Don’t Expect New Car Deals

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Electric charging stations might be coming to a block near you, Tesla’s talking about dogecoin, and Toyota has reversed itself. All that and more in The Morning Shift for December 14, 2021.

1st Gear: Good Luck Buying A New Car Right Now

If you expected that December would bring the usual new car deals — Lexus’s December to Remember, Toyotathon, Chevy Red Tag, Happy Honda Days, and all the rest — you should expect those in name only. Demand is high, supply is low, and incentives are almost nonexistent.

Automakers do holiday deals because it is in the consumerist spirit of the season, and also they like to get rid of current model year cars to make way for next year’s, and also they like to puff up the year’s sales number. This year the dynamics are different.

The Wall Street Journal, whose audience is always in the market for a new car, has a look at the situation this morning:

In November, nearly 87% of all new vehicles bought by individual customers sold at or above the sticker price, according to research firm J.D. Power. That number is up from about 75% at the halfway point of the year, and well above the pre-pandemic average of about 36% of sales.

The availability of both new and used vehicles is at historic lows, and car companies and dealers are responding by eliminating discounts and adding upcharges to the manufacturer’s suggested retail price, which is the figure displayed on the window sticker when a vehicle leaves the factory. Upcharges include selling items such as tire protection and vehicle accessories.

In addition, dealer markups—which appear as a “market adjustment” affixed next to the window sticker—are also proliferating more broadly. These dealer-price adjustments are separate from upcharges and traditionally have been reserved for rarer models. Now such adjustments appear on everything from no-frills vehicles to new, special-edition SUVs such as the Ford Bronco, dealers and analysts say.

A dealer in Minnesota is feeling sort of generous, but only if you are going to be his customer for years:

Paul Walser, a Minnesota dealer and chairman of the National Automobile Dealers Association, isn’t charging above sticker for his new cars but says he understands why some smaller dealerships may have to raise their prices. He pointed to dealers he has visited lately who have seen monthly transactions plummet and are looking for ways to cover their business expenses.

“The market is not only changed by the fact that there’s limited supply and high demand,” Mr. Walser said. “Dealers are also sensitive to their costs and making sure that they’re providing for their employees.”

Mr. Sheehy is using markups as a way to filter out one-time customers, he said. When he listed vehicles at or below sticker earlier this year, he said customers drove from hundreds of miles away to buy from him. He said those customers are less likely to come back for service or to purchase another vehicle.

“We really don’t want to sell cars to people who are not going to be our customers in the long-term,” he said. For his most loyal customers, Mr. Sheehy says he is offering to wave the price increases and sell at sticker.

When this all began, about a year ago, I would’ve said that the smart move is to wait it out, and maybe that is still true. The longer this goes on, though, that seems harder and harder to recommend, in that if you want or need a car right now maybe just buy one. Who knows how long this will last. I am tired of making predictions and being wrong. Someone texted me the other day saying that he intended to sell his 2011 BMW 3 Series to buy a 2017 Land Rover Discovery and I almost launched into a whole thing about how shoddily-made Land Rovers are but instead didn’t and said that that sounds fine. Judgment is out the window these days; now is the time to make whatever iffy car choice you want.

2nd Gear: Nevermind The Past Few Years, Toyota Says It’s Now Serious About Electric

Toyota, of course, was a pioneer with hybrid cars with the Prius, all those years ago. Then, confusingly, it didn’t bother to do much else in the electric space. It does offer an all-electric car in the U.S., but that car is the Mirai, a fuel cell electric car that only makes sense to use in California. Anyway, Toyota said Tuesday to forget about all that, it will now invest billions in battery electric.

From The Wall Street Journal:

Toyota Motor Corp. on Tuesday stepped up its commitment to battery electric vehicles, saying it would have 30 EV models available by 2030 and aimed to sell 3.5 million battery EVs globally by 2030.

Toyota also said that 100% of the vehicles in its luxury Lexus brand would be EVs globally by 2035. The Lexus brand aims to have battery EVs account for 100% of total sales in Europe, North America and China by 2030, Toyota said.

The car maker said it would invest ¥2 trillion, equivalent to $17.6 billion, in battery technology.

[…]

Toyota’s president, Akio Toyoda, said the car maker wanted to reduce carbon-dioxide emissions as much as possible and as quickly as possible.

Toyota has a transcript of Akio Toyoda’s remarks Tuesday here. The Lexus news is particularly interesting.

3rd Gear: Bring On The Chargers

The Democrats’ infrastructure bill passed last month, and one part of it is funding for an electric charging network, some details of which the White House released Monday.

From NBC News:

Vice President Kamala Harris, flanked by a pair of electric vehicles at a county maintenance facility in Maryland, said rolling out a reliable network of electric vehicle chargers would address pollution that disproportionality affects poor communities while also keeping the U.S. economically competitive.

“Sales are driven by consumer demand,” Harris said. “The auto industry is clearly moving toward electric. We need to make the shift faster and make sure it is driven by the United States.”

[…]

Of the $7.5 billion the Biden administration has to work with, $5 billion will be doled out to states, territories and the District of Columbia to install charging stations. The remaining $2.5 billion will be given out through competitive grants focused on putting charging stations in rural areas, improving air quality and targeting disadvantaged communities, the White House said.

As part of the strategy, the Energy and Transportation departments this week will sign an agreement creating a joint office focused on building out a national charging network. The White House said it will be a “one-stop shop” for charging resources.

The administration also plans to solicit information from U.S. manufacturers of electric vehicle chargers about how to expand the industry domestically, issue guidance to states and cities on developing charging networks, and take suggestions for new “alternative fuel corridors,” which are designated stretches of highways equipped to allow travelers to use alternative fuels like electricity.

This is all a bit ham-fisted, but everything with the feds is. Install a charger on my block, though, and I’m pretty much there in buying an EV.

4th Gear: Canada Wants To Make A Deal With The U.S. On EV Incentives

This is all stemming from the tax break for union-made EVs that is part of a $1.75 trillion social policy bill currently being considered by Congress. Canada and Mexico are very worried about it.

From Bloomberg:

Prime Minister Justin Trudeau says Canada has put forward “a number of solutions” for resolving its complaint over a proposed U.S. tax incentive on electric vehicles made only by unionized American workers.

Canada has slammed the tax credit as a violation of the North American trade pact between the Canada, U.S. and Mexico, saying it amounts to unraveling five decades of integration in the auto sector.

Trudeau, speaking Monday in Ottawa, said one option is to align electric-vehicle incentives in Canada and the U.S. “to make sure that there’s no slippage or no unfair advantages on one side or the other.” He added that conversations on how to solve the dispute are ongoing between the two sides right now.

It seems a little odd to me that Canada is trying to make a deal before the law is even passed, but maybe that is just an indication that things are further along with the bill than they seem. Things in Washington have been hard to parse.

5th Gear: Tesla Will Accept Dogecoin For Merch

Or so says CEO Elon Musk.

From Reuters:

Dogecoin, popular among retail investors, raced up to $0.20 after the tweet. Musk’s tweets on the cryptocurrency, including the one where he called it the “people’s crypto”, have helped the meme coin soar 5,859% over the past year, according to data from Coinbase website.

Musk did not specify what merchandise, which starts from $50 and goes as high as $1,900, could be bought with dogecoin.

Tesla sells apparel, ‘Giga Texas’ belt buckles and mini models of its vehicles as well as quirky limited-edition items such as the ‘Cyberwhistle’, which is modeled after its much-awaited Cybertruck. It recently launched a quad bike ‘Cyberquad’ for kids, also modeled after the truck.

Musk, a cryptocurrency supporter, has often endorsed dogecoin and said it is better for transactions, most recently in an interview to the Time magazine, which named him “Person of the Year” for 2021 on Monday.

This is too bad for me, who just ordered a Giga Texas Belt Buckle. I could’ve used all of my dogecoin holdings for that.

Reverse: Indy

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