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- 🦅 Affordability Stalls, Inventory Soars, and EV Moves to Watch
🦅 Affordability Stalls, Inventory Soars, and EV Moves to Watch
Chris reeves
October 16, 2024
TL;DR:
Despite the Fed’s rate cuts, new-vehicle affordability in September was about as exciting as watching paint dry. Average payments crept up to $740, and car prices nudged 0.8% higher. Loan rates dipped slightly, but not enough to make a dent in the 36.2 weeks of median income it still takes to buy a car. Higher incentives are helping dealers move inventory, but profits are squeezed as lower-priced vehicles like the Chevy Trax outperform bigger-ticket trucks. Meanwhile, dealerships are juggling rising inventories—2.84 million units and counting. In other words, it’s a wild ride for margins.
This Digest
💸 New-Vehicle Affordability Stalls, Auto Loan Rates Stay High
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New-vehicle affordability saw no improvement in September, despite slight rate cuts by the Fed. Here's the data that drives the headlines.
Vehicle affordability remained unchanged in September, with the average payment increasing by 0.2% to $740.
The number of weeks of median income needed to purchase a new vehicle remained steady at 36.2 weeks.
Average auto loan rates declined by 30 basis points to 9.53%, the lowest in over a year, but vehicle prices increased by 0.8% for the month.
Income growth and higher incentives helped balance out some price hikes, with year-over-year income growth up by 3.6%.
September marks the best affordability level since May 2021, despite auto loan rates hovering near historic highs.
8 Car Models That Could See Big Price Drops
With the average new car price at $48,397 and full-size trucks like the Ford F-150 averaging $67,443, consumers are looking out for significant price drops on 2023 models like the Camry and Accord as newer inventory arrives in November 2024.
Lower Priced Vehicles, Inventory Overflow Hurting Margins
While average new car prices held steady at $48,369 in September, rising incentives—up from 4.8% to 7.3%—are putting pressure on dealer margins. Small, affordable vehicles like the Chevrolet Trax ($25,081) and Toyota Corolla ($25,535) are outperforming larger, higher-priced trucks and SUVs, dragging down profits. Additionally, inventory is growing, with 2.84 million units in stock in September, up from 2.61 million in January 2024. Dealers may need to rely on increased incentives to move vehicles through the rest of the year.
👑 GM Defends Its SUV Crown with Tahoe & Suburban
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GM has refreshed its SUV powerhouses—the Chevy Tahoe and Suburban—to maintain dominance in the highly profitable full-size SUV segment.
General Motors isn’t playing around when it comes to defending its leadership in the large SUV market. With competitors like Ford and Nissan nipping at their heels, GM’s updates to the Tahoe and Suburban include new high-end models, updated interior tech, and even the addition of hands-free Super Cruise. Prices are climbing with these upgrades, starting at $60,000 for the Tahoe, but GM isn’t backing down from the competition.
The stakes are high as GM’s market share has dropped to 64% from 70%, yet the company is determined to maintain its crown. Sales may be down due to the model changeover, but GM is confident the refreshed designs will keep its iconic SUVs on top. With their full-size SUV market still representing a significant portion of GM’s profits, holding onto this segment is crucial.
Securing the EV Supply Chain
Meanwhile, GM is looking beyond the present with a major investment in its electric future.
General Motors is contributing $625 million to a joint venture with Lithium Americas for the Thacker Pass lithium project in Nevada. This deal gives GM a 38% stake in the project, securing enough lithium for 1 million EVs annually. As demand for electric vehicles continues to surge, GM is positioning itself to reduce reliance on Chinese suppliers and secure a stable battery material supply.
Big Government Support
The U.S. Department of Energy is backing the venture with a $2.26 billion loan, helping GM drive forward the Thacker Pass project. This agreement also includes a 20-year offtake deal, allowing GM to lock in 38% of Phase 2 production, ensuring a steady flow of lithium as the project expands.
Future-Proofing the Battery Game
As GM looks to build out its EV fleet, diversifying its battery material sources is key to staying competitive in the EV race. Between expanding its SUV offerings and securing lithium for future EVs, GM is covering all its bases to maintain dominance in both the gas and electric vehicle markets.
🏁 Polestar Pushes Toward Profit (But Still Faces Hurdles)
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Polestar delivered nearly 12,000 vehicles in Q3 2024, but they’re far from turning a profit just yet.
Strong Q3 Deliveries but Profitability Still Elusive
Polestar’s numbers for Q3 2024 are solid, with 11,900 deliveries, but the company still faces profitability challenges. They’re optimistic, targeting a profit by Q4 2024, but new tariffs and shifting market conditions mean they’re navigating stormy seas. The company’s aggressive new sales strategy aims to boost orders, particularly in the U.S., where the Polestar 3 and 4 are poised to compete in the luxury EV space.
Sustainability vs. Rising Costs: A Delicate Balance
While Polestar’s focus on sustainability—like their ambitious Polestar 0 project—resonates with eco-conscious consumers, import duties and rising costs will challenge their bottom line. But with backing from Geely and a strategic shift in sales, Polestar might just weather the storm and achieve break-even by 2025.
⚡ Charging into the Future: Nissan’s New EV Charging Network
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Nissan expands its charging network for Ariya owners, giving them more charging options across the U.S. Here's what it means for dealers and EV infrastructure.
Nissan is launching the Nissan Energy Charge Network with 90,000 fast chargers across multiple third-party partners, including Electrify America, Shell Recharge, and more.
The MyNissan app will allow Ariya owners to start a charging session and pay with a single tap, making the process more seamless.
Tesla Supercharger adapters will be available for Ariya owners, although it's still unclear whether they will be free or paid, unlike Ford or Rivian, who provide the adapter free of charge.
Nissan plans to release EV models with native NACS ports by 2025 for better Tesla Supercharger compatibility, though this only applies to Ariya and not the aging Nissan Leaf.
Nissan’s shift aims to accommodate its 16 new electrified models by 2026, building a broader EV presence in the U.S. market.
Nissan's Mobile Man Cave
Nissan is also bringing some fun to the field and the trail with their Project Trailgater. Based on the Frontier Pro-4X, this modified truck comes equipped with two 43-inch TVs, Starlink internet, and a propane grill—perfect for streaming football games while off-roading. Featuring a lift kit, performance shocks, and a fold-out kitchen station, it's set to be a showstopper at SEMA.
🚚 Kia’s Pickup Truck Drama: Will the Tasman Come to the US?
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Kia finally reveals its long-awaited pickup truck, the Tasman, but is it heading to the U.S. market? The answer is murkier than you think.
Does the Tasman really stand a chance against the Ford Ranger?
That’s the big question, isn't it? Kia is throwing its hat into the pickup ring, but don’t expect the Tasman to dethrone the Ranger anytime soon. With a boxy design and no V6 in sight, it's more likely to steal glances than market share—especially since it's targeting the Middle East, Africa, and Australia first. As for the U.S.? The chicken tax might cook those dreams before they even take off.
What about the electric version—will we get it by 2026?
Well, Kia says maybe. With plans to debut an all-electric Tasman by 2026, it could happen, but the U.S. is a secondary thought. They’ll likely wait until they've sold enough diesel trucks to justify the EV version. Plus, with that 25% import tax, don’t hold your breath waiting for the eco-friendly version to cross the Pacific.
🚛 Tesla Semi: Worldwide Rollout?
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Elon Musk claims the Tesla Semi will be available worldwide, but there’s still a long road ahead before that becomes a reality.
The Tesla Semi has been a long time coming, but Musk’s vision for global distribution is finally gaining momentum. Recent third-party testing has verified some of Tesla’s bold claims, but production hurdles remain. Tesla plans to ramp up production starting in 2025, with a target of 50,000 units per year, focusing initially on North America and Europe. However, Musk’s worldwide ambitions might have to wait until Tesla can overcome its production bottlenecks and earn back the industry’s trust.
🔄 Fisker’s Recall Rollercoaster: Who’s Paying?
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Fisker Ocean owners have been through a lot, and now they’re being told that recall costs will finally be covered. So, why the drama?
Why did Fisker flip-flop on paying for the recalls?
Oh, you know how it is—one minute you're covering costs, the next minute, you're asking customers to foot the bill. Fisker’s bankruptcy saga had owners sweating over who would pay for these repairs. Luckily, the courts stepped in, and now owners won't have to sell a kidney to fix their faulty door handles.
Should I be worried about future Fisker recalls?
If you like drama, owning a Fisker might be right up your alley! With their recent bankruptcy liquidation, they’re promising support for five years via the cloud. But, just in case, you might want to keep that extended warranty handy—or pray their next model isn’t haunted by more glitches.
More where that came from and a morning email packed with the good stuff available at Daily.ASOTU.com.
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