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- Marin County
So, not sure if anyone else has noticed, and to quote one of my personal idols, ****'s bad right now. I paid $7.50/g for premium gas last week. I know I'm particularly screwed in coastal CA, but I think the proportional pain at the pump is similar around the country. With the amount of cash pumped into the economy over the last few years, its hard for me to see prices returning to pre-pandemic levels unless there is a colossal crash. We could be on the verge of a genuine recession too boot. The last time there was such an economic shock (2007/2008) it pretty radically shifted the automotive market, at least in the USA. I remember those free-flowing money, cheap gas days, everyone had massive BOF SUVs with V8 engines or sports cars. The GFC pretty much ended those two segments beyond niche products. (I will admit that the big SUVs have mounted something of a comeback in the past 4 years, with the proliferation of cheap money)
Regardless of where we were, where we are going is this:
-Expensive gas
-Expensive money (ie, higher interest rates)
-Potential for economic malaise (ie, people losing their jobs and/or tightening their spending)
-Very likely an end to remote work (if the above is true, remote workers will likely be laid off before in-office staff)
-Prolonged supply shortages (I don't expect this will get better for years)
-Increasing pressure to electrify more vehicles
Who's going to face challenges:
For me, pure BEVs are going to be a nonstarter for a ton of people because they are too expensive (particularly if people are worried about money and interest rates are high) to buy for most people outside of boom years, and they aren't practically suitable for I would argue most people as an only car. I think the high-end BEV automakers like Lucid and Rivian are going to really struggle to stay afloat over the next few years. Anything with less recognition than those two simply don't have a chance, they already missed the boat. I think Tesla has a chance to stay alive, but the Cybertruck is a really poor product to be launching at this time, it's just too dumb and impractical and expensive for the coming economic period. They should be concentrating on revamping their quite old range instead. I also think Musk's antics will hurt the brand substantially, as he is really doing his level best to alienate his core buyers.
Mazda I think is going to have a tough time unfortunately. They have become expensive yet not premium enough to really capture that market (they aren't pulling Audi buyers in a downturn, that's for sure) and they don't really make efficient enough vehicles to be compelling on that front either. Where are the Hybrids, Mazda?
The premium automakers at the fringe (Alfa Romeo, Jaguar, and Infinity come to mind) I think are on their last legs and I can't see them surviving a downturn in the US market. None of them have a compelling USP (outside of Alfa Romeo being Italian) anymore and they just don't seem to have a game plan.
Sports cars as a segment - This may be the final death blow. Icons like the Mustang, MX-5 and 911 will survive just because they'll be the only game in town, but I don't expect niche offerings like the Supra, Z, BRZ, etc to make it through a downturn.
Autonomous car startups: I think they will simply run out of money before getting product to market outside very selective circumstances
FCA/Stellantis: I mean, it's just a continuous descent.
Who will do well:
Plug-in hybrids as a type and the car makers who make good ones. I just think these make a ton of sense, particularly for the further-flung Americans.
Toyota & Ford - They have, I think, effectively hedged their bets with regards to economic conditions and BEVs. They both have mature plug-in hybrid and normal hybrid tech that they can deploy across a range of products at different price points. Both car makers have small cars in other markets that could be brought to the US market to fill in gaps at the low end of the price spectrum.
Honda & GM - Similar to above but to a slightly lesser extent. They don't have quite the same scale in Honda's case, but I think they are in reasonably good position particularly because the Hybrid system Honda uses is almost a plug-in setup already and GM's hybrid tech is pretty mature. I think GM made a misstep with the Hummer which is landing somewhat incongruently with the economic landscape - kind of like the last one. They also sell a lot of BOF V8 SUVs still, which I think are going to be crushed over the next few years. I do think some of GM's brands might go under, like Buick.
The Koreans - I think they will do fine. As I understand it, the Hybrid systems offered by Hyundai and Kia are less adaptable to plug-in configuration, but they offer a lot of cheaper products which should help them. I think the Genesis brand will gain market share too.
Who will tread water:
Ze Germans. BMW, Mercedes, and Audi I think will continue to pull in premium buyers though that crowd might be a bit thinner. I do expect less overt big shows of transitioning to full EV ranges though, because I'm not sure there's going to be buyers for it and they'll want to devote resources to stuff that sells in volume.
I don't think VW will do as well as Honda Toyota Ford GM or the Koreans because I think they've put too much emphasis on BEVs (that aren't that great). The id.buzz should have been designed as a plug-in hybrid, IMO, because that is a car essentially built for road trips. It might have helped them to get it to market sooner. As it is, it won't hit US shores until 2024. That might be too late for an expensive niche product. Their core line is pretty uninspired as well. But they will be the only affordable European cars, and their BEV offerings will sell in the cities, so I think they will endure.
Subaru - Nobody else really makes what they make and they will continue to sell well where they sell well. I expect them to partner up more often with other automakers.
Well that's my thoughts. Who knows if I'm right.
Regardless of where we were, where we are going is this:
-Expensive gas
-Expensive money (ie, higher interest rates)
-Potential for economic malaise (ie, people losing their jobs and/or tightening their spending)
-Very likely an end to remote work (if the above is true, remote workers will likely be laid off before in-office staff)
-Prolonged supply shortages (I don't expect this will get better for years)
-Increasing pressure to electrify more vehicles
Who's going to face challenges:
For me, pure BEVs are going to be a nonstarter for a ton of people because they are too expensive (particularly if people are worried about money and interest rates are high) to buy for most people outside of boom years, and they aren't practically suitable for I would argue most people as an only car. I think the high-end BEV automakers like Lucid and Rivian are going to really struggle to stay afloat over the next few years. Anything with less recognition than those two simply don't have a chance, they already missed the boat. I think Tesla has a chance to stay alive, but the Cybertruck is a really poor product to be launching at this time, it's just too dumb and impractical and expensive for the coming economic period. They should be concentrating on revamping their quite old range instead. I also think Musk's antics will hurt the brand substantially, as he is really doing his level best to alienate his core buyers.
Mazda I think is going to have a tough time unfortunately. They have become expensive yet not premium enough to really capture that market (they aren't pulling Audi buyers in a downturn, that's for sure) and they don't really make efficient enough vehicles to be compelling on that front either. Where are the Hybrids, Mazda?
The premium automakers at the fringe (Alfa Romeo, Jaguar, and Infinity come to mind) I think are on their last legs and I can't see them surviving a downturn in the US market. None of them have a compelling USP (outside of Alfa Romeo being Italian) anymore and they just don't seem to have a game plan.
Sports cars as a segment - This may be the final death blow. Icons like the Mustang, MX-5 and 911 will survive just because they'll be the only game in town, but I don't expect niche offerings like the Supra, Z, BRZ, etc to make it through a downturn.
Autonomous car startups: I think they will simply run out of money before getting product to market outside very selective circumstances
FCA/Stellantis: I mean, it's just a continuous descent.
Who will do well:
Plug-in hybrids as a type and the car makers who make good ones. I just think these make a ton of sense, particularly for the further-flung Americans.
Toyota & Ford - They have, I think, effectively hedged their bets with regards to economic conditions and BEVs. They both have mature plug-in hybrid and normal hybrid tech that they can deploy across a range of products at different price points. Both car makers have small cars in other markets that could be brought to the US market to fill in gaps at the low end of the price spectrum.
Honda & GM - Similar to above but to a slightly lesser extent. They don't have quite the same scale in Honda's case, but I think they are in reasonably good position particularly because the Hybrid system Honda uses is almost a plug-in setup already and GM's hybrid tech is pretty mature. I think GM made a misstep with the Hummer which is landing somewhat incongruently with the economic landscape - kind of like the last one. They also sell a lot of BOF V8 SUVs still, which I think are going to be crushed over the next few years. I do think some of GM's brands might go under, like Buick.
The Koreans - I think they will do fine. As I understand it, the Hybrid systems offered by Hyundai and Kia are less adaptable to plug-in configuration, but they offer a lot of cheaper products which should help them. I think the Genesis brand will gain market share too.
Who will tread water:
Ze Germans. BMW, Mercedes, and Audi I think will continue to pull in premium buyers though that crowd might be a bit thinner. I do expect less overt big shows of transitioning to full EV ranges though, because I'm not sure there's going to be buyers for it and they'll want to devote resources to stuff that sells in volume.
I don't think VW will do as well as Honda Toyota Ford GM or the Koreans because I think they've put too much emphasis on BEVs (that aren't that great). The id.buzz should have been designed as a plug-in hybrid, IMO, because that is a car essentially built for road trips. It might have helped them to get it to market sooner. As it is, it won't hit US shores until 2024. That might be too late for an expensive niche product. Their core line is pretty uninspired as well. But they will be the only affordable European cars, and their BEV offerings will sell in the cities, so I think they will endure.
Subaru - Nobody else really makes what they make and they will continue to sell well where they sell well. I expect them to partner up more often with other automakers.
Well that's my thoughts. Who knows if I'm right.
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