#592 -🐠🎣🏝 Big Fish, Little Pond

TOGETHER WITH

CARS backs off, Volvo pushes ahead, and Rivian expands the menu.

Take a quick look at some of the automotive news, and check out the second section in today’s email for a quick look at the week’s economic movement.

Sometimes, loving people well means giving them something; other times, it means learning something so they don’t have to. We like to celebrate both.

Keep Pushing Back
-Paul, Kyle, Chris & Kristi

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BUSINESS

Slow Down, Take it All in

Big News: FTC Suspends Enforcement of CARS Rule Pending Legal Review

• Temporary Hold: The Federal Trade Commission (FTC) has temporarily suspended implementing its Comprehensive Automotive Retail Standard (CARS) Rule.

• Legal Challenge: This decision follows a challenge in the 5th U.S. Circuit Court of Appeals by the National Automobile Dealers Association (NADA) and the Texas Automobile Dealers Association.

• Rule Details:

  • The CARS Rule, announced in December, was scheduled to become effective July 30.

  • It focuses on establishing new requirements for dealership advertising and finance and insurance practices.

• FTC's Position: The FTC order stated, "Balancing the equities here, the Commission has determined that it is in the interests of justice to stay the effective date of the Rule to allow for judicial review."

Keep an eye on The Automotive Troublemaker this morning to hear more from Paul, Kyle, and Jim Ganther of Mosaic for a deep dive on how this came about and what it means.

Maserati

Stellantis's Maserati premium brand is halting production on its harry-potter-spell-sounding EV, the Quattroporte Folgore. It is the 3rd major EV delay for the brand on its road to an all-electric lineup. 

• Officially, the company says they have performance concerns. Media sources point to the group's recent request for a 6% reduction in parts prices as a hint they are rethinking the business savvy of the whole push. 

• Maserati has other electric models on the way, with the GranCabrio releasing this year. 

• Stellantis seems to be looking for the sweet spot between future all-electric dreams and profitability today. 

Rivian

Since last November, Rivian has offered leasing in some US states, but now they are adding their R1S SUV to the list. 

At $1,157 a month PLUS tax and "fees," you may wonder who wants to sign on for such a steep price, but by leasing, consumers are eligible for the full $7,500 tax credit. So, a full-year lease would only cost the customer $6,384 of the $13,884 total cost of 12 months. 

But since Rivian's leasing options are 24-36 months, the math breaks down kinda ugly after that.

VinFast

Last year, Vietnam's home turf EV maker, VinFast, aimed to deliver 40K units but fell short at closer to 35K. A valiant effort, but like my dad used to say, "Effort doesn't pay the Bills." He owed two guys named William a lot of money, but that's beside the point. 

• Competition, market adoption, and shaky economics contributed to the slower-than-hoped growth of the company. 

• Despite the shortfall, the company delivered 35% more in Q4 than in Q3, signaling a ramping up of the brand's effectiveness. 

• 60% of VinFast's deliveries in Q3 and Q4 were to its affiliate, Green SM a taxi operation in Vietnam. 

Volvo

There are a lot of reasons to take a chill pill if you've caught the EV bug, but Volvo's CEO says, "It's just allergies. Let's get this paper" (Paraphrased by Chris)

The company leader, Jim Rowan, says "tremendous growth," is coming to the EV market as people earn more money and can afford to buy them.

Last year, Volvo increased its year-over-year EV sales by 70% to 113,419. In terms of production, EVs were just 16% of the units Volvo produced, with the number jumping to 37.5% if including hybrids. 

--

Let’s face it: China is and will likely remain the world’s BIGGEST auto market for some time.

But the US is the capital of the business world. Everything that happens out there will likely make ripples, if not landfall, here in our country.

So, while we can watch VinFast, Volvo, and EV Leasers from a distance today, we may be competing against them, sparing space with them, or working around them tomorrow.

This email works both ways: Hit reply and let us know, “What do you think we should be keeping our eye on as an industry?”

TOGETHER WITH LOTLINX

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DATA & INSIGHT

Dollars and Sense

💼 Labor and Wages — New weekly jobless claims fell to their lowest point in more than a year and a half. A decline in job openings indicates a cooling in the labor market, which should lead to slower wage growth.

🛋️ Homes and Goods — Increases in rent for new leases have slowed and mostly stabilized after their 2022 spike. In December, the consumer price index rose by 3.4% YOY largely due to higher costs of services, car insurance, and used car prices.

🐡 Inflation and Federal Reserve Policy — Inflation remains above the Fed's 2% target, but the easing of Fed policy is likely later in the year.

💪 Market Trends and Opportunities — Stock markets are showing resilience with the S&P 500 and Dow Jones reaching new highs. Opportunities are showing in diversified investments, especially in lagging equity segments and U.S. small-and mid-cap companies.

🌊 A Surge of New Biz: In December, 457K business applications were filed in the US (about 45% more than at the same time in 2019).

Although applications in transportation and warehousing (including gig, ridesharing, and delivery services) initially doubled, they have been declining steadily.

🥰 Improved Satisfaction in Vehicle Shopping — A recent Cox Automotive study shows increased satisfaction in car buying, credited to better inventory, discounting, and an effective omnichannel approach.

🤓 Shopping Habits: Buyers typically checked out two vehicles and visited two dealerships before making a selection, with nearly 80% using third-party websites like Autotrader and Kelley Blue Book to help inform their decision.

⚔️ Challenges in Auto Credit and Loans — The auto loan industry has experienced a noticeable uptick in interest rates this month, resulting in higher monthly payments for consumers and downgrading their purchasing power.

This tightening has coincided with an increase in auto loan delinquencies and defaults, speaking to broader economic issues plaguing consumers like persistent inflation and ballooning debt.

📉 Declining Market Prices — In the first half of January, Manheim Market Report prices fell by 0.7%, exceeding the usual 0.1% drop for this period, reflecting weaker-than-normal buying demand.

🤑 Segment-Specific Price Trends — In contrast to the overall 1.0% industry decline, luxury, SUVs, and compact cars saw greater price reductions, while midsize cars, pickups, and vans showed relatively smaller drops.

TIE CUTTERS

2024 TIME Dealer of the Year Nominee: Dale Benton

Dale Benton, representing Alabama, is up for the TIME Dealer of the Year award, and he's a real standout. Starting from humble beginnings and working every job at the dealership, Dale now heads Benton Auto Group with a bunch of Nissan stores under his belt. He's a guy who puts his heart into his work and believes in giving back big time.

Dale's community spirit is off the charts. He's all about fishing tournaments to help King’s Home, big donations to Foundry Ministries, and loading up backpacks for kids in need. His work is more than selling cars; it's about making a difference and building a legacy of kindness.

Hats off to you, Dale! The ASOTU team is all about your journey and impact on the community. 👏

AROUND THE ASOTU-VERSE

Coming Soon

• FEBRUARY 1 - 4, 2024

  NADA 2024 in Las Vegas

  Are you going to NADA and itching for some eye-catching media coverage? We're your dream team for content creation.

  🎥 Let’s link up 🎥

Quick Hits

• Arnold Schwarzenegger was detained at a German airport over an ultra-rare Audemars Piguet (AKA a very fancy watch). ⌚️

• Reddit, which Reuters called a “social media site,” is preparing to launch an IPO. 📈

• Mortgage rates have hit a 7-month low at 6.60%. Down from October’s high of 8%. 🏡

History

• 1937: Howard Hughes sets a new air record by flying from Los Angeles to New York City in seven hours, 28 minutes, 25 seconds. ✈️

• 1954: GM announces a $1B investment in expansion. 🤑

• 1978: The last German VW Beetle is manufactured. 🇩🇪