AD #3881 – U.S. August SAAR Falls To 15.2M; Hyundai Doubles Down On EREVs; BYD Profits +33% Despite Price War

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

U.S. AUGUST SAAR FALLS TO 15.2M
There’s good news and bad news about new car sales for August in the American market. S&P Global predicts that sales will hit 1.42 million units, up 7% over last year and up 11% from July. That’s good stuff. The bad news is that translates into a SAAR, or Seasonally Adjusted Annual Rate, of only 15.2 million units. At the beginning of the year automakers were confident the SAAR would go over 16 million, but that’s not happening. The problem is high interest rates and high car prices. So we could see more aggressive sales discounts. And if the Fed cuts interest rates, making car loans cheaper, we could see sales pick up. 

BYD PROFITS UP 33% DESPITE PRICE WAR
BYD is on a tear. Not only has it grown to be the biggest car company in China, it’s putting some serious money on its bottom line. And that’s even with a price war raging in the Chinese market. It sold almost 1 million vehicles in the last three months. About 60% were PHEVs and 40% BEVs. Revenue hit $24.7 billion, up almost 26% from a year ago, while its net profits hit $1.3 billion, up almost 33%. Its gross margin was 20% and it sees no signs of slowing down. BYD wants 50% of its sales to come from outside of China by the end of the decade.

LI AUTO PROFITS PLUMMET 52%
Meanwhile, Li Auto is still the only other Chinese automaker making a profit on electrics, selling mostly EREVs, but it saw its profits plummet 52% from a year ago, even though its sales and revenue were up. So it looks like the price war really took its toll on Li Auto, and shows that BYD’s vertical integration strategy to hold down costs was a smart move. 

HYUNDAI DOUBLES DOWN ON EREVs
Speaking of EREVs or extended range electrics, that’s one of the ways Hyundai wants to go, as it targets a 30% increase in global sales by the end of the decade. It’s going to double its lineup of hybrids to 14 models. And in 2026 it’s going to start building hybrids at its U.S. plant in Georgia, which originally was only going to build EVs. Reuters reports that those hybrids are going to be range-extended EVs and a key reason why so many automakers are looking at EREVs is that they can be cheaper to make than PHEVs. Since the range-extending engine only operates in a limited rev range, it can be made cheaper. And EREVs don’t need transmissions or drive shafts, which cuts cost and weight even more. So as BEV sales seem to plateau, I bet you see a lot more EREVs hitting the market.

GM & SAMSUNG FINALIZE BATTERY PLANT DEAL
General Motors and Samsung SDI finalized plans to open a battery manufacturing plant in the U.S. The two companies will invest $3.5 billion to build the plant in New Carlisle, Indiana. Production will start in 2027 with an initial capacity of 27 GWh, which will later be boosted to 36 GWh. The two companies first announced the partnership in March of 2023. And up to this point, GM was working with LG to produce EV batteries in the U.S.

ANOTHER AUSSIE TAKES TOP DESIGN POSITION
Could Australia become a new hotbed for car designers? The head of design at General Motors, Mike Simcoe, is Australian. And now Ford just put an Aussie in charge of its global design. Todd Willing has been with Ford for 21 years, starting in Australia, but also taking assignments in Japan, Germany and the United States designing both cars and trucks. He also did the exterior design of the 2017 Ford GT. What is it about Australians rising to some of the top spots in automotive design? Maybe it’s something they put in the water…or the beer. 

LEXUS ID’S BODY STRUCTURE AS A WEAKNESS
Other than the spindle grille, the biggest criticism I hear most often about Lexus is that it’s just a tarted-up Toyota, but soon there will be more that distinguish the two brands. Automotive News reports that Lexus has been benchmarking German luxury vehicles from Audi, BMW, Mercedes and Porsche. And found one of the biggest differences between their vehicles and its own is body rigidity. So, Lexus will eventually add braces to the front and rear of its vehicles as well as two more in the middle section. It’s already increased the number in the NX crossover and says trials have started on its entire lineup. It thinks this will make its vehicles feel sportier, while also improving safety.

ACURA REFRESHES THE RDX
Sticking with premium Japanese brands from a moment, Acura is launching the refreshed version of the RDX in the U.S. Truth-be-told there’s not a whole lot that’s different. It features a new frameless grille, trim and wheels on the outside and a reworked center console on the inside. Power still comes from a 272-horsepower turbocharged 2.0L 4-cylinder engine that’s mated to a 10-speed auto and AWD is standard. Starting prices range from $46,000 to just under $56,000 for an A-Spec version with the Advance Package. 

VW MISSES COST CUTTING GOALS
Last year Volkswagen set a bold goal to cut costs by €10 billion by 2026. But it’s not working. The plan focused on cutting administration jobs, developing new vehicles faster, slashing production times and scrapping a planned €800 million R&D facility. It targeted to boost the VW brand’s return on sales from 2.3% to 6.5%. But Germany’s Handlesblatt newspaper reports that VW is €2-3 billion short of its $4 billion savings goal for this year. It’s run into parts shortages that have disrupted production, a slowdown in demand and increased incentives to help offset that slowdown in sales. So now VW is looking at other areas to cut costs including its sales operations.

3 CHINESE OEMS TO MANUFACTURE IN ALGERIA
As more countries add tariffs to block Chinese imports, Chinese automakers are building more plants overseas. Geely, JAC, and Chery will open plants in Algeria. JAC’s production plans aren’t known at this time, but Chery plans to build 100,000 vehicles a year in the next three years and Geely’s $200 million plant will have an initial capacity of 50,000 vehicles a year. Last year, only 113,000 new cars were sold in Algeria. This year sales are on track to top 150,000 units. So most of that Chinese capacity will probably be exported to other markets, and the EU is a likely target.

XPENG HUNTS FOR EU PLANT
And over in Europe, Chinese automaker Xpeng is looking for a manufacturing site. The company’s CEO says it’s in the initial stages of choosing a location and that it wants one with “relatively low labor risks.” That probably means Eastern Europe. It also wants to set up a data center in Europe. The EU recently slapped an additional tariff of 21.3% on the EVs XPeng imports into Europe, on top of the existing 10% tariff on all imported cars. So it would avoid all of that by building in the region.

MERCEDES PURE SPEED HEADED TO LIMITED PRODUCTION
McLaren has the Elva, Ferrari the Monza SP1 & SP2, Aston Martin the V12 Speedster, Fang Cheng Bao the Super 9 and soon Mercedes-AMG will be added to the list of automakers that offer a sportscar with no top or windshield. It revealed that it’s in the final stages of testing the PureSpeed, which it first showed off in May. Instead of a roof it features a HALO bar like its Formula 1 car and while it hasn’t revealed what’s under the hood, we think the powertrain will also take inspiration from F1 and offer some sort of hybrid system. The PureSpeed is the first vehicle in a new limited series of cars to come from Mercedes-AMG, called Mythos and will only make 250 examples that are just for enthusiasts and collectors. 

But that brings us to the end of today’s show. Thanks for tuning in.