Dealers Are Running Out Of New Cars To Sell

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Hyundai sales are good in the U.S., Porsche is going to issue a recall for Taycan, and Volvo. All that and more in The Morning Shift for July 1, 2021.

1st Gear: New Car Inventory Is Very Bad

Sales in June are expected to be good and The Wall Street Journal reports that new car sales in the first half of 2021 in the U.S. should total about 8.3 million cars, or more or less the number of new cars that sold before All Of This Shit Began. But because of stop-start production thanks to the global chip shortage and lingering pent-up demand, dealers are running low on inventory. Very low. And the next few months for new car sales don’t look good at all.

“We really don’t have enough cars to go around,” said Joe Shaker, owner of Shaker Automotive Group, which sells several brands in Connecticut and Massachusetts. He said his Ford store is carrying about 14% of its normal inventory.

[…]

Mr. Shaker said the new-vehicle selling price is no longer his priority in negotiations. Instead, he is telling salespeople to find customers who have a used vehicle they are willing to trade in.

“Right now, it’s far more important for us to sell to someone with a trade-in, because we need more vehicles to sell,” Mr. Shaker said. “When you’re running out of cars, a customer with a trade at least gives you two bites at the apple.”

For automakers, meanwhile, this is both a good and bad problem to have, in that they literally can’t produce cars fast enough.

Kurt McNeil, General Motors Co.’s vice president of U.S. sales operations, said GM dealers have less than a week’s worth of supply of large sport-utility vehicles, whereas normally they would have enough inventory to last three months.

He said GM expects the semiconductor shortage to ease, but he doesn’t see the situation on dealer lots improving much before the end of the year, and expects inventory to be constrained through 2022.

“There’s so much demand that vehicles are just going to sell” as soon as they hit dealer lots, Mr. McNeil said. “We’re just going to be drastically low for the foreseeable future.”

We’ve entered the second isolation, in which some people go mad overpaying for cars and houses and the smart money stays on the sidelines until at least next year. This is not an insult to any of my friends who have bought a house or new car in the past few months, I would never do that.

2nd Gear: Porsche Is About To Issue A Taycan Recall: Report

We have been seeing that automakers probably won’t nail their first go at going electric, because, even if they know how to make internal combustion engine cars pretty good, an EV is a very different proposition. The latest evidence, via Bloomberg:

Porsche AG is planning a global recall of its Taycan electric car to fix a software issue that can cause a sudden loss of power, according to people familiar with the matter.

The move follows reports of cars switching to emergency mode in the U.S. that prompted an investigation by the National Highway Traffic Safety Administration in May, said the people, who asked not to be identified as the plan isn’t public.

An official announcement may be made in coming days, the people said. There have been no reported accidents or injuries, one of the people said. A spokesman for Porsche declined to comment.

Porsche’s dependability reputation is on par with industry legends like Lexus, so if it can happen to Porsche it can happen to anyone.

3rd Gear: Hyundai And Kia Sales Good In The U.S.

The automakers announced its June sales Wednesday and returns were good, with crossovers and SUVs backing new records.

From Automotive News:

Volume rose 45 percent to a monthly record of 72,465 at Hyundai, while deliveries jumped 43 percent to a June high of 68,486 at Kia. At Genesis, sales advanced 184 percent.

The three Hyundai Group brands are benefiting from new and redesigned crossovers and other light trucks. At Kia, light trucks accounted for 64 percent of all U.S. sales in the first half while crossovers now represent 55 percent of Genesis volume.

Hyundai’s retail volume rose 36 percent to a June record of 66,765. The company said it ended the month with 67,992 cars and light trucks in dealer inventory, down 25 percent from 91,249 at the start of the month.

The global chip shortage has affected automakers to greater and lesser degrees, and Hyundai/Kia seem to be on the lesser end of that spectrum.

4th Gear: Volvo Is Still Making Noises About Going Public

Volvo has been on a hot streak. No surprise that it’s been making noises since March about possibly going public at a valuation of around $20 billion. Now CEO Håkan Samuelsson tells Reuters that Volvo could go public by the end of this year, trading on the Nasdaq Stockholm exchange. The remarks came amid Volvo’s big tech rollout day Wednesday.

Volvo Cars is “making good progress” toward a potential initial public stock offering by the end of this year, CEO Hakan Samuelsson told Reuters.

“We are looking at the possibility of doing an IPO before the end of the year,” listing shares on the Nasdaq Stockholm exchange, Samuelsson said in an interview on Wednesday.

This would be an own, of sorts, as Reuters points out, since Volvo is a successful company and others who have gone public in recent times are not.

A number of startups have gone public in the U.S. and China over the past two years, following EV market leader Tesla in taking advantage of investor enthusiasm to raise cheap capital to compete with established brands such as Volvo.

All of those startups have gone just swimmingly.

5th Gear: Nissan Will Invest Huge In Its Northeast England Plant 

This would be in Sunderland, in the country’s northeast, where they could use some good news. Nissan has a plant there, and it said Thursday it’ll spend $1.4 billion, along with a Chinese partner, to expand and make batteries, in making a plant that could supply batteries for 100,000 cars a year.

From Reuters:

Nissan cast its backing for the 9 gigawatt-hour (GWh) plant as illustrative of a rejuvenation of Britain’s automotive industry, which has for five years grappled with the fear that Brexit could cut off the rest of the European market.

“This project is the demonstration of the renaissance of the British car industry,” Ashwani Gupta, Nissan’s chief operating officer, told reporters at the Sunderland plant, which exports 70% of its vehicles to the European Union.

British Prime Minister Boris Johnson said Nissan’s move was “a major vote of confidence in the UK and our highly skilled workers in the North East”. Nissan said Britain had backed the plan, but did not detail any guarantees or incentives.

The 1 billion-pound ($1.4 billion) investment by Nissan, its Chinese partner Envision AESC and local government in northeast England will create 6,200 jobs at the Sunderland plant and in British supply chains.

Reverse: I Somehow Completely Forgot That Thunderbird Was A Response To Corvette

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