High Car Prices To Stay High In 2022

Table of Contents

[ad_1]

Image for article titled 'It Could Take Years' For High Car Prices To Come Down

Shopping for a new car? Have you considered waiting until 2023? All that and more in The Morning Shift for April 18, 2022.

1st Gear: Car Companies Can Get Away With It

Car companies have been spending years — decades — desperately trying to keep prices down to stay competitive in the market. But what if… every car company raised their prices at the same time? What if they all started to produce only their most expensive models with the highest profit margins? What would encourage them to bring prices back down?

Anyway, here’s a news story from the Wall Street Journal from auto industry experts and insiders saying they just can’t find a way to bring down prices anytime soon:

“This could take years” before dealership stocks recover, said Steve Center, operations chief for Kia’s U.S. business. “You won’t see incentives, because we’re still going to be selling everything we can make.”

Auto makers entered this year optimistic that the chip shortage would gradually abate. But it continues to sporadically limit vehicle production globally, along with other disruptions, from the war in Ukraine to Covid-19 restrictions in China.

[…]

Even with car companies trying to generate buzz regarding new showroom offerings, an extended period of low inventory is continuing to leave car shoppers with few good alternatives and keep prices high.

After surging to record highs, the amount Americans have been paying for new vehicles showed some signs of leveling off in recent months. In March, the average transaction price—or the out-the-door price paid—declined slightly for the third straight month, to about $43,700, according to J.D. Power.

Still, it is about 26% higher than before the pandemic, when the average transaction price hit $34,600 at the end of 2019, the research firm has reported.

As long as car companies can keep getting away with high prices, I don’t see this coming to an end.

2nd Gear: BMW Says It Won’t Cut Jobs In EV Transition

A reminder that companies blaming things for job cuts is usually bullshit — they can prioritize keeping jobs around if they choose. Here is BMW saying it won’t blame any job cuts on its transition to battery-powered cars, as the Financial Times reports:

BMW will not cut a single employee in the transition from combustion engines to electric models, its chief executive has pledged, even as economists predict tens of thousands of job losses across the industry.

“We will not have job losses due to the transformation,” Oliver Zipse said. “At the end of the day, possibly already in this decade at our Munich plant, there will be fully electric production without anyone losing their job.”

His comments come as the European auto sector, as well as leading economists, warn that plans to ban petrol and diesel cars will lead to mass unemployment.

Generally, electric cars have fewer parts than ICE vehicles. Theoretically, EVs require less maintenance as well. Parts suppliers have claimed that job cuts are coming, and I don’t see why we can’t have jobs promises in the transition.

3rd Gear: 2023 Kia Niro EV Going 50-State Wide

I drove the current Kia Niro EV the other week and really enjoyed it in Southern California, with warm weather and plentiful chargers. Do I wonder what the car would be like in Topeka, Kansas? Or Lincoln, Nebraska? Or Minot, North Dakota? Of course! Now the Niro EV will go on sale in all 50 states, as Automotive News reports:

The second-generation 2023 Kia Niro electric crossover, one of three available electrified variants, will go on sale in the U.S. this summer in all 50 states, the automaker said last week. The current-generation EV is sold only in certain states.

“Part of our electrification strategy is to sell electric cars everywhere, not just to comply with regulations and the exempt states, or the California standard states,” said Steve Center, Kia America’s COO. “People want electric cars all over the country.”

4th Gear: Ford Down 19 Percent In China Q1

We reported on GM being down by around 20 percent in Q1 in China, so it feels perhaps unsurprising that Ford would be down by the same amount. From Automotive News China:

Ford Motor Co. and its joint ventures sold roughly 125,000 vehicles in China in the first quarter, a drop of 19 percent from the same period last year.

Ford’s China unit blamed the drop on the persistent semiconductor chip shortage and the negative impact from resurgent coronavirus outbreaks in the country.

Lincoln deliveries edged up 0.8 percent to 19,471 during the period and Ford-brand passenger vehicles fell 17 percent to 46,719.

5th Gear: Hongqi Super Luxe Chinese SUV Goes On Sale In Israel

I am charmed that China’s glitziest car brand managed to build a Cadillac Lyriq before Cadillac did. You can see the thing on Car News China, reporting on the model’s Israeli launch:

Israel is not the first country where Hongqi exports to. In September 2021, Hongqi held a ceremony for the launch of E-HS9 in the Norwegian market and announced its entry into the European market. Hongqi also exports to other countries such as Russia, Kuwait, and UAE.

In Hongqi’s global strategy, European users will gradually familiarize themselves with the Hongqi brand through the E-HS9 model, starting from Northwest Europe. In the future, Hongqi plans to launch small and medium SUVs and sedan products to enrich its product range in the European market and customer demands.