IF YOU HAVE TO ASK…

Editor's Note: This week, Peter once again discusses the affordability crisis that continues unabated in the industry. In On The Table, we take a look at the 2023 Audi TT Roadster Final edition, and I have a few comments about Chevy's new ad tagline. For our AE Song of the Week, we feature the just-released - and very emotional - "Now And Then" by The Beatles. In Fumes, Peter talks about Jim Hall's Chaparral Cars racing team and its triumph at the famous Nordschleife circuit in 1966. And finally, we have racing highlights from F1 at the Sao Paulo Grand Prix, the NASCAR Cup Series Championship race and the Trans Am Series presented by Pirelli race at Circuit of The Americas in The Line. Onward. -WG

By Peter M. DeLorenzo 

Detroit. So, now that Shawn “Eat the Rich” Fain has scored “life-changing” contracts for the UAW, the ugly reality of what that actually means is about to hit the auto industry like a 2 X 4 in the forehead. The Ford Motor Company has already gone on record as saying that the new contract will add $850 - $900 to the cost of each vehicle, but I have heard that those figures are decidedly on the low side. This, at a time when the average price of a new vehicle has ballooned to $50,000, and average monthly car payments have soared from $500 to $700 in three years. 

I have been writing about the affordability “crisis” in this business for years now, and it’s no secret that the Detroit-based car companies’ headlong rush into manufacturing BEVs has notably accelerated this crisis. Yes, reasoned veterans point to high interest rates as one of the main factors in all of this, but that doesn’t even begin to cover it. The cost of new cars, trucks and SUVs has increased exponentially, and there are solid indications that this trend will continue unabated. 

Given that the entire cost structure of BEVs is daunting to begin with, the Detroit-based manufacturers are finding out the hard way that just because they build them, consumers will not come. Yes, the game-changing, $35,000 Volvo EX30 due to arrive in 2025 promises to address the BEV affordability issue with content and performance, but who’s kidding whom here? The collective “Detroit” has invested in what I like to call “Show Pony” BEVs, like the $100,000 GMC Hummer and the $75,000+ Ford F-150 Lightning. (And Rivian is not immune either, with its own $75,000+ entries.) Are these vehicles worthy of consideration? Certainly, because they represent tremendous technological development and an industry hell-bent on reinvention, but they mean little except to the well-heeled early adopters who can afford them. To the rest of the consumer car-buying public, they’re just another “I can’t afford it” distraction far removed from their day-to-day car ownership reality. 

I have repeatedly pointed out that the most significant vehicle Ford has produced in the last three years is not the Mach-E or the Lightning pickup, but the Maverick hybrid pickup. The fact that Ford under-projected the significance of this vehicle has been well-documented. And the fact that the Dearborn-based automaker has continuously dealt with production difficulties has been well-documented too. If Ford isn’t putting an all-out press on not only producing more Mavericks but promoting the hell out of them, I would be shocked. But then again, it’s Ford, so being shocked at its stumblebum routine is not a value-added activity. 

In GM’s case, I priced a new Chevrolet Trax 2RS FWD with additional options and it stickered at $26,305. I don’t need to read any more about electric Silverado pickups or other promised BEVs like the Equinox from Chevrolet because again, they just don’t matter to consumers. The real-world price point for the Trax is exactly what the market needs. 

And I must point out that Akio Toyoda is sounding smarter by the day. He had the temerity to put the brakes on Toyota’s push into BEVs and suggested that multiple propulsion choices would be essential going forward. He was right, of course, which is why Toyota’s offering of many hybrid model choices is looking like a genius move. And Honda’s embrace of hybrids is looking just as smart. The Koreans have hybrids, too, but they’re definitely over-compensating to BEVs at the moment, and whether that strategy proves to be a winning one remains to be seen, although they are well and truly kicking Detroit’s ass in that arena. 

While Fain and his minions are doing victory laps and high-fiving everyone in site on their rounds, the Detroit-based automakers are having to deal with the ugly aftermath, and this is no joke. The collective “Detroit” – except for a few notable instances – is poorly positioned to deal with the affordability issue. And cost-cutting won't get them where they need to go. They have relentlessly churned out vehicles with higher content and higher prices with a shocking attitude that there were no real limits, and that this could go on forever. 

But that attitude flies in the face of one of this industry’s time-honored axioms: nothing lasts forever in this business.  

With the “Grand Transition” to BEVs on an extended delay, the auto manufacturers who have smartly addressed the need for all-new ICE vehicles will not only survive, they will thrive. In the meantime, consumers are finding out the hard way that if they have to ask… they can’t afford it. 

And that’s the High-Octane Truth for this week. 

Editor's Note: Click on "Next 1 Entries" at the bottom of this page to see previous issues. - WG