Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.
Carmakers Don’t Like The Senate’s New EV Credit Proposal
If the Senate’s new EV tax credit deal leaves a bad taste in your mouth, you’re not the only one. Reuters reports that a group representing major automakers has some serious concerns regarding the EV tax credit structure put forth by the Senate. I can see what automakers aren’t pleased with this new EV credit proposal. It all stinks a bit of “we’re not happy until you’re not happy.” The protectionist nature of requiring U.S.-sourced battery components seems anti-competitive and not great for consumers looking for an EV that fits their budget. If you’re looking to learn more about this new EV credit proposal, our own Mercedes Streeter has an awesome run-down on the new Senate deal that’s definitely worth checking out. The group had warned Friday that most EV models would not qualify for a $7,500 tax credit for U.S. buyers under the bill. To be eligible for the credit, vehicles must be assembled in North America, which would make some current EVs ineligible as soon as the bill takes effect. The Senate bill imposes other restrictions to deter automakers from using Chinese-made materials by phasing in required percentages of North American-sourced battery components. After 2023, vehicles with batteries that have Chinese components could not receive the credit, while critical minerals also face limitations on sourcing.
Markups Hurt Brand Loyalty: Report
It shouldn’t be a huge surprise that forcing markups upon customers is a great way to discourage repeat sales. Automotive News reports that Growth from Knowledge AutoMobility (is someone just randomizing buzzwords out here?) has been able to quantify exactly how markups are hurting brand loyalty. It’s crazy how dealers can see repeat customers just by not being awful. It’s definitely possible to extract a lot of money from one customer through marking up a new car right now, but it’s very much a short-term gain that will bring long-term pain for greedy dealerships and the manufacturers they represent. Throwing away 27 percent of new service clients is huge and generally not a great business practice. Needless to say, it’ll be interesting watching the long-term effects of markup-happy dealerships both on the dealerships themselves and on manufacturers. In May and June, 80 percent of car buyers paid at or above the sticker price, the research showed. In addition, 31 percent of buyers who paid above sticker said they would tell others not to go to the dealership they used, and 27 percent said they would not return to the dealership for service. Twenty-seven percent of respondents said they would not buy from the same brand if they were charged more than the sticker price, and 23 percent said it negatively impacted their opinion of the brand. As a result, automakers have had to manage the negative criticism they face because of dealerships’ prices, Kenar said.
China Expected To Buy Six Million EVs This Year
We may be experiencing a global new vehicle shortage, but that doesn’t seem to be slowing down electric vehicle sales in China. Bloomberg reports that Chinese market sales are so strong that six million new EVs are expected to find homes in Chinese driveways this year. Six million is a seriously impressive number and I’d be really interested in seeing sales broken down by segment. China has some really impressive entry-level EVs on offer that are price-competitive with combustion cars, albeit at the expense of range. The Wuling Hongguang Mini EV immediately comes to mind. Beyond infrastructure, I expect price to be the biggest driver of new EV sales as not everyone can afford to drop $40,000 on a compact EV crossover. GM’s aggressive pricing on the Bolt is a good start, but we still have a long ways to go for affordable EVs in America. The increased forecast represents a doubling from last year’s 2.99 million NEV sales, underscoring the dramatic growth in demand for cleaner cars in China, and the challenge for legacy automakers to adapt in a market that is rapidly going green. The increased forecast of 6 million is still “relatively cautious,” the PCA in a statement, adding it could be further increased at the start of the fourth quarter.
Mercedes Moves To Unity For Next-Gen Infotainment OS
Will Cuphead, Pokemon Go, Kerbal Space Program, and Mercedes-Benz soon have something in common? Fundamentally, yes. Automotive News reports that the German automaker will develop its next-generation infotainment system on the Unity engine, further blurring the lines between information and entertainment. That may sound like marketing drivel, but don’t worry, I can explain most of it. Mercedes wants their new interface to be slick and fully-featured, let the owner talk to the system and vice-versa, and add more peripheral apps to its next-generation infotainment system. As for what that last desire could look like, picture how Teslas let owners play games or watch movies while charging their EVs. Future Mercedes customers will be spending a lot of time waiting around at charging stations, so stuff to do is always welcome. In any case, here’s to hoping that MB.OS is more intuitive than the current MBUX infotainment system. The new Mercedes-Benz Operating System, or MB.OS, will debut in 2024 model-year vehicles and enhance four central domains — infotainment, automated driving, body and comfort, and powertrain, the automaker said Monday. “With our own operating system, we want to achieve three key things: to shape the user interface according to a luxury brand, to create a bidirectional communication with the customer and to integrate the digital lifestyle of the customer into the vehicle domain,” Magnus Östberg, chief software officer for Mercedes-Benz, told Automotive News in an email.
The Flush
Whelp, time to drop the lid on today’s edition of The Morning Dump. It’s an overcast Tuesday here in Toronto and I’ve been pondering a strange question. New cars are so easy to judge on merit because they all roll out of factories unravaged by deferred maintenance and parking lot knocks. However, used cars are much more difficult to judge because they’re all treated differently. Given the choice, would you rather have a terrible example of a great car or a great example of a terrible car? Lead photo credit: Volkswagen But, we’ll see how things shake out over the next couple months. If I don’t have to pay up front, I will take the worst remaining Bugatti 57S, please. And this is why I have a Buick-GMC guy and have for years now. It’s a smaller, family owned dealership that refuses to sell to the monopolistic scum that have taken over most dealers, and gleefully bragged about massively increased profits by charging way over sticker and manipulating used car prices. And that dealer, even now? Here’s the window sticker. That’s the minimum we’ll accept. The various upsell stuff isn’t on the sticker, period. Absolutely they will try to sell you on the paint protection and the extended warranty, but it’s never on the sticker. Out of state buyer? Fully refundable deposit if you want them to hold it. Otherwise, if it’s on the lot, it’s up for grabs at the price on the sticker for anyone. No big decals plastered over the rear window or even small stickers, just an entirely optional license plate frame. And don’t go anywhere, the owner likes to personally thank every buyer. (No upsell, just a handshake, a full tank of gas, and a genuine thank you.) And they even check in after the sale to make sure everything’s good. Any problems with the infotainment, sure, we’d be glad to help you – no charge. Annoying squeak? Absolutely bring it in. Everything still good after a year? If not, we’ll make it right. (Not: “WE WANNA BUY YOUR CAR.” Just ‘you spent a bunch of money on this, we want to make sure you’re happy with it.’) Not surprisingly, they can’t keep cars on the lot. And more than half their customer base is repeat customers – now from all 50 states. “Twenty-seven percent of respondents said they would not buy from the same brand if they were charged more than the sticker price, and 23 percent said it negatively impacted their opinion of the brand.” Oh cry me a goddamn river. One, you have an increasingly monopolistic dealership system thanks to the likes of AutoNation and Penske. Two, the manufacturers already have contractual levers they can pull to prohibit dealers from selling above MSRP. What, you bought their lies that they can’t control dealer pricing? Yeah. No. That was always bullshit. Dealers can charge anything they want, but if that dealer’s behavior is causing ‘reputational harm’ to the manufacturer or putting the manufacturer in a negative light? Contractually they can reduce or even halt deliveries of cars. They can tell dealers that cars sold above MSRP will be counted against any floor plan, finance incentives, etc. Sell the car $10k above sticker, that’s $10k of rebates your customers can’t have, $10k of lease makeup gone, forcing the dealer to eat more warranty cost, etc. There’s dozens of ways their very smart lawyers can find to stop this without violating any contractual terms. So they can fuck off with their ‘poor us, it’s all the dealer’s fault.’ They want happy dealers, and a dealer raking in record profit off the back of outright price gouging is a very happy dealer. “The new Mercedes-Benz Operating System, or MB.OS, will debut in 2024 model-year vehicles and enhance four central domains — infotainment, automated driving, body and comfort, and powertrain, the automaker said Monday.” Say it with me now, folks: SOFTWARE IS HARD, EMBEDDED SOFTWARE DOUBLY SO. (Which is why I’ve repeatedly told folks I am not interested in a job doing automotive development in C for a living at any price.) And of course, we all know how manufacturers are so eager to diagnose bugs in infotainment and provide patches and fixes at no cost to the custo-nope, couldn’t say it with a straight face. Which is to say, this is going to be a shitshow for at least several model years. And of course, customers will pay the price – doubly so. Because these kind of ‘tightly integrated’ designs are specifically designed to make repair impossible and force you into buying a new car more frequently. Manufacturers hate that the average age of cars is going up, because that’s less new car sales. So how to fix it? Make any sort of aftermarket electronics next to or just outright impossible through a mix of proprietary bullshit and DMCA threats, integrate everything so tightly that any single component can essentially render the car bricked, charge so much for repairs that they’re never economical, and just wait for the new sales to roll in. And every one of these cars will be chock full of first, second, fifth, sixth year bugs where the only ‘fix’ Mercedes will offer is ‘buy a new car, we promise the 2028 infotainment fixes the bugs of the 2027 one.’ And don’t claim that they don’t do that. Every manufacturer has been doing that shit for years. GM across the entire line said ‘oh, yeah, the next model year with the same hardware now supports Android Auto. What? Of course we won’t be offering an upgrade. If you want it, you’ll have to buy a new car.’ But most people aren’t in that situation. They can wait. They can refuse to pay over MSRP. But they don’t. So I’m sure they’ll be more than happy to get what they want at the same dealership that ripped them off today and get ripped off again in 4 years. Note that Tesla, which has been supply constrained for some time, lowered prices when their tax incentives expired. https://consumersresearch.org/tesla-drops-prices-after-ev-tax-credit-rollback/ Depends on in what way the great car is a terrible example… or in what way the great example of the terrible car is terrible. For the first case… if it’s a great car that has hail/cosmetic damage, then I would go with the great car. But if the great car is completely rusted out, then I’d be more inclined to go with the terrible car in great condition. And conversely, it also depends why the terrible car is ‘terrible’. Some people consider a Prius is “terrible” because it’s “boring”. But I would buy a Prius any day over many more exciting vehicles. But if the vehicle is ‘terrible’ in the way that British Leyand crap from the 1970s was Terrible, then I’d be more inclined to go with the great car that needs a ton of work. There is no long-term thinking in dealership sales when everybody on the sales staff will be gone by the time the customer comes back for another car. The very definition of “not my problem.” The only people who can stop this is the ownership and they are too busy raking in money for nothing. It’s too late for Americans to actually buy American. Talking to a car: I shall not. Even it goes by the name Hey Mercedes. Not Colonel Kurtz, me.
