Dealerships in America keep getting bigger, with consolidation on the rise. All this and more in The morning shift for April 4, 2022.
1st gear: consolidation is in place
Industry trade that is Automotive News reports heavily on auto dealership activity, and this year’s report indicates that consolidation continues unabated. The top 10 and 150 dealer groups nearly doubled their share of all dealerships nationwide, according to Automotive News The data:
AN says to expect more consolidation to come, so the era of the mega dealer group seems to continue unabated. I won’t say I’ll exactly miss any type of small mom and pop car dealership, but you can’t say this trend feels right.
2nd Gear: Hertz doubles the number of electric vehicles
I don’t know exactly how to take this news. On the one hand, you could say this is a big fleet sales deal for Polestar. On the other hand, you could say that the main news is that we have a big car rental company buying even more electric vehicles. Anyway, here are the main details of Automotive News:
Swedish electric car manufacturer The North Star signed an agreement with rental giant Hertz will supply up to 65,000 battery-powered vehicles. The five-year global deal is expected to represent more than $3 billion in potential revenue for the EV startup, a source says Automotive News.
While car rental companies typically demand steep discounts from car manufacturers, Hertz would pay closer to the list price.
All in all this is probably bad news for EVs in general. I’m not sure anyone gets a good impression of a car from a rental.
3rd Gear: Car Sales Might Be Down, But Demand Is Not
What’s restricting sales is supply, not demand, according to another Automotive News report:
As factory problems on three continents continue to disappoint efforts to capture what analysts say is pent-up consumer demand, U.S. auto sales fell 16% in the first quarter for the 11 automakers automobiles that reported last week.
But it’s not a sluggish market. Many retailers sell vehicles on an entry, exit basis. Almost as soon as a vehicle hits a dealership’s lot, a customer shows up to take delivery.
In this market, “our pace of production equals our pace of sale,” Tyson Jominy, vice president of data and analytics at JD Power, told Automotive News.
The pinched sales tally has led forecasting companies to revise their sales projections for the full year. LMC Automotive and JD Power expect total U.S. light vehicle sales of 15.3 million for 2022, down from an earlier forecast of 15.9 million. Cox Automotive also cut its forecast for 2022 to 15.3 million from 16 million.
It’s still a bad time to buy a new car, I guess, just like it’s still a bad time to buy a used car. The right thing to do, of course, is to take advantage of the last cold days in much of the country to rush out and buy a bike.
In unrelated news, I will soon be repairing and selling some of my used bikes! Please enjoy buying them.
4th gear: just not for Tesla
The proof that supply is down and demand remains high is that when automakers have supply, sales are up. Here is Tesla in the first quarter, while the New York Times reports:
Tesla, the world’s largest electric car maker, reported a surge in global sales in the first three months of the year on Saturday. overcame supply chain issues and has approached production levels comparable to those of established luxury automakers like BMW and Mercedes-Benz.
Tesla said it delivered 310,000 vehicles from January to March, compared to 185,000 cars during the same period in 2021, which is roughly in line with Wall Street expectations. The nearly 70% increase contrasts with major automakers like General Motors and Toyotawhich reported a sharp drop in sales on Friday due to shortages of key components.
5th Gear: I love this article that explains how hard it is to make cars
Our publishing platform no longer focuses on beacons and beacon pages, so I’ll say I’m missing two of ours used to highlight all of our coverage of the electric car startup world. There was Shitshow or scam? where we wondered if the new automakers were intentionally misleading investors about what they could achieve with just a few hundred million extra dollars or if they were being tricked themselves. Much of Faraday Future’s coverage ended here. Then there was Making cars is hard, where we laid out all the trials and tribulations of Silicon Valley startups, believing they could quickly beat dumb industry veterans and end up being sued. Much of Tesla’s coverage ended here.
Either way, the UK is now getting some of its own electric vehicle startups, which means UK publication The FinancialTimes catches up with our point of view. Please enjoy this article on Making Cars Is Hard:
Just outside the English market town of Bicester, 15 miles from Oxford, is the shell of a factory that is at the forefront of the UK’s electric vehicle revolution. Beneath a cavernous warehouse ceiling, dozens of gigantic black robotic arms sit above vacant assembly bays, waiting to mass-produce electric vans for Arrival, the electric vehicle maker’s start-up.
By fall, this immaculate center should start producing electric vans for UPS, the American parcel delivery group. But the work has already been delayed. A sister factory in the US will not be ready in time, so the UK factory will have to take on most of this year’s production. Arrival now expects to make just 600 pickup trucks this year, less than half the number promised to analysts in 2021.
The company is not alone. A plethora of aspiring electric vehicle makers – some opening factories for the first time, and many with high valuations – face their biggest challenge yet: making vehicles. From Nio in China to former Amazon-backed Wall Street darling Rivian, nearly every fiery new entrant to the automotive world has stumbled at this point.
Maybe it’s time to update our startup betting guide.
Reverse: MLK Jr. Murdered
I’m always intrigued by the transportation-centric part of the civil rights movement — from bus boycotts to marches, all framed against the Great Migration. Anyway, after years of being tracked by the FBI, someone who definitely didn’t work for the FBI Killed Martin Luther King Jr.
Neutral: Where are the resellers?
Without them, who will sponsor our nation’s little league teams?