AD #2810 – Long-Term Car Loans Shoot Up; Destination Charges on the Rise; Could Cash for Clunkers Come Back?

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

The corona virus is starting to impact the auto industry in some unexpected ways.

LONG-TERM CAR LOANS SHOOT UP
Long-term car loans can lower your monthly payments, but you also end up paying more for the car in the end. But because of the economic uncertainty caused by coronavirus, car buyers are going for longer term loans. Prior to the virus outbreak, only 7% to 8% of new car buyers took out an 84-month loan, but that shot up to 23% in the last week of March. Some Automakers, like GM, FCA and Hyundai are also enticing those buyers by offering zero-percent financing on 84-month loans. The benefit to automakers is higher margins. Longer loans lower monthly payments and people end up buying a more expensive car.

AUTOMAKERS CHARGING MORE FOR DESTINATION CHARGES
Auto makers are also raising prices in a sneaky way. They’re hiking the destination charges, which supposedly pay for the cost of shipping cars to dealerships. Most automakers advertise the price of their cars without including destination charges. There are some exceptions, like General Motors. And at Autoline we will only report the price of a vehicle including its destination charge. In fact, we’re amazed that automakers are able to legally advertise the price of a car without those charges since you can’t buy a car without paying it. Consumer Reports has been tracking the price of those charges and says they’ve gone up 30% since 2011, which is far above the rate of inflation. Fiat-Chrysler has the highest charges, almost $1,600 on average. Ford and GM charge almost $1,300, while Toyota charges about $1,100 and Honda almost $1,000.

COULD CASH FOR CLUNKERS COME BACK?
Remember the cash for clunkers program that the Obama Administration ran during the Great Recession? Well maybe we’re going to see something like that again. Back then, Congress authorized $3 billion for incentives to trade in an old, inefficient car and buy a new one, and that triggered $13 billion in sales. So far there’s no talk in Congress for another cash-for-clunker program, in which consumers could get up to $4,500 to buy a new car. But Ford’s Mark LaNeve raised the issue during an interview with Bloomberg. And U.S. Representative Debbie Dingell says it’s being discussed in Congress, but they haven’t reached any consensus yet.

FORD’S OLD V8s JUST WOULDN’T DIE
The best story I heard from the cash-for-clunkers program was from a Ford dealer. If you remember, not only did you have to trade in an old clunker, the dealer had to destroy the engine so it wouldn’t go back on the road again. So dealers would pour a chemical into the radiator that would cause the engine to seize up. It was like pouring Drano into the radiator. Only thing is, the V8’s in those old F-150s just wouldn’t die. As the Ford dealer told me, “Most engines would seize up in a matter of minutes, but we’d come back two hours later and that V8 would still be chugging and smoking and wheezing, but it wouldn’t die.”

We invite you to join us this Thursday for Autoline After Hours when our guest will be Doug DeMuro, one of YouTube’s super star car reviewers. Doug built up an audience of millions with his reviews and we’ll get the background on how he did it. Frank Markus from Motor Trend will also be on the show, so join Gary and me for one of the best gearhead programs in the business.

BENTLEY SALES ACTUALLY WENT UP
Even though we reported dismal sales for the U.S. market in March, one brand bucked the trend. LMC Automotive reports that Bentley saw its sales shoot up 34%. It only sold 219 vehicles, so it didn’t take much to boost the percentage jump, nonetheless it’s the best sales news we’ve come across. LMC says that Ram and Kia were the only brands that did not fall by more than 20% last month.

COMAU LASER WELDS MOTORS & BATTERIES
The supplier Comau, which is part of FCA, is now laser welding electric motors and batteries at its facilities. Laser welding is extremely precise and the new system allows it to automatically alternate between fiber and diode lasers. And it can also handle working with different melting temperatures of materials, such as copper and aluminum, while still ensuring a precise joint. This technology allows it to experiment with new techniques to save time and costs. Comau is using this system at two plants in Italy as well as in Shanghai and Detroit.

YOUR IDEAS ARE NEEDED NOW MORE THAN EVER
The SAE is looking for engineers, researchers, and entrepreneurs to enter its Create the Future Design Contest. It’s a global forum to share ideas for new products and technologies that could generate jobs, improve health & safety, protect the environment, and benefit society in other ways. You’ll need to provide at least one picture of your entry, a description with how it works, what makes it novel, how it would be produced and pick one of seven categories it will be applied in. Entries will be accepted until July 1st, there’s no cost to sign up and the top prize is $20,000. As the SAE says, “your ideas are needed now more than ever.”

DO YOU KNOW THIS MID-ENGINE MUSTANG PROTOTYPE?
We often ask for your help identifying an old car, but now it’s Ford that wants to tap into your knowledge base. Five years ago, Ford’s performance division received photos from 1966 of a mid-engine Mustang prototype being assembled in the ‘International’ side of the automaker’s Dearborn Design Studio. The only thing is, no one at Ford seems to know anything about this car, even the top people in charge of the Design Studio at the time. They’ve ruled out several possibilities, like this being the Mach 2 concept, so now they’re turning to you. We’d love to know what you think and you can also email any info to ClubHub@Ford.com.

TESLA’S STOPPING AT TRAFFIC LIGHTS FEATURE
A new Tesla feature, called Stopping at Traffic Lights, was captured on video by an owner. Using the front cameras and GPS info the car will stop all traffic lights, even green ones. Text will pop up on the center screen saying that the car will stop and where it will stop. The driver can override the feature by hitting the gear lever or throttle. Stopping at Traffic Lights is meant to emphasize caution, but seems more like a learning tool for its Autopilot system.

GM WILL MAKE EVs IN MEXICO
General Motors is making a big deal about how it’s converting its Hamtramck assembly plant in Detroit to making only electric SUVs and trucks, including one that will be badged as a Hummer. But that’s not the only GM plant that will be making electric sport utes and pickups. Autoforecast Solutions reports that GM’s plant in Ramos Arizpe, Mexico will begin making all-electric full-size D-class SUVs for Cadillac in April of 2023, and an all-electric C-class Chevrolet SUV a few months later in July. GM is going to build two EVs for Honda starting in 2024 and while neither company announced where they will be made, we’ve got to add Ramos to the list of possibilities.

BMW’S WILL ALWAYS HAVE A GRILLE
Electric cars don’t need a grille. And I’ve predicted EVs with grilles will start to look very old fashioned in another year or two. But BMW’s head of design, Domagoj Ducek, tells Autoblog that its iconic twin-kidney grille won’t go away on its electric cars. While it will continue to evolve, Ducek says the grille is the biggest differentiator between all its luxury rivals. It will be interesting to see how BMW’s grille will evolve, perhaps the company will take Ford’s approach with the Mach-E, which has a silhouette of a grille, unlike Audi which slapped what looks like a big radiator grille on the front of the e-tron

MICROGRIDS CAN HELP MANAGE DEMAND EVs PUT ON ELECTRIC GRID
As EVs grow in popularity, they will put more demand on the electric grid. One solution to help manage those extra loads are microgrids. For those of you unfamiliar with microgrids, they’re a group of interconnected energy sources, that can operate independently of the main power grid. I interviewed Andy Haun, the CTO of Microgrid Business at a company called Schneider Electric and he explained how microgrids can help fleet operators make the switch from ICE vehicles to electric cars.

Andy Haun, CTO, Schneider Electric
“Well it turns out that, especially the points you raised about the fleet vehicle owners but also fleet vehicle manufacturers, who want to be able to sell fleet vehicles to end users, who are currently using internal combustion engine vehicles. These microgrids can be packaged and sized such that when you want to sell a set of vehicles to an end user, you can bring the electrical infrastructure along with the charging apparatus, to be able to bring the capability to the site. So you’re not just dumping a bunch of vehicles on site and telling the end user to figure out how to get them charged. The electrical system can actually deliver all of that. The provider of the system can work with a Schneider or other packaged solution providers to bring this electric vehicle infrastructure and make it easy for a fleet operator or a large user of electric vehicles to be able to make that transition to ICE much less painful.”

You can watch that entire interview right now on our YouTube channel.

FISKER SHOWS OFF-ROAD OCEAN
Looks like Fisker’s all-electric Ocean could go off-roading. Henrik Fisker tweeted this teaser of the Ocean that says, “Rescue zero emission vehicle!” He also says they found a place to hide the spare tire that could only be done with an EV. Where do you think that spot is? Hint: It’s not the trunk or frunk.

And that wraps up today’s show, thanks for watching.