sustainability and carbon neutrality by reducing emissions through gas exhaust and noise, reducing water consumption, and using heat pumps and LED lighting. Production at the plant is slated to begin by the end of 2026. Scout Motors is based in Tysons, Virginia, and was founded in 2022. Competing in a segment dominated by Jeep and the Ford Bronco, it’s aiming for a vehicle price of $50,000. +++
+++ In the UNITED STATES , a backlog of vehicles is accumulating on dealer lots nationwide as, for the first time since June 2020, there are 80 days of new vehicle supply throughout the automotive industry. This follows a weak sales performance in January and the normalization of supply lines. The days’ supply metric is one of many used by analyst to gauge the health of the automotive market, and measures the number of vehicles on dealer lots and in transit from the factory. Although the figure is complicated by the after effects of the pandemic (which devastated vehicle supply), more days of supply generally correlates with weaker demand for new vehicles. So it will be of concern to dealers that the average number of days of supply at the start of January hit 80, up 38 percent from a year earlier, new data from Cox Auto shows. In fact, the last time days’ supply was higher was in the early days of the pandemic, before chip shortages rocked the industry. In June 2020, the industry had 83 days’ supply of vehicles across the nation. However, dealers will likely take comfort in the fact that there were simply more vehicles available to sell in the first month of 2024, than there were in the first month of 2023. Although there were 2.61 million unsold new vehicles available around the country at the start of February (around 50 percent, or 870.000 more units than were available a year earlier) sales were also up 9 percent as compared to a year ago. The good news is that higher supply is being felt on the price sheet. At the start of February, average listing prices across the industry fell to $47,142, down 1 percent from a year earlier. Prices fell significantly in the second half of January, as harsh weather disrupted sales during what is already one of the lower volume months of the year in terms of auto sales. Moreover, dealers are working harder to sell their vehicles. Listing prices are falling by about 1 percent per week, and discounts have been growing. Incentives averaged 5.7 percent of average transaction prices in January, which is nearly twice what they were in January 2023. By group, Stellantis was the automaker with the greatest supply surplus. Chrysler and Dodge both have more than 160 days’ supply (twice the industry average), as does LiIncoln, while and Ram and Jeep are only performing a little better at 153 days and 119 days, respectively. Genesis and Infiniti aren’t doing much better either at 126 and 124 days respectively. Detroit’s big-3 all have high inventory. Lincoln also has more than 160 days’ supply, while Buick, Ford, GMC and Chevrolet all have more supply than the industry average, at 119, 104, 83 and 81 days, respectively. Ford and Chevrolet both have some highly sought after vehicles, though. The Maverick and the new Trax are both flying off the lots, and are 2 of the vehicles with the lowest days’ supply, behind the Toyota Grand Highlander, which tops the charts. Indeed, the vehicles with the shortest supply come from Japanese automakers. Toyota has just 36 days’ supply, while Honda has 48, and Lexus has 54. +++
