Beltway Talk Podcast: In New Jersey, Dealers Model Resilience
In the newest episode of Beltway Talk, Jim Appleton, President of the New Jersey Coalition of Auto Retailers, shares some insight into how New Jersey auto dealers have weathered the past year, the many ways in which they have stepped up to serve their communities, and why he believes advocacy is key to their future. Listen in to the newest podcast here, and don’t forget to subscribe so you don’t miss future episodes.
Honda Goes All-In on Electric in Stark Contrast to Toyota
Honda Motor Co. has become the first of Japan’s automakers to state publicly it will phase out sales of gasoline-powered cars completely, setting 2040 as the goal and giving newly minted Chief Executive Officer Toshihiro Mibe a once-in-a-career chance to put his stamp on a firm that can trace its lineage back 84 years. “It’s a very bold target,” said Yachiyo Tanaka, an analyst at automotive research company Fourin. “Honda has pledged to pull ahead of other automakers by introducing the latest technologies.” Bloomberg reports that it’s a bet that stretches beyond Japan’s borders. Global sales of passenger EVs are set to rise sharply, jumping to 14 million in 2025 from 3.1 million in 2020, according to BloombergNEF. Honda, which gets about 56% of its revenue from North America and around one-quarter from Asia ex Japan, has already begun aligning itself with powerful carmakers overseas, last year striking a pact to use General Motors Co.’s battery technology. Read more here (Source: Bloomberg).
U.S. Buyers Paying $2K More for New Cars in 2021
In few spaces are the principals of supply and demand more in play than the automotive industry, where demand is strong and supply is down — prices have jumped by more than $2,000. Due to lower inventory levels and other factors, the average transaction prices are more than $2,000 higher than last year, reports The Detroit Bureau. According to analysts at Kelley Blue Book, the average transaction price — i.e. what the consumer paid — for a new vehicle last month was $2,125 more than May 2020. It’s a 5.4% increase year-over-year, and the hikes are even month to month as they were up 1.2% between April and May this year. Overall, May new vehicle sales rose 36%, according to TrueCar. “Last month’s average transaction price performance highlights an all-time high in year-over-year growth for the month of May,” said Kayla Reynolds, industry intelligence analyst at Cox Automotive. “Many manufacturers reported year-over-year gains in average transaction prices. The largest increase came from Mitsubishi, up 12% from this time last year.” Read more here (Source: The Detroit Bureau).
Some Used Vehicles Now Cost More Than Original Sticker Price
Welcome to the wacky world of U.S. car and truck sales, where the pandemic and a global shortage of computer chips have pushed prices to record levels, reports The Associated Press. In the past year, used vehicle prices on average have climbed 30%, according to Black Book. Used vehicle price increases accounted for one-third of the large rise in inflation last month, according to the Labor Department. Prices shot up a record 10% in April and another 7.3% in May, as inflation spiked 5%, the biggest 12-month increase since 2008. The average used vehicle cost $26,457 this month, according to Edmunds.com. Read more here (Source: The Associated Press).
VW's Diess Sees Autonomy Transforming Cars More Than Electrification
Diess's view may surprise some auto industry observers, given the breadth of VW's electric revamp and the level of disillusionment that has set in for autonomous-vehicle technology, reports Automotive News. Volkswagen Group is undergoing the world's largest industrial overhaul for the electric-vehicle age, plotting half a dozen battery plants just in Europe and retooling assembly lines around the globe. And yet, its CEO sees autonomous-driving technology bringing about an even bigger shift, reports Automotive News. "This change will transform the industry more than EVs or the electrification does," VW Group CEO Herbert Diess said in an interview for Bloomberg's Qatar Economic Forum. "The car becomes so different when it’s driving autonomously." While development is taking longer than many expected, automakers and technology firms are continuing to plow billions into trying to automate driving. The consulting firm AlixPartners expects the cost of highly and fully autonomous systems to drop at least 60 percent by 2030 and enable broader use cases. Read more here (Source: Automotive News).
Kerrigan Advisors Releases First Quarter 2021 Blue Sky Report®
The auto retail buy/sell market accelerated in Q1 2021, posting a 20% increase in the number of completed transactions quarter over quarter, as reported in the recently released First Quarter 2021 Blue Sky Report® by Kerrigan Advisors. A perfect combination of market factors – record auto sales and gross profits, soaring blue sky values, reopening of the economy, low interest rates and potential new tax laws – is fueling one of the most active buy/sell markets on record with 300 completed dealership transactions in the last 12 months, more than any 12-month period in recent history. The Blue Sky Report® is the leading industry publication analyzing the auto retail buy/sell market and includes franchise blue sky multiples and trends impacting dealership valuations. Read a preview of The Blue Sky Report® here.
Around the Web
The Cheapest Cars Sold at Barrett-Jackson's No-Reserve Vegas Auction [The Drive]
Travelers Turn to Car-Sharing Platforms Amid Rental Car Shortage [USA Today]
The Most Ridiculously Expensive Cars from Fast & Furious [Men's Health]
VW's Diess Sees Autonomy Transforming Cars More Than Electrification [Automotive News]
