Dealers Pessimistic Outlook, Japan’s EV Battery Push, The OG Mustang

The Automotive Troublemaker w/ Paul J Daly and Kyle Mountsier

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We’re almost through the week, and we’ve got Steve Greenfield back with us today to help us understand why dealers are feeling a little pessimistic about Q3. Plus we’ll discuss how Japan is investing heavily in EV battery production and have a little bit of nostalgia about a historic Mustang.

Show Notes with links:

• Franchised dealers grew more pessimistic going into Q3, with a Cox Automotive poll revealing concerns about interest rates, the economy, and election uncertainty. The Dealer Sentiment Index fell below 50 for only the third time in its seven-year history, indicating negative expectations for the near future.
  • Dealers rated their three-month outlook at 49, down from 52 the previous quarter, signaling waning confidence.
  • Interest rates (67%), the economy (53%), and political uncertainty (49%) were the top concerns affecting franchised dealers.
  • Jonathan Smoke said that with the exception of interest rates, today’s economy suggests that the SAAR should be 17 million given demand. However, it currently sits at 15.4M
  • Profitability also dipped, with dealers reporting a score of 43, well below pre-pandemic levels.
  • "To say that profits are today worse than they were before, I think, is thinking beyond new-vehicle gross margins and thinking about the other expenses that dealers have that are still being impacted by inflation and higher costs and higher interest rates, which make it very expensive to hold inventory," Smoke said

• Japan is investing heavily to secure its electric vehicle battery supply chain, offering up to 350 billion yen ($2.4 B) in subsidies. The funding will boost production for companies like Toyota, Nissan, Mazda, Subaru and Panasonic, aiming to increase the nation's storage battery capacity by 50%.
  • The combined investment from the four automakers, along with Japanese government subsidies, totals over ¥944.6 billion ($6.58 billion)
  • The goal is to increase Japan's battery production capacity from 80 GWh to 120 GWh annually.
  • Toyota is leading Japan’s EV battery push by developing next-gen solid-state and performance lithium-ion batteries, with plans to start production by 2026,
  • Subaru and Mazda will partner with Panasonic for cylindrical lithium-ion battery production, while Nissan plans to produce lithium-iron-phosphate batteries for mini-EVs by 2028.
  • "We hope these efforts will strengthen Japan's battery industry," said Ken Saito, Minister of Economy, Trade, and Industry.

• Bill Ford and Jay Leno took a trip down memory lane in a classic piece of automotive history—the original pace car from the 1964 Indianapolis 500. Featured on Leno's YouTube show, the two discussed the significance of the car and its connections to the Ford family.
  • The car was built in the first hour of Mustang production, and Bill Ford recently became its fourth owner after a friend spotted it at a show
  • Bill's uncle, Benson Ford Sr., drove the pace c

Hosts: Paul J Daly and Kyle Mountsier
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