To be more specific, Dodge might have around 6,398 big problems. As we get further into the selling year the 2023 MY (model year) cars should start to fade away from dealer lots as 2025 MY cars start to get introduced. This isn’t happening at Dodge, which is stuck with a bunch of 2023 MY vehicles.
Lately, the Morning Dump has been a swing between wondering how much trouble Stellantis is in and how boned Volkswagen is. Today, we’ll get a little bit of both. After teeing off with Stellantis, let’s talk about Europe and the ways in which the government might step in to bail out companies there. Europe may also bail out Mother Earth a little bit by relaxing its position towards China, which is a weird sentence.
Do you know what would help? If either Stellantis or Volkswagen offered a regular hybrid in the United States. Hybrids are selling extremely well and both companies have been caught flat-footed.
It’s Friday. I spent all night looking at Twitter for clips of Shohei dropping bombs and… all the other stuff. Let’s do this so I can go back to sleep.
Dodge Is Still Living In 2023
I don’t blame Dodge for holding onto 2023. Stellantis was extremely profitable, the company was still making new Chargers and Challengers, and Schmigadoon! was still on the air. All good things must come to an end… unless you’re a Dodge dealer.
Cox Automotive is out with an update on inventory levels, and the big news seems to be that the market has stabilized after the volatility caused by the CDK Global ransomware attack. According to Cox, the Days’ Supply was 77 nationwide. That’s not a terrible number, although it’s heavily skewed by Lexus (30), Toyota (35), and Honda (40). Dodge is at 149, meaning that it would take more than four months to clear the existing inventory.
Why? Cox Automotive has a good data point:
While Stellantis brands, in aggregate, lifted incentive spend to 7.8% of the average transaction price (ATP) in August from 5.7% in July, MY23 vehicles are still weighing down dealers in multiple markets. Dodge was most muted on incentives in August among the volume Stellantis brands at only 5.6% of ATP, and it shows in the 22.5% of inventory of prior year models still on the ground. At the end of August, Dodge days’ supply at 149 was nearly twice the national average days’ supply.
Did you get that? Dodge has a ton of 2023 models on the lot and, yet, Stellantis was also not willing to give dealers too much money to get rid of those cars. The average discount/rebate for a new car in August was 7.2% of ATP, but Dodge dealers only got 5.6%.
Just for funsies, I went to Cars.com to check out what’s currently listed for sale nationwide. There are about 10,000 2024 MY cars for sale, about 1,600 2025 MY cars (mostly Durangos), and a whopping 6,000+ MY 2023 vehicles. A lot of these are the discontinued Charger and Challenger, though there are still more than 700 Hornets and Durangos listed for sale. By comparison, Mazda only has about 100 cars from 2023 still for sale.
This would be terrible news in any environment, but look at how hard Dodge is having to discount 2024 models. Here are your options if you go to a Dodge dealer:
- A cool, but expensive and out-of-date sedan.
- An even cooler, but expensive and out-of-date muscle car.
- A large, mostly mediocre three-row SUV.
- An expensive, problem-prone crossover
There is definitely a price at which I’d consider a Durango or a Charger, but it doesn’t seem like Stellantis is willing to get close. It’s the last month of the quarter so maybe Stellantis will make a push and you’ll get better deals. It seems like Thomas already found some.
Germany Might Bail Out Volkswagen
In talking about how screwed Volkswagen currently is, I haven’t even really gotten into how screwed Germany might be. This will require just a little bit of history.
When the Berlin Wall fell, the difference between West and East Germany was the difference between Shoehei Ohtani and, like, the 5 through 8 hitters in the lineup for the Chicago White Sox. Reunification seemed like the right thing to do, but the West German government suddenly inherited a large population raised under a paranoid, Soviet-style government with huge debt and few economic prospects. The fact that the two countries were brought together at all, so quickly and so peacefully, is amazing in retrospect.
Lurking in the background, however, was a feeling that many East Germans had about being second-class citizens. That’s a little simplistic, so here’s a deeper bit of reporting on the rise of the populist, far-right AfD (Alternative for Germany) party from The New Yorker:
The dynamic was reminiscent of what I had observed while reporting on the rise of Donald Trump in the American Midwest in 2016—above all, the disconnect between voters in left-behind places and the highly educated winners of the metropolis. What sets the situation in Germany apart, in addition to the dark historical context, is the multiplicity and transparency of the rupture. In the U.S., the growing regional disconnect has been flattened under the weight of Trump’s cult of personality, obscuring the realignment under way in both major parties. But, in a multiparty parliamentary system like Germany’s, the rifts and tensions are easier to discern. They are out in the open, striations of a Western democracy under strain.
After reunification, and sensing this might be an issue, the German government worked with companies to build a ton of industry in the former East Germany. The theory was that economic prospects might temper any simmering resentment. That completely falls apart if Volkswagen goes through with its threat to start closing plants, especially if those plants are in the east.
In a way, Volkswagen (which, it’s worth noting, is owned in part by the state of Lower Saxony) put a gun to the head of the current coalition government in Germany. So it’s fitting that Germany’s Economy Minister Robert Habeck went to a plant in Emden to announce that the government will help, maybe, sort of.
From Reuters:
German Economy Minister Robert Habeck said on Friday that he wants to help Volkswagen get through this period of cost-cutting without site closures.
During a visit to the carmaker’s factory in Emden, the minister said he also wants to ensure that personnel policy measures remain within the normal collective bargaining framework.
However, the minister said there were limits to what his government could do to support Volkswagen, adding that the structure and viability of a business was down to company policy.
The government of Germany is tighter than two coats of paint, man. They’re gonna slice off their kartoffeln to try and save their bratwurst.
EU Might Try To Stave Off Tariffs
Constructive meeting with ????????Minister of Commerce Wang Wentao.
Both sides agreed to intensify efforts to find an effective, enforceable and WTO compatible solution to the BEV case.
This without prejudice to the EU investigation and its deadlines. pic.twitter.com/8P60L3pNYM
— Valdis Dombrovskis (@VDombrovskis) September 19, 2024
The European Union is slowly starting to realize that it can’t have its cake, eat it, crap it out, and eat it again. To quote the great Ross Perot: It don’t work that way, folks.
Faced with a need to bail out its own car industry, which can’t build cheap electric cars, but also a desire to have cheap electric cars, but also without paying to lower the cost of them through extensive subsidies, the EU seems to be considering letting in Chinese cars with tariffs that maybe aren’t as onerous as the ones being proposed.
From the Bloomberg update on the ongoing economic diplomacy:
Valdis Dombrovskis, the bloc’s trade commissioner, said that he and Commerce Minister Wang Wentao had a productive meeting and planned to continue talks “without prejudice to the EU investigation and its deadlines.”
The EU made clear to China that it will continue its formal investigation into unfair subsidies for EVs made in China, but “the two sides agreed to take a renewed look at price undertakings,” according to Olof Gill, a spokesperson for the European Commission.
I think the EU is going to cave. It’s just a feeling, but if Spain/Italy oppose it and Germany comes out against it I don’t see it happening.
1-in-10 Cars Sold In The United States In July Were Hybrids
Because some no-fun automakers decided to stop reporting monthly sales amounts, we’re always at a bit of a delay in determining monthly sales trends. Thankfully, places like S&P Global Mobility can use registration data to make some conclusions.
In the above-linked S&P story on the slowing of EV adoption, there’s some interesting data on hybrid sales:
[I]n the first seven months of 2024 US light-vehicle registrations saw more growth in traditional hybrid-electric vehicles (HEV). Plug-in hybrid electric vehicles (PHEVs) have improved as well, though that solution still sees slower adoption than either BEV or HEV. In July 2024, HEV registrations were at 10.4% of the total market and volume grew to just under 146,000 units for the month, compared with about 121,000 BEVs being registered. In the January to July period, HEVs accounted for 9.2% of all registrations.
I think at the rate we’re going we might hit 10% hybrids overall for the market by the end of the year.
What I’m Listening To While Writing TMD
It seems like a good time for The White Stripes and, specifically, “The Big Three Killed My Baby.”
The Big Question
Time for some baseball talk: Did Shohei Ohtani have the greatest offensive performance of all time last night? Is he the GOAT? Is he the best ballplayer since Babe Ruth?
Top photo: Cars.com/Ron Bouchard Dodge Jeep Ram
C’mon, you can’t expect such niche, boutique manufacturers to be able to diversify their portfolio that much! It’s not like they can compete with behemoths such as Mazda, who have ICE and hybrids of multiple flavors.
You do NOT want a hybrid made by VW or Dodge. Not everyone has to make everything because no one makes everything well.
Dodge has dug itself so deep into the “Oorah ‘Murica” hole that they can’t really use good MPGs as a selling point anymore. Their EV branding is super clunky as it is.
And the less said about VWs electronics and powertrain reliability the better.
They will both get bailed out by their respective governments and none of this will matter.
What is Dodge these days? Belgian? Italian? Dutch? So hard to remember.
I think they’re based in Krakozhia now.
Checked the local dealership which owns all the dealership within 100 miles. The only 2023 it has is a challenger and it only has 1. Selling the 2024 Hornet for $2k of sticker. It doesn’t have any Aztecs but not seeing what I am reading.
Here’s an idea:
Perhaps Germany and the EU should push VW and Stellantis to partner with superior Chinese automobile companies such as BYD, Nio and Changan to build their cars in VW and Stellantis plants?
China gets tariff-free access to the German and EU markets through existing sales networks – VW and Stellantis gets to keep their plants open. The higher cost of German labor is offset by the costs of shipping, import duties and tariffs.
Win-Win.