Two years later, when car dealers were surveyed, they said “limited inventory” was holding back their business. That makes sense. The pandemic has led to shortages, particularly in the semiconductor sector, which have slowed sales. In 2024, the problem will be much less and instead dealers and consumers are looking ahead to November.
That’s right! Politics impacts car sales. Specifically, a majority of consumers and dealers believe the election will influence car purchasing decisions and, more specifically, that the next president will impact interest rates in some way ( which is strange because technically the president can’t do that!).
The other big news yesterday was that Volkswagen took a huge stake in Rivian. How did the stock market react? Rivian is up aaaaaa and… Volkswagen is down. In less/still important news, CDK Global says the systems may not be fully operational until June 30 yyyy and… here are the lawsuits.
Oh, Cruise has a new boss from a pretty interesting place.
Let’s give up.
82% of dealers think the US presidential election will impact rates
I was delighted to be invited to Cox Automotive’s mid-year presentation, which focuses on the overall economy, dealers, consumer confidence and how it all comes together to establish a forecast for the year.
Despite this, sales are recovering from their lowest levels (when SAAR reached 12.3 million in September 2021) and we are returning to a SAAR of 16.0 million in June.
What’s holding us back in the second half?
Cox Automotive surveyed dealers and interest rates are on the rise, with 59% of dealers thinking it’s an issue holding back their business, followed by the economy at 57% and market conditions at 41%. Obviously, interest rates were much less of a concern a few years ago when they were practically zero.
The economy is almost always an issue, as are market conditions, and interest rates can be a problem when they rise. But the “political climate” is interesting. More than a third of dealers said it was a problem. Do people think Joe Biden or Donald Trump will be better at car sales?
Not quite. It goes back to interest rates and uncertainty, and it cuts across party lines.
“Consumers appear to believe that the upcoming U.S. election will impact the economy, interest rates and even inflation. With this level of uncertainty, many have adopted a wait-and-see mentality,” said Vanessa Ton, senior director of research and market intelligence at Cox Automotive.
Crunching the numbers, nearly 66% of consumers and 82% of dealers believe the U.S. presidential election will impact interest rates “in one way or another.”
I mean…maybe? Technically, the Federal Reserve and the Fed Chairman are independent and cannot (or will not) do something just because the President of the United States asks them to. This independence is a key element of how the Fed operates.
So in a vacuum, it’s a bit strange. Going further, there are many things a president can do to impact the economy. How did we get inflation? A lot had to happen, but federal spending in response to the COVID pandemic played a role. Of course, rates are only a larger part of the overall economic landscape (and are not the only thing the Fed does to help control the economy) and: I’m waiting for the elections before buying cars because I’m waiting for rates to drop is a weird take.
This is a strange election. Stranger than normal, depending on your definition of “normal.” And, honestly, a second term for President Trump could try to influence the rates. Since Bloomberg:
Neither Trump nor his campaign have taken an official position on the matter, although the Republican nominee has said he will not reappoint Fed Chairman Jerome Powell, whose dismissal he discussed in 2018. Some Trump’s informal advisers have floated ideas about possible changes at the Fed. this would give him more power over the central bank.
This convinced many people that Trump would act on the issue in a second term: 44% of respondents in a Bloomberg reader survey in late May said they expected him to weakens the independence of the Fed or limits its power. In contrast, only 5% said President Joe Biden would go beyond comments on monetary policy or calls for lower interest rates if re-elected.
Perhaps this illogical decision is, in some way, logical. Maybe a President Trump will take control of the Fed somehow and force it to lower rates (or raise them, who really knows).
Or maybe everyone is so tired of campaigning and so tired of the world that they are waiting to see what happens next and assuming, incorrectly or not, that things will go back to normal after november.
Volkswagen Group invests $5 billion in Rivian
Without support from the Saudi government or another game, it seemed inevitable that Rivian would partner with a major automaker. I’m not sure I imagined that the automaker would eventually become the Volkswagen Group, but that’s what happened.
From Rivian:
The partnership is expected to accelerate software development for Rivian and the Volkswagen Group. It is expected to enable the two companies to combine their complementary strengths and reduce cost per vehicle by increasing scale and accelerating innovation globally. Rivian’s market-proven zonal hardware design and integrated technology platform are expected to serve as the basis for SDV’s future development in the joint venture to be applied to both companies’ vehicles. Rivian plans to contribute its expertise in electrical architecture and is expected to license existing intellectual property rights to the joint venture.
The two companies aim to launch vehicles benefiting from the technology created within the joint venture in the second half of the decade. In the short term, the joint venture is expected to enable Volkswagen Group to use Rivian’s existing electrical architecture and software platform. The ambition of the partnership is to accelerate the Volkswagen Group’s SDV plans and the transition to a pure zonal architecture. Each company will continue to operate its respective automotive businesses separately.
Rivian needs money. It is losing too much money and needs to expand. Volkswagen’s Cariad software arm is a disaster and Rivian’s software works. Everyone wins, and eventually both companies will be able to make cheaper cars. How does this fit in with VW’s Rivian competitor, Scout? Simple, Scout will run Rivian software according to Reuters.
Since the news was announced, Rivian’s share price has risen sharply and Volkswagen’s is down slightly.
Here are the CDK lawsuits
CDK Global, the largest provider of dealership management software, has been hit by a ransomware attack and is trying to get its work back up and running after reportedly paying off the hackers.
The company’s response seemed pretty bad and it’s possible the company won’t fully restore dealerships until June 30, which is a big deal since it’s the end of the month.
What does CEO Brian MacDonald have to say about this? From Automotive News:
“Our management team is in contact with dealer group customers through daily small group discussions, emails and phone calls; and our sales and customer success teams are conducting one-on-one contact with dealers in their territories to offer additional ways to support their sales and service efforts in the meantime,” MacDonald said.
This does not appear to prevent lawsuits since two different lawsuits have been filed by people seeking class action status:
The lawsuits filed on June 24 by former dealership employee Eugene Buraga and on June 22 by vehicle lessee Yuriy Loginov, both located in the Northern District of Illinois in the United States, each seek legal status. class action.
(…)
Both men criticized CDK for allegedly failing to properly inform them and other members of the group about the problem. Loginov’s lawsuit said this meant he and other class members lost “the earliest ability to take appropriate steps to protect their private information and to take other steps necessary to mitigate the harm caused by the data breach.”
Who else is excited about another year of credit monitoring!?!
Meet the new boss of cruises
Founder and sometime CEO Kyle Vogt resigned from GM’s robotaxi company Cruise after one of his taxis dragged a pedestrian and an interim CEO was put in place.
Now there’s a new boss, Marc Whitten, who was one of the founding engineers of Microsoft’s Xbox. You may recognize Whitten, who worked at Xbox for three generations of the platform, as the person who wrote the community letters.
“In a few years, transportation will be fundamentally safer and more accessible than it is today, creating far more value for people and communities around the world. This is a unique opportunity to be part of this transformation,” said Marc Whitten of his decision to join Cruise. “The Cruise team has built world-class technology and I look forward to working with them to help bring this critical mission to life.”
It would be nice to have someone at Cruise who isn’t afraid to talk to the community.
What I listen to while writing TMD
If you’re not watching the third season of “Shorsy,” I don’t know what you are. Pull on your balls.
The big question
Not to mention your politics, do you expect to make any purchases before the election? For what?