Never Stop Driving #107: Midyear Check-In
Nearly a decade ago, I joined Hagerty, abandoning a career reviewing cars at Car and Driver and Road & Track magazines. I left that world because the new machines were converging in size, power, and design, creating fewer opportunities to tell interesting stories. At Hagerty, I could focus on the fun stuff, the cars we own because we love them, not because they’re needed for commuting to work or getting the kids to school. That said, Hagerty Media provides selective new-car coverage because the auto industry still pops out compelling new enthusiast cars, just not at the frequency it once did.
I’m still a keen observer of the industry, which I find fascinating. Most car companies are public and are focused on quarterly results, but cars take years to develop, so they must plan years ahead. Throw in huge labor forces, government regulations, and an independent dealer network and it’s no wonder the big players pivot with all the grace and speed of the Titanic. July is typically an important month, not only because it’s the height of the summer selling season but also because it’s when car company bean counters and industry analysts alike parse the sales figures from the first half of the year and make predictions for the second.
Cox Automotive expects full-year U.S. sales to be slightly higher than 2023, at nearly 16 million new cars, despite various headwinds: high interest rates; pandemic pent-up demand has now largely been met; and a major disruption to thousands of dealers from a ransomware attack on software supplier CDK Global in June. My local VW dealer could not even schedule a service appointment let alone sell a car. No one seems to know the extent of the attack or if personal information was compromised. Lawsuits are flying. According to Automotive News, CDK paid the attackers some $25 million to leave them alone. Digital ransom, it seems, works. Incredible.
I also love seeing what car-world observers, from business journalists to Wall Street analysts, have to say about the auto industry. Often, their advice seems obvious. For instance, in this year’s Bank of America “Car Wars” report, U.S. carmakers are advised to focus on profitable trucks to fund EV development and reduce costs. More telling, the report claims Tesla has a $17,000-per-car cost advantage over competitors. Wow.
The Bank of America report also urged a retreat from China, a market that was once a gold rush, with every car company eager to form the required joint ventures with Chinese companies to sell cars. I remember asking executives if they were worried that they were simply handing over proprietary knowledge. We’d see clumsy copies of cars like the BMW X5 that looked sort of close but off, too. The Chinese Land Rover copy was hilariously called “Land Wind.” The executives all understood the risks, but the market was just too huge, too untapped to ignore. The Chinese industry caught up quickly and now, no surprise, there are dozens of Chinese car companies competing with established players. B of A believes the domestic players have improved and the competition is so fierce that there’s not enough upside.
One of my favorite unexpected realities of today’s market is that Mitsubishi, which has seemed on life support here for at least the last decade, still exists. The company that was once shrinking to oblivion recently announced an ambitious five-year plan.
General Motors reported stronger than average Q2 earnings and, in her shareholder letter, CEO Mary Barra reiterated the company’s commitment to autonomous technology via Cruise. The industry remains focused on EVs with frequent reports either confirming the popularity of these cars or debunking it. Cox said that EV sales grew 11 percent year over year in Q2, despite a slowdown in Tesla sales. They credited more models and more incentives that lowered prices. The Tesla Model 3 is a solid deal these days, although be sure you read the fine print. The company is certainly creative with its “price after probable savings” figure, which includes the $5000 Tesla says you’ll save by not buying gas. I kind of admire that sort of creativity even if it is a little underhanded. Selling cars is a bare-knuckles game.
The rosy EV sales increase in Q2 masks a general slowdown of EV adoption, which was discreetly acknowledged in Barra’s letter. When it comes to EVs, she wrote, GM is committed to “disciplined volume growth.” This week, Barra told analysts that the company is scaling back planned EV rollouts. They’re not alone. Porsche is doing the same. Most believe that EVs will remain about 10 percent of new cars sales for a while.
Among this backdrop came news I never dreamed of: Chevy will soon sell a 1064-hp Corvette. I remember when 500 horsepower was a big deal. We just published the Corvette ZR1 details, which were gleaned during interviews with GM engineers. Visits with automotive engineers are one of the best parts of my gig, an opportunity to indulge my curiosity. I’ve been to hundreds and this one felt markedly different. I could feel the excitement and pride among the group, a sense that they couldn’t believe they were let loose to show what they could do. We need a ticker tape parade in Detroit to celebrate this milestone, the first 1000-horsepower mass-produced car. The Dodge Demon advertised the figure, but it required E85 fuel whereas the Vette does it on commonly available pump gas. We remain in the golden age of internal-combustion horsepower.
These are the most interesting times. Have a great weekend!
Larry
You referenced Mitsubishi being on life support. That is still too good for them, after how that corporation treated allied soldiers in WWII. Captured allied soldiers were used as slave labor, and were starved to death being forced to build rail lines and work in mines. I will never buy any product made by that horrible corporation – history needs to be remembered, even when discussing automobiles.
I was recently visiting DC and was using Uber and Lyft to get around; most of the cars were hybrids, none EV. One mentioned he was looking at the new Camry hybrid w/ estimated mpg in the low 50s. When hybrids get to 75 or even 100mpg where does that leave the EV market, he said. Most likely in the very very distant future. It seems obvious that logic dictates that the goal is not to eliminate fossil fuel altogether but use it so efficiently that the impact to the environment is negligible. We appear to be on our way and one big Japanese company seems to get it.
Larry,
Keep on writing and sharing. Hagerty content like yours, Jason & Derek’s, and others, is part of the reason I’m loyal to Hagerty for my coverage. That, and the palpable enthusiasm I see from everyone at Hagerty, including Hagerty himself. So mission accomplished.
Cheers.
Many thanks
Hi Larry, I agree with your comments and look forward to your thoughts each week. We will soon have a 2024 Lexus LC500 convertible arriving in mid to late August. This will replace our MR2 Spyder that we kept for 22 years. Can’t wait to enjoy this new car for 20 more years! We will be riding in style with a great looking GT and great sounding NA V8! Will contacting Hagerty for a price quote as I think they cover this car.
Automakers may have jumped in too deep, overlooking plug-in hybrids too quickly on their way to full EVs.
I had to chuckle about the kerfuffle with CDK Global’s “glitch”. Way back when, at the dawn of computerizing dealership operations such as service writing, parts department management etc. I worked for Reynolds & Reynolds, who pioneered this. Previously, this was all done with card files–to track parts sales/orders and hand-writing ROs (repair orders) on multi-carbon forms, no electronics involved, just pencils and pens. You just ha to remember to update each parts card when you sold a part, and then remember to make a note if you were about out of a fast moving part so it could be re-ordered. I got my job at R&R because I had behind the counter parts department experience and thus could “speak parts” to parts and service department people, training them on the importance–and ease, compared to those tub files–of recording all those sales on the computer to maintain an accurate inventory. Ahhhh, progress!
Thanks for the background! Those digital platforms have them in handcuffs…
Just like steam power which reached the pinnacle of development for locomotives just before the diesel-electrics took over, in the automotive world ICEs are at or near the pinnacle of their development as the electrics are poised to replace them. With trains, the diesel locomotives completely replaced the steam engines in about 15 years. I think it will take longer for the EVs to replace ICE cars, but I also believe it’s inevitable. Forget the ‘save the climate’ rhetoric, I bought a Tesla because I was curious and was not willing to accept the prevailing sentiment on the Internet. After six years of driving a Tesla (including cross country trips), I can confirm it truly is the future, but I’m still enjoying my MGs and Volvo – I still need to find the Packard of my dreams and a 1960 El Camino.
My worry here in beautiful British Columbia, Canada is WHO is going to pay for road taxes etc. With EV’s not buying gasoline and using the same roads as ICE drivers. Not quite fair to ICE drivers. Our government has never spoken of this as far as I know and offer big discounts for purchase of EV’s.
Wake up Gov’t.
New cars are irrelevant to my life, so maybe I should opt out of your communications?
I can’t afford what you feature, I can’t work on any of them, and despite the over-killing performance, I don’t want to drive them–plus they look like Transformers, not automobiles. And, objective observations tell me you guys can’t drive them either, not on roads you share with me. Sorry. Transportation appliance merged with fragmentation grenade? Just sayin’
You worked for Road & Track.
Did you Henry Manley?
This would be the mid ’70s?
Worked at MPH (Denver) then, he would stop by and visit the shop.
I worked there in in 2012 so that was before my time.
Your reference to GM and Porsche EV back-pedaling is common sense to my ears. Considering how much of the potential USA electric vehicle market is above the 39th Parallel, is anyone surprised that they don’t sell well, and that new emphasis is being placed on Plug-in Hybrids? They represent a more livable/common sense option where temps are below 45F for 6 mos a year and scant charging stations have been erected despite constant Blue State Democrat politiclal promises.
I have said for years that Federal Tax Rebates ought to be based upon GEOGRAPHY to help assuage northern market buyers’ hesitancy.
Totally love your articles, especially when you are writing about the old classics, the car we all drove back when we were teenagers and the cars and trucks our dads and grandfathers drove, love to hear about the peopleand what it take to keep the old classics on the road today…..my Pride & Joy is a 31 Ford Coupe w/a/Rumble seat, just like my grandfather drove back in the day all original and purrs like a singer sewing machine, use it if the weather is nice on the weekends and in our local parades, the grandkids enjoy it as much as I do…
Larry, at the end of this article, you asked for comment, so…Hagerty is an insurer of classic cars. My interests are in antique and classic cars. I don’t give a whit about EV’s or 1000hp corvettes. Tell me about a 1949 Hudson Hornet or a 1923 Marmon Speedster.
Larry:
Could you perhaps comment on why my HDC membership increased from $45 to $70 this year? That’s an enormous increase!
Hello Larry,
I’m hoping you can put me in touch with Cameron Neveu, I’d also like to use some of his C8 photos in a book I’m years (decades?) into writing. Thanks KS