Automakers continue to report sales growth, prompting investors to question whether this trend can persist into the second half of 2024. Cox Automotive executive analyst and senior director of economic and industry insights Erin Keating joins Market Domination Overtime to discuss her outlook on the auto industry.
Keating calls the auto industry's performance "pretty good" in 2024 despite economic uncertainty that pointed to a potential slowdown. Addressing the electric vehicle (EV) sector, she notes that "a lot of the decline" in the EV market "is coming out of the Tesla (TSLA) share," noting Tesla's former position as the sole competitor in the market.
With more automakers transitioning to EV production, Keating doesn't believe that "EV demand is completely falling off a cliff." Instead, she describes the market as "normalizing," reflecting a more competitive landscape.
Looking ahead, Keating tells Yahoo Finance that 'the automotive market will have to balance itself out." She forecasts increased consolidation and collaboration among automakers as the industry adapts to evolving dynamics.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.
This post was written by Angel Smith
Video Transcript
Automakers reporting modest sales growth.
GM reporting its best quarterly sales in more than three years.
Teslas seeing sales fall less than expected for the second quarter.
However, looking to the second half of the year, the road ahead for automakers may be a rocky one cox automotive executive analyst and senior director, Economic and industry insights.
Aaron Keating joins us now to discuss Erin.
It's good to see you.
So, um maybe Erin's our big picture, you know, we did just hear as we mentioned uh from GM and Ford and Tesla um just a 30,000 ft view, Erin when you look at the US auto industry, how healthy, how, how strong does it look to you?
You know, I think we actually have to put it in perspective and, and so far, I think we're seeing a pretty good year.
We all knew that the uncertainty with the election, the climate, the interest rates keeping at high levels that we were going to be seeing potentially a slow growth this year.
Um Certainly the CD K outage in June didn't necessarily help us the fact that the O Ems or the automakers have not come in with really high incentives.
Um like they were in the pre panem.
I think we're doing pretty well.
Uh how, what are margins looking like?
We're talking about increased incentives here?
We know that the automakers like to uh provide a little juice for the customers from time to time.
How are margins faring so admittedly then cox automotive, we don't get terribly deep into the financials of the automakers.
Um but again, we're seeing them starting to loosen some of the, the financial space they have on the cars as they try to move more metal off the parking lot.
So we are going to, we are anticipating that we'll see some more incentives coming forward.
Um There's a lot of rate of pension that's having to happen right now because of the high interest rate.
So we're hoping that they'll be able to give a little bit more of this back.
It may come a little bit from the dealer's margin and a little bit of sharing from the automakers, uh, margin as well.
Erin, let's talk about a trend.
We talk, we discussed a lot here ev sales growth.
Erin, not what it used to be.
I'm interested, the reasons you see for that.
Erin and, and what do you think it would take to kind of jump start that?
Well, I think, you know what we have to remember is that some of the decline or a lot of the decline is actually coming out of Tesla's share.
They were primarily the biggest competitor in the market, the only competitor in the market for a long time outside of Nissan and Chevy.
Um but we see a lot more competitors coming in with some really compelling product as well as good incentives and of course, the tax credit.
So I don't see that we say ev demand is completely falling off a cliff or you think it's normalizing.
And so as we see Tesla start to drop share that's not alarming around the entire message for evs because the rest of the brands are actually starting to really lift in their E sales.
So while we may not be at 10% this year, we're going to get hit awfully close to it.
More hybrids are being sold, more P HS are being sold.
This is all good for the transition to um fully electrified vehicles in the future.
So I'd say that we're still on a path to getting to an electrified future.
It's just going to take us a little bit longer and we're really excited about the fact that we finally have some additional players in the market providing some really good options for consumers.
Let's talk about the, the some of those players in the market right now.
Um I was just looking at the Wi Fi Interactive, I know you don't comment on stock prices, but what I'm gonna show illustrates uh the big versus the small, this is, this is a year to date.
Um performance for a bunch of EV stocks and Tesla just became positive today actually, but GM is up, 30% Toyota is up, 12% byd is up 9%.
And then these little, a lot of the smaller players uh nev just are not doing it.
Rivian down 37%.
Lucid Motors down 30%.
Admittedly, China's its own story.
But what do you think the difference is between some of the, the outperforms of these big guys versus the little guys?
I think it's, I think it's precisely that a story of the big guys versus the little guys.
I do think that we anticipate Vivian starting to get a little bit more under its feet um especially with its new tie up with Volkswagen.
Um And I do think that the automotive market will have to balance itself out.
I mean, a lot of people forget that at the beginning of the last century, I think we had over what 1000 automakers, you know, it whittles down.
So I think we may see more consolidation or more collaboration amongst some of the O Ems.
Um and meaning some of the really small players might get swallowed up, perhaps a lot of them over in uh in China.
But even when you saw the Volkswagen Arabian announcement, you see where they're starting to realize that collaboration in some areas is actually good for, you know, the rising tide helps all all shift and of course, we may see a few like we saw with Fisker filing for bankruptcy, some of them will go away from the market and that's ok. That's the speed of competition, right?
Erin.
Uh I'll get you on this, you know, we talked about EV si also want to know what's going on with trucks.
Erin broadly.
I mean, what are the, what are the trends and themes you're seeing there so broadly?
I mean, trucks still make up a majority of our sales.
Um But we are seeing that the smaller sub or compact suvs, compact trucks and of course, sedans are starting to have a little bit of a, a renaissance here where there are a couple, you know, their share is going up just a little bit, but I don't see that we're going to transition to um going back where sedans are the primary winner in this market.
Um So trucks are doing ok.
Uh they are stabilized.
Um But we are seeing that the lower cost vehicles which tend to be, the smaller vehicles are certainly pushing up in sales.
And again, that comes back to the affordability challenge that we're seeing in the market that if they need a car, they need four wheels, they'll take what they can get.
And if that happens to be a little bit smaller than they anticipated or wanted, then that's what they'll grab for the new or used car and we will leave it there Aaron Keating.
Thank you.
Sure.
No problem.
"auto" - Google News
July 06, 2024 at 04:13AM
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Auto industry still on track for 'an electrified future' - Yahoo Finance
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