April 11, 2025 • 49 mins
Cox Automotive's Erin Keating joins the podcast to talk tariffs. Plus, Hannah reports back on the Cadillac Celestiq and Matt rides the Buell.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. I'm Matt Miller and
I'm Hannah Elliott, and this is hot Pursuit.
Speaker 2 (00:20):
All right, we are tariff tariff tariff today, right on repeat.
Speaker 1 (00:26):
Yeah, I mean sorry, sorry, not sorry, we're talking about tariffs.
Speaker 2 (00:30):
Well you have to talk about because it's going to
change everything. I mean, it's completely reorganizing a century old
system of global trade. So and cars are such a
big part of that.
Speaker 1 (00:42):
This is this is like the entry of a bullet,
where the entry point is smaller and then the destruction
or the chaos is as the bullet moves through. And
I'm not a ballistic expert, but you know, I think
the ramifications of that are going to be massive. Obviously
(01:03):
you're smiling, you're are you laughing at my No?
Speaker 2 (01:07):
No, I love it. First of all, I do love
your comparison. I love fallistics.
Speaker 1 (01:12):
But yeah, I think you know the fallout is going
to be increasingly massive.
Speaker 2 (01:16):
Well, and we've already seen like crazy fallout. My day
job is covering the markets over the opening bell every
day from nine to eleven on Bloomberg Television or bloomber
dot com. And you know we focus in on single
stock stories and on on industries, and I'm always kind
of fighting with people who want to cover banks, and
(01:38):
people want to cover retail, and people who want to
cover energy, and people want to cover industrials, you know,
but I care about cars. And the fun thing for
me about this tear off chaos, beyond the fact that
you know, chaos makes things more interesting, is everybody wants
to talk about automakers. Like all of my producers like, yes,
now's the time to focus on cars because there's such
(02:00):
a huge part of this story.
Speaker 1 (02:02):
Yeah, I know, it's it's this. I've actually always known.
I will cop to that because cars influence everything, and
you know, most people don't think about cars on a
day to day daily basis, but they are so woven
into the fat fabric of our culture. You know, once
you start messing with the car world, it's going to
(02:23):
have very wide effects. So I, in a weird way,
love to hear that all of your people on your
side want to talk.
Speaker 2 (02:31):
Cars well, and we have the perfect guest to talk
about it today, Eric Aaron Keating from Cox Automotive, which
has done in such an incredible job researching and putting
out intel on the business side of the industry. Plus
she's a car lover herself. She goes and test drives
new cars and has opinions on them, just like you
(02:51):
and I do. And they own Mannheim, which does the auctions,
the wholesale auctions for dealerships.
Speaker 1 (03:00):
Yeah, she's one of my favorite people to talk to.
And she's just it's funny. She had a planned scheduled
vacation this week, so talk about timing for her. She's
just I don't think she got much vacation, but I'm
so glad she could join us.
Speaker 2 (03:13):
All right, let's get straight into it. This is Aaron
Keating from Cox Automotive. I just have a couple of
personally specific questions. I've seen Cox doing great coverage on
a number of different issues. One of them is affordable cars,
Like it seems as if these tariffs, especially if there
were so called reciprocal tariffs, go back into place in
(03:36):
ninety days, there won't be any affordable cars for Americans
to buy in this market.
Speaker 3 (03:42):
So you know what I want to just emphasize here,
and this is and we were just talking about this
as a team this morning. The costs that we're seeing
at are coming in are costs and cost only So
when we're looking at a tariff, we're saying the automaker
or the importer of record, which is typically the automaker,
is going to get hit with this twenty five twenty
seven and a half percent tiara. How that shows up
(04:03):
for the customer completely different story. And honestly, I'm not
sure how quickly automakers are going to jump in to
jack up the prices on individual models. In fact, I
would bet almost all of them will look across their
entire portfolio, and you know, the vehicles that you guys
are a lot of the times focused on luxury are
going to get the bump because profitability is there to
(04:26):
be able to absorb some of that TARA so that
they can keep competitive at the entry level models and
or just the vehicles that are available for lower price.
So just because a thirty thousand dollars vehicle is going
to get hit with twenty five percent, say like a
Chevy Tracks, which we know is completely brought in from Korea,
I can't imagine, at least in my head, how Chevy says, oh,
(04:48):
let's let's make that thirty thousand dollars car bear the
hit of that twenty seven and a half percent, right
or twenty five percent. I think they don't have the
original MFM, But so I think that that's that's what
everyone kind of has to keep in mind, is that
the automaker has a lot of different levers to pull
to figure out how does this ultimately impact the consumer?
Prices will rise naturally demand and supply, and the and
(05:11):
the pull a head buying that we have right now,
and the fact that inventory might get impacted because OEMs
might pull back on producing as much until they can
figure out how they're going to deal with the economic
challenge of this. But it's not apples to Apple's tariff
price increase.
Speaker 1 (05:28):
All right, interesting, and that would that that would be
dependent on the automaker too. Like sare to say, some
automakers believe that their customers will be tolerant to a
slightly and some may think, no, we're not, We're not
going to do that.
Speaker 3 (05:42):
I think it's going to vary across automakers. I think
it's going to vary across segments models, you know, I
think maybe even down to regional areas, because again, you're
going to get impacted by what the dealer is seeing
on the in the market level conditions. Because MSRP is
is one way the price changes right. Another way the
price changes is list price what gets put out to
(06:04):
the consumer.
Speaker 1 (06:06):
How much is that also related to the breakdown within
each specific vehicle of which percentage of components are sourced
or made in the US anywhere else? And I asked
I of LA like yesterday and that's obviously an American brand,
And they're not really able to answer right now.
Speaker 2 (06:26):
They don't put that on the Monroney because yeah, and
the Maroney.
Speaker 3 (06:31):
What it shows you, Yeah, so the Monroney typically will
show you assembly. Remember for Monroney purposes. According to Nitza,
US and Canada are combined, even though we know the
terror situation is Canada MASA right, well not all of
North America, right, because.
Speaker 4 (06:44):
Mexico is not.
Speaker 3 (06:45):
So it's when it says it's US, it's you'll see
US slash Canada. So it throws those two into the
bubble together, even though we know tariffs is actually being
addressed as Canada Mexico US. So that's a little bit
interesting and difficult for people to parse through the data.
Second of all, it will matter based on okay, So
there's three ways basically at least that we can see
that the tariffs are going to get put onto the vehicles. One,
(07:08):
you completely import the assembled vehicle, you pay the full
bear of the tariff from any other country outside.
Speaker 4 (07:14):
Of North America.
Speaker 3 (07:15):
If you import Canada and Mexico, you get hit with
the twenty five percent, but they'll give you credit for
US content, And we don't yet know how they're going
to certify which pieces really consist of US content. And
then the third way that they're going to teariff you
is if you're US assembled, but any componentry parts, steel,
an aluminum, anything else that's coming into the country that's
(07:35):
helping you build that vehicle that will have been tariffed
on its way into assembly.
Speaker 2 (07:39):
Does that make sense, yes, But it's worse than that.
According to Bloomberg. For example, an Audi Q five assembled
in Mexico gets hit with a twenty five percent tariff
for being a car coming in from outside the US
YEP also a twenty five percent tariff for being a
non USMCA compliant Mexican product coming from Mexico, and a
(08:05):
two and a half percent surcharge for not being US
MCA compliant. If that makes sense, So total tariffs for
the AUDIQ five coming in from wherever San Luis Bispo
is going to be fifty two and a half percent.
Speaker 3 (08:17):
Yes, so you're correct the auto tariffs and I haven't
looked specifically into that car, but you're correct in the stacking.
So when March twenty six came up, Trump indicated, Hey,
these auto tariffs are going to be stacked on top
of existing tariffs that I've already been put into place,
which included the February first IEPA authorization of twenty five
percent on Canada, Mexico and the ten percent on China,
(08:39):
which the ten percent went to twenty percent, and at
the time they gave the USMCA compliant exemption. So if
a car is not USMCA compliant, you're correct they were
subjected to that twenty five percent under the IEBA order
February first, and that would get stacked on top of
the twenty five percent that was then issued on March
twenty six.
Speaker 4 (08:58):
You're correct on that.
Speaker 2 (08:59):
And by the way, is our understanding and do they
have to? So I'm driving a BMWM two right now,
test driving it, and it's amazing not currently no, but
you have that yes, I'm not actually yeah, but so
I have it and twind in his hair and yeah,
my hair is flying in the wind.
Speaker 4 (09:16):
No.
Speaker 2 (09:17):
So on the Monroney it says parts content information and
then it lists major source of foreign parts Germany twenty
seven percent, Mexico fifteen percent assembled in Mexico, and then
US Canada parts content six percent.
Speaker 3 (09:36):
Yes, you're right, and the Monroney label. So yes, I
started to say there and then I and I jump
to another fact. The Monroney label does. Yes, it will
typically tell you where the engineer transmission is from, what
the other percentage of content is, and then what's available
in the US, and then where it was assembled. I
have seen varying, so admittedly I haven't done too deep
(09:58):
into what is the like what does every manufacturer have
to put on them, but most of them do have those.
Speaker 4 (10:04):
Four or five different outlines exactly just helpful for consumers.
Speaker 2 (10:08):
This engine was put together in Austria, the transmission was
built in Germany. The whole thing prices out at eighty
two five, which is already kind of steep for an
M two. If you think about it, like when you
were a kid that was that would have been an
M three and it would have been like forty five
(10:28):
like Max so sure. And now if if they're not
USMCA compliant, this M two is going to sell in
the US, assuming BMW doesn't eat the costs for one
hundred and like at least one hundred and thirty thousand dollars,
that's nuts.
Speaker 3 (10:46):
In theory, Well it would cost it would cost them
manufacturer that much.
Speaker 4 (10:49):
Yes, so correct whether.
Speaker 3 (10:51):
They end up you know, fully giving that to the client.
And we know BMW has already said, hey, we're gonna
we're gonna eat the cost for now, I think through
the end of May, is it? And that, you know,
likely is an exercise of the automaker to say, what
does this.
Speaker 4 (11:07):
Look like moving forward? Where do we put the costs?
Speaker 3 (11:10):
How do we afford this so that we don't make
the end to completely irrelevant?
Speaker 4 (11:14):
Or do we get rid of the end too?
Speaker 3 (11:16):
Because you know what, no matter which way we slice this,
we're not going to be able to make this at
an affordable price, and therefore we're gonna.
Speaker 4 (11:22):
Get rid of the model. I mean that's certainly possible
as well.
Speaker 1 (11:25):
I know, Matt, have you had anyone call and ask
to buyer in too? Because I'm thinking the idea that
dealerships are calling people yeah, can we buy.
Speaker 2 (11:35):
Well, this is something else that I wanted to ask about.
Cox has been doing awesome coverage of the Mannheim Well,
I think you own the Manheim auctions man, Yes, we do. Yeah,
but I have heard that we're already seeing like nutsoe
prices at these auctions. Have you heard any you know,
anecdotal evidence that dealers are paying sure high prices.
Speaker 4 (11:57):
Sure?
Speaker 3 (11:57):
Yeah, No, we've been seeing increased sales conversion. Jeremy rob
one of my colleagues, did his monthly movie call on
Monday with some great you know figures around what we're
seeing in the used car market. But absolutely, we're starting
to see the sales conversion rate go up, We're.
Speaker 4 (12:14):
Starting to see the.
Speaker 3 (12:15):
Wholesale costs go up, and we're starting to see listing
prices go up.
Speaker 4 (12:20):
So one hundred percent.
Speaker 3 (12:22):
You can tell the dealers are saying, you know, we
got to stack up and make sure that we have
good supply of new and used.
Speaker 2 (12:27):
So I wonderful'll be back in the situation. When I
bought my Silverado in twenty twenty two, I went to
the Chevy dealer to collect the truck when it was
finally delivered from Mexico, where it was assembled, and they
had an identical truck on the lot that was used
with like ten thousand miles for ten thousand dollars more
(12:47):
than I was paying MSRP. Are we going to start
seeing that again?
Speaker 4 (12:51):
We might. I mean, I think we're going to see
a lot of the same.
Speaker 3 (12:54):
Things that we thought about as part for.
Speaker 4 (12:58):
The course during Cold cod.
Speaker 3 (13:00):
The difference is going to be that we're probably going
to be in a period of high.
Speaker 4 (13:04):
Frenzy, high profit.
Speaker 3 (13:06):
But at the end of the day, we have a
very different economic situation now for the country as a
whole than we did in the pandemic, which I think
is going to slowly but surely towards the end of
the year tamper demand. We don't have the federal stimulus
coming into the economy. We know that consumers are not
as financially stable as they were that and we know
(13:26):
that that used to be when you know, interest rates
were at crazy lows and now they're at crazy highs,
so on and so forth. You know, people aren't moving
as much, which usually when someone moves it it spurs
on a purchase of a vehicle. So there's so many
other things that are happening in the market that lead
us to believe that while demand might froth quite a
bit right now, it will likely taper off as we
get further into the year because of all the other
(13:48):
extenuating circumstances.
Speaker 1 (13:49):
Are you following it all? This sort of ongoing confusion
when it comes to vintage vehicles and cars that are
older than twenty five years, you know, it seemed like
they were going to get hit and then now there's
a carve out, but they're still going to get hit
by the parts tariffs. Do you have any clarity on
that to share?
Speaker 3 (14:09):
There's a great question. And I listened to you guys
talking about this the other day, so I love it. Yeah,
And I had just read yes, yes. So as much
as I have tried to steep my interest here in
tariff and myledge grow my knowledge, I have yet to
officially become a trade lawyer, but I play one on
TV and I can tell you that it is confusing.
(14:33):
Low and behold, we're going to have a whole new
well not news services industry. But let me tell you,
customs brokers, it's your day. Get out there, go for it, man.
But I do think there is some confusion because there
did seem to be an exemption.
Speaker 4 (14:46):
For vehicles that were over twenty five years.
Speaker 3 (14:49):
But then depending on what comes, what specificity there is
in the annex one, and what actually hits the federal register,
these are all things we never knew we would know
anything about. That will tell us a little bit more
information about which parts and specific will get hit with
tariffs at what level. So would they get hit by
the automotive terrafs this is March or twenty sixth if
they don't appear in that schedule, didn't they get hit
(15:11):
by the ten percent tariff that was put on all
countries and eventually bet the reciprocal tariff. It's anyone's guess
at this point. So this is why you see a
lot of analysis, you know, paralysis analysis.
Speaker 2 (15:23):
It seems impossible because because Hannah, if you if you
already don't know the origin of the components of a
new Cadillac, try figuring out the origin of the components
of a nineteen ninety seven six thirty five CSI like, right, Well, that's.
Speaker 1 (15:40):
My question is is this deliberately confusing and chaotic or
is it a question of no one actually knows what
they're doing? And I mean, is this completely deliberate or
is this a case of the people in charge making
the rules are sort of learning as they go and
(16:00):
figuring out as they go along.
Speaker 3 (16:02):
You know, it's a great question and what I would
actually say, and I think you guys would agree with this.
It is the massive uncovering of why we love automotive,
right but why you know, industry specific information is incredibly
important when you're thinking about doing blanket moves that might
impact multiple sectors, and the global automotive industry literally touches
(16:25):
nearly every sector of the economy. It is incredibly and
highly complex, and I don't believe it's as deliberate as
some people might think it is, although there could be
some deliberate components of it.
Speaker 4 (16:38):
I think it truly is.
Speaker 3 (16:39):
Even people in automotive who've been in it for thirty
five years are going, huh, actually, where does that come from?
Or how did that get into our supply chain? So
I think by its very nature it's incredibly complex, which
is why, you know, the more individuals that are out
there that have been doing this for a long time
and have that deep, deep knowledge of the supply chain
(17:00):
are going to come in real handy.
Speaker 4 (17:01):
To trying to dig this apart and figure out Wait
a minute.
Speaker 3 (17:05):
Because you hit you need a trade layer, you need
a customs broker, you need a supply to it expert.
You know, you're going to need several people at the
table to mince through all of the details because you're
likely to cross over a couple of different areas of
expertise to make a final declaration of like, aha, yes,
this part subject to sixteen point five percent effective terrorfreate right.
(17:28):
You know, I think it's gonna it's going to take
a lot of people to get there.
Speaker 1 (17:31):
Yeah, okay, good.
Speaker 2 (17:32):
I did I have I know you got to go,
but I have one last question. You don't just do
the business end of this. You also love cars. And
I know last time we talked to you, you were
on a press junket. So I was going to ask,
what's your favorite car of the currently assembled in the
(17:52):
US vehicles, Like, if you had to pick one that's
not assembled outside of this border, what would you choose?
And it's not like there's a broad variety to choose from, right,
because they're mostly trucks.
Speaker 3 (18:05):
Yeah, yeah, exactly fifty percent the chicken tags. That's something
we should all consider in looking at this right now.
Oh my goodness, you asked a tough one. Because I've
been so focused on what's imported. I don't know that
I've been paying a ton of attention to exactly what's
actually built in the US.
Speaker 2 (18:19):
Like, I mean, do you like the Rivan? Do you
like the Lucid? So you were going to ev No, no, no, no,
I wouldn't choose an EV. I would probably choose an
F one fifty also, or yeah, or a Tahoe. I
like the Tahoes and suburbans, you know, I.
Speaker 3 (18:35):
Mean Honda and Toyota both. Yeah, they both have a
ton of vehicles. I mean eighty percent of Toyotas are
assembled in the US.
Speaker 4 (18:42):
Same thing with Honda.
Speaker 2 (18:43):
There's Mustangs and Corvettes, right.
Speaker 4 (18:46):
There's Mustangs and corvettes. Yeah, I mean I could list
you fifty cars that are not assembled in the US
right now. You put me on the spot.
Speaker 2 (18:53):
Well, the Mustang is the only one of the only vs.
The vights you can get with a stick can be
listed on two fingers, right, Mustang GT and Cadillac CT
five V black wing. Right, and that'd probably my choice.
Speaker 4 (19:07):
Yeah, I'll go with your choice. I'll let you check
I'll let you.
Speaker 3 (19:10):
Pick it out for me about that, Thanks Aaron, I
trust your judgment, really appreciate your time.
Speaker 1 (19:15):
Thank you, Aaron. We all know my answer to that.
There's only one answer, and that's the Corvette.
Speaker 2 (19:20):
You know what, I might agree. I have this internal
dilemma or this internal debate all the time if I
were going to choose a sports car or like, would
I choose a Cadillac CT five V black Wing or
would I choose a Corvette? And there you could have
also a ZO six or ZL one.
Speaker 1 (19:43):
I don't know, thanks American specifically American branded HIC.
Speaker 2 (19:49):
I mean, if I had another one hundred and thirty
forty fifty grand to buy a sweet car, those two
would be way up there my short list, way up there,
And I don't know which one I would rather have.
You know, they're different. For you can't get a stick
with the Corvette. But do I care that much about
three pedals? Maybe not?
Speaker 1 (20:07):
Oh, I mean, I guess because the.
Speaker 2 (20:09):
Cadillac is horrible to look at it. It's very ugly, I know.
Speaker 1 (20:13):
But you could fit your kids in the back and.
Speaker 2 (20:15):
It has a supercharger. You know, you can't get a
new Corvette?
Speaker 1 (20:19):
Was the real question is what is more important to
you the engine or the transmission setup.
Speaker 2 (20:25):
It's a yeah, this is we can have a whole
show on the Corvette versus the Cadillac Cet.
Speaker 1 (20:33):
Everyone to email us with what you think is more important.
Speaker 2 (20:36):
I think, right, yeah, that would be a great email.
Our email is hot pursuit at Bloomberg dot net. Isn't
that right?
Speaker 1 (20:43):
Yeah, hot pursuit at Bloomberg dot net. I honestly would
like to hear what is more important to the born
and bred automotive file.
Speaker 2 (20:52):
I wonder who else has this internal debate? Probably a
lot of people, because those are two kind of halo vehicles,
right right. One of them is looks really cool and
has an amazing and complex interior, maybe not the best
sort of reputation. The other one looks awful but is
(21:15):
just mind blowing in terms of the powertrain, has a
stick shift option and a very elegant, I think interior.
Speaker 1 (21:24):
You know, I think about this a lot when it
comes to houses in a way, like would you rather
live in a house that looks very nondescript on the
outside but it's really cool on the inside, or something
that looks really beautiful on the outside. But it's not
especially charming on the inside.
Speaker 2 (21:39):
Definitely the former, Definitely the former. Yeah, you know, when
I started when I started doing when I started going
a lot to southern Spain, and because my wife is Spanish,
I do that now a lot. I noticed there's this style,
especially like in Sevilla Cordoba, Granada, and I think it's
from the Moors when they, you know, ruled they ruled
(22:00):
Spain for hundreds of years, and they have this thing
where on the outside they don't want to show their wealth,
so it just looks like, you know, a stucco building,
a wall, and then you go in and these gardens
are beautiful and the interiors are amazing and there's like
water fountains, and yes, I would rather have that for sure.
Speaker 1 (22:20):
Yeah, I'm with you on that. I'm really with you
on that, because you're when you're inside, that's your space.
You're inhabiting that.
Speaker 2 (22:26):
I mean, yeah, I need to make a quick correction,
speaking of email, before we get flooded with I said
nineteen ninety seven six point thirty five CSI and the
E twenty four six series. They stopped making it in
nineteen eighty nine.
Speaker 1 (22:42):
So okay, if anyone would have called you out on that.
I would have. I don't know the difference. I would
have been very surprised.
Speaker 2 (22:51):
I've been talking with some car blogger bros. A lot lately. Yeah,
this is one of those things that they in on instantaneously.
Speaker 1 (23:02):
You know, I will never Honestly, those guys are the
best fact checkers because you get I mean, you get
nothing past them. I will. I will never be able
to get anything past that type of reader, which is
a good thing, you know.
Speaker 2 (23:17):
Yeah, for sure, if I ever had written nineteen ninety
seven six thirty five CSI on opposite lock, I would
have been lambastard, you.
Speaker 1 (23:27):
Know, as a fool for such a careless error.
Speaker 2 (23:31):
What a great car though the twenty four to six
series No.
Speaker 1 (23:36):
I was with Cadillac this week for their Celestic.
Speaker 2 (23:40):
Ah cool, all right, so.
Speaker 1 (23:43):
You should talk about that because Cadillac is on the
brain this week.
Speaker 2 (23:46):
Let's do it. And you also have driven the Escalade IQ.
Speaker 1 (23:52):
Yes, and that review is going live on Monday. It'll
be in Business Week magazine and the print issue and
it will be online on Monday after this episode goes live.
So yeah, we should talk Cadillac and I drove the
Celestic yesterday all day all around lap up in the
mountains in Hollywood, in downtown.
Speaker 2 (24:12):
So wait, is this the like three hundred thousand dollars.
What's the story with the Celestic because it has got
a polarizing design.
Speaker 1 (24:20):
Which I applied polarizing and I might have I might
have figured it out. So this is the three hundred
and sixty thousand dollars all electric vehicle that it's a
two plus two car. The wheelbase is as long as
an escalade wheelbase, and it is, but it is as
(24:43):
tall as the CT five, so it's the same height
as a sedan. But it's wheelbase is as long as
an escalade. It has a hatchback rear and Cadillac is
not marketing this as a wagon, but I think with
the rear end, the rear end is problematic. It's difficult
(25:06):
to digest. And I really think their launch color of
bright orange, like a McLaren style orange, has really really
hurt that car because it's not flattering to the car
at all.
Speaker 2 (25:19):
Yeah, it doesn't look good enough.
Speaker 1 (25:20):
I did have the opportunity to see the car in
multiple different colors this week, and I also started sort
of framing the car as a wagon and that helps
me to understand the car better. You know, that car
in like sort of a smoky brown metallic is actually
(25:41):
rather beautiful, and I started imagining it sort of like
the Lamborghini Espata from the seventies, or a citron An
sm or even a Portion nine twenty eight. And when
you start talking about it in those terms, I can
kind of see it. I can see it. And I
don't think any of those cars was particularly critically or
(26:06):
popularly acclaimed when they debuted, but of course now as
vintage models, we really love them. So so yeah, Cadillac
is swinging for the fences, as it were, with this one.
They have been working on this for really for fifteen years,
with a lot of concepts, like if you remember the Eskala,
(26:28):
the Cadillac I think it was this, but.
Speaker 2 (26:29):
Not always as an electric, right, because that's where you
do when you say hybrid.
Speaker 1 (26:34):
Yes, so the last five years they committed, you know,
they committed to making this an electric vehicle five years
ago when it looked like everyone was going to be
electric by twenty twenty five. Obviously that hasn't happened. And
I did ask multiple of the engineers yesterday, could you
have pivoted two years ago, when you guys, when everyone
(26:55):
kind of realized hybrids are important and they might be
here to stay for quite a while, you have pivoted
to hybrid and they all said, yes, yes, but we
wanted to stick with the plan and stay the course
and you know, make a very audacious move. So this
is their audacious move. Matt, tell me your thoughts. I
can see you looking, I can see you sort of
(27:17):
studying this car. I'm dying to know what you think.
Speaker 2 (27:19):
So I'm not a fan of French cars, and I
think the comparison to Citoya is pretty spot on. Yeah,
for sure it. I like it much better when I
think of a nine to twenty eight. So I think
that's a really interesting way to frame it. I do
applaud any car maker that is willing to take such
(27:41):
a bold step, and it doesn't matter if I like
it or not. For example, I think the Tesla cyber
truck is horrendous, but I think it's so cool that
they actually made that. That was before you know, Elon
lost his mind. But uh, but for me, like three
(28:02):
hundred and sixty thousand dollars, When you say that and
then you follow with all electric I'm like tuning out
because I don't care anymore. You know, you were talking
with Aaron about retailers that go away from technology, right
or or your your take. I like on luxury, which
is that things have to be real wood, leather, and
(28:25):
I need to smell, you know, the gas. Like I
know that an electric powertrain is also real, But there's
something to me about the mechanical moving parts of an
internal combustion engine and the way it operates, probably because
of my you know, my age and my history, but
a lot of us have that. So yeah, I can't.
(28:47):
I can't think about luxury and electric in the same breath.
I could be wrong. I've never driven like the Rolls
roy Specter and you have so, and I understand why
that would be perfect for that magic carpet ride. Like effort,
this motivation totally, and so my whole thinking on this
could be changed when I drive, when I drive one
(29:08):
of these things, but I haven't yet.
Speaker 1 (29:10):
So I bet you, I bet you will have that opportunity.
I think Cadillac has had that car out and about
and they're going to have it more out now. I
totally agree. You know, Cadillac is going to make twenty
five of these in the first year. They've told me
they've sold twenty two of that twenty five, so they're
you know, they're not mass producing them. I'm sure they're
(29:31):
This is a lost leader, and it's about trying to
recapture some of what Cadillac used to mean. And we
did talk a lot about how to tap into I mean,
Cadillac used to be the standard of the world. As
their tagline was, it was this the world's standard for
luxury at one time. And I do think it's very
(29:55):
fascinating that now we're being forced to consider what does
American luxury mean when when we're thinking about tariffs affecting
a lot of our other wonderful luxury atoms that are
being imported. To your point about the electric vehicle, I agree,
you know, it's I don't think it's wrong that Rolls
(30:17):
Royce made an electric powertrain for the Specter that does
go at. Rolls Royce had already talked about making electric
vehicles one hundred years ago, so that seems very in
a way authentic Cadillac. It's a little bit different, I
can tell you. I'm I'm undecided. I know it's a
really bad time to be selling a really expensive EV
(30:39):
nobody wants them. I don't necessarily think it was wrong
they did it. I can't talk more about it because
I'm under a bargo, but I.
Speaker 2 (30:47):
Don't I'm sure. I'm sure that it drives amazingly well,
and I have driven, by the way. I was talking
to some listeners recently who who reiterated the idea that
I'm antiev which isn't true. I've driven electric vehicles that
I found to be rewarding and luxurious. I really enjoy
(31:08):
I really enjoy the Audi Etron, for example. I really
enjoy the Mercedes EQS and it's super luxurious, right, and
I think the electric power train fits. I love the BMW,
the electric BMW seven series, the I seven. That's a
very luxurious car, and it's very expensive, and I think
it's probably to some extent worth it. But I and
(31:32):
I'm and I'm sure that the Cadillac Escalade IQ is
going to be my favorite electric vehicle of all time,
because you know, I love the pickup trucks, the electric
pickup trucks like the Sierra EV, and I love the
GMC Hummer. I feel like I feel like Cadillac IQ
is the perfect vehicle for that because it's not as
sort of doesn't have the silly image as much of
(31:54):
as the Hummer does. And it doesn't I won't feel
like I'm overpaying, which I would with like any Tron
or else. Yeah, you know, two hundred kilot hour battery
does a lot to win my money, but I don't
know for me. The I mean, if it's really luxury,
like four hundred thousand dollars, then you.
Speaker 1 (32:16):
Know, a big, a big selling point to this vehicle.
And really what they're leveraging is the fact that each
one will be made tailored to the customer specifications. There's
no standard entry level Celestic. Each one is a made
to order thing that you you will you know, pick
(32:37):
the colors. It's not it's not extensive bespoken, but it's
it's pretty good, you know. So if you want, if
you already owned a Rolls Royce and a Bentley and
an Aston Martin and you thought, oh, it'll be really
fun to have an American vehicle that I can have,
you can know, I can tell a story with the
colors and the trims and all of that. You know,
(32:59):
it's it's a bit of a high price point vehicle,
but yeah, I mean they don't have to sell that
many of them. I had dinner with Michael Simcoe, who's
the head designer, the other night, and he still believes
that electric vehicles are the future, even though nobody wants
(33:22):
to buy them.
Speaker 2 (33:23):
Now, I'm sure he's not wrong.
Speaker 1 (33:25):
He really doubled down and said, hey, eventually, this is
where we're going, no question about it. So we're staying
the course.
Speaker 2 (33:34):
It's for sure. It's true as a utility, you know,
as a as an appliance, it makes total sense. But
that's not what this is supposed to be. Right. In
any case, I think a lot of it has to
do with my own biases. I'm still confers founded by
(34:01):
the effect these tariffs are going to have on the
ultimate driving machine, on the nine to eleven on Ducati motorcycles, Like,
what's going to happen? I just I look at this.
When I saw this, Monroney really really drove it home
for me and for those who don't know. Car makers
(34:22):
put out these labels that are I think regulated by
by NITZA, and they have to include certain pieces of
information like vehicle content. So again the M two it
says US Canadian parts content six percent. Major source of
foreign parts Germany twenty seven percent, Mexico fifteen percent, Final
(34:44):
vehicle assembly San Luis, Potosi, Mexico Engine, Austria Transmission, Germany.
This car is not getting sold in the US without
massive tariffs. And I think, you know, BMW obviously produces
so much here, and I think I think BMW is
one of the biggest exporters in America. They export double
(35:04):
digit billions of dollars for their products. But those are
all X series, so that it's X three x five
x seven, you know, the M two, or that any
two series three series, which ironically is what they started
producing here in the US and the seventies. But none
of that's made here. So what are they gonna do?
(35:26):
And I think of my beloved Ducoatti motorcycles, you know,
I mean, they're already pretty pricey. I can put together
a multi strata on the configurator and get well into
thirty thousand dollars. And if and if it's gonna be
tariffed at twenty five percent, which I'm not positive about,
I don't know how motorcycles will be handled. But it's,
(35:48):
you know, all of a sudden, it's it's gonna cost
closer to forty right.
Speaker 1 (35:53):
So yeah, I don't it. Do you think that now?
I mean, it would seem natural that now a car
like a BMW would be even more of a status symbol.
I mean it, five years from now, if these tariffs
stick and you know, everything continues down this path, five
(36:14):
or ten years from now, hypothetically those cars will be
considered extremely like signifiers of status.
Speaker 2 (36:22):
Yeah, but like the point of the three series is
for uh, you know, I know someone who's just made
it to middle management, or you know, a young person
who's just started on Wall Street, or or someone who
saved money and cares about driving, like I imagine that BMW
if this kind of thing, if this tariff sticks, I
(36:42):
imagine they'll have to assemble them at Spartanberg again. And
for a company like I don't know, Ducati is Italian
is in its DNA right, so they'll they'll never be
able to make a Panagali here, but I imagine they
might at least consider, you know, for the dirt bikes
(37:05):
they're making off road vehicles now, to assemble those somewhere
in the US.
Speaker 1 (37:09):
You know, are you getting a sense just with the
people that you're talking about that some of the people
who may have voted for Trump because they thought that
it would help their bank accounts are now extremely frustrated
and disappointed. You know, besides anyone in the headlines, just
normal people that they kind of thought, well, maybe I'll
(37:31):
vote for him because it's going to do this and
this and this for my portfolio or my business.
Speaker 2 (37:36):
But now it's like, especially the ladder, especially the ladder,
I hear from so many people. We get a ton
of small business owners writing in when I do my
TV show every morning, saying there's no way for me
to move my supply chain around. Basically, you know, I'm
(37:56):
not even for Apple, it'll be impossible. But for these
big companies, they can at least pretend to move the
supply chain or make you know, multi billion dollar commitments
to the Trump administration that will last as long as
he does in office, and then you know, keep making
everything in China. But these smaller businesses, they can't do
those things. So I got an email this week from
(38:17):
someone who makes light fixtures in the Southwest. She designs
them herself. She has a brick and mortar store front.
You know, she employs Americans, but you know, when they're made,
they're put together, they're assembled in Asia. I got a
message from a guy who runs a chocolate confectioner in
(38:39):
New Jersey and they, you know, they make the product
in New Jersey, but the ingredients come from Canada and Mexico,
so they can't get around those twenty five percent tariffs.
And you know, these are people who voted for Donald
Trump because they agree read that maybe cars should be
(39:01):
built in the US, but didn't expect it to hit
their own business's bottom lines. And now they can't hire employees,
maybe they have to let some go, they can't reinvest.
But for the car makers, it's just an absolute nightmare.
I mean, if you're GM or Ford, I guess you
can move some production, but you're not going to build
a new plant that takes like minimum three or four years,
(39:25):
probably five to seven. And by the time you have
done that, someone completely different as an office, I mean
needs stability and long term to do long term planning completely.
Speaker 1 (39:37):
You know, talking with the folks at Cadillac again this week,
their big thing is we just want a target that
doesn't move whatever it is. We just need something that
isn't going to change that we're worried about being kicked
down the road a bit or whatever, because then we
can plan for it. But at the moment, it's impossible
(39:58):
to make any plans because everything is so volatile. So
Cadillac is you know, even with regulations, emission standards all that.
I think if they know the target, they will do
their best to hit it. They'll make it work. They
just need to know that it's going to remain stationary.
Speaker 2 (40:16):
Yeah, I think they're probably not going to get a
lot of stability in this with this administration, and I'm
not that's not a value judgment. I don't think that
that's what Trump administration is aiming for. Stability is not
the name of the game for them. I also think,
like I appreciate products made in the US. I guess
we've talked about this before, Like I I will spend
(40:37):
extra money to buy something made in America.
Speaker 4 (40:40):
But.
Speaker 2 (40:42):
If it's at these levels, right at sixty seventy eighty
thousand dollars, if you're talking about raising those prices ten
or twenty percent, I'm just out of the game. I
can't afford to, especially since I have to buy two
cars right for my family, and can.
Speaker 1 (40:58):
Speaking of can I ask how your motorcycle viewing went
last weekend? Do you want to give us another so Harley?
You went to look at a Harley?
Speaker 2 (41:06):
No, no, I I'm doing that this weekend. I'm going to
Danbury on Saturday to ride a road King and a
Fat Bob. But this last week I've been riding this
Buell Supercruiser and I don't think I've ridden something that's
as unique and exciting and cool in the motorcycle space
(41:28):
for years. For years.
Speaker 1 (41:32):
That's quite a statement.
Speaker 2 (41:33):
It's I mean, I don't know if it's people say
it's vapor ware, like they don't think it's ever going
to really come to market. But this week on my show,
this coming week on Wednesday, I'm going to interview the CEO,
Bill Melvin, who bought the manufacturer, bought the patents, bought
the the name from Eric Buell, and he claims to
(41:58):
have taken an over six one thousand pre orders for
this Buele Supercruiser. And that's you know, people put down
one thousand dollars a piece for a pre order and
that they're going to start making them in the fall,
like I'm very likely to put down my own deposit,
and I kind of hope that I won't get it
until like late in twenty twenty six, when I can
(42:19):
afford to buy it. But that's the one thing that
concerns me is the price. It's pretty high. Twenty six thousand.
I think it's even twenty six nine nine nine, so
twenty seven thousand dollars for a motorcycle that is just
a V twin in a tubular frame with a bule
swim arm.
Speaker 1 (42:37):
Where does that price come from? How do they arrive
at that figure?
Speaker 2 (42:40):
I don't know. That's a good question. I will ask
Bill when I have them on Ask the show on Wednesday.
Speaker 1 (42:46):
And speaking of I'm driving this Lotus Electree suv this
week and it's interesting. It's an electric suv. The pricing
starts at two hundred and thirty thousand dollars and that
seems insane. That's a lot, truly insane. And I'm going
(43:08):
to ask them as I start writing the review, which
I haven't yet, but can you walk me through how
you arrive at this price point? And automakers hate to
do that because that's, you know, their proprietary business advantage information,
but I don't. I clearly am not I'm not understanding
and not seeing where that price comes from in the vehicle,
(43:31):
you know what I mean. Yeah, so I'd be curious
to hear the Buele folks.
Speaker 2 (43:35):
I mean for them, for them, they're starting up, right,
So this is a design that Rolling Sands did for them.
I'm sure he doesn't come cheap.
Speaker 1 (43:44):
And Sands did that.
Speaker 2 (43:45):
Yeah, he designed it and they're building it, you know,
in house in Detroit, so they're there. They have to
put up a factory staff it, you know, get the
parts and they're mostly American sourced parts. So I think
I can't remember the number now, but it's over sixty
percent of the components are going to be American.
Speaker 1 (44:04):
They're the most American.
Speaker 2 (44:07):
They do claim that the most American made brand. I
don't know. I haven't asked Harley Davidson about the claim that.
There was an engineer at Buel who told me that
Harley Mates gets thirty to forty percent of their parts
are American sourced. That sounds low. And by the way,
you know Harley's CEO, Yolkin Sites, who has been the
(44:29):
source of a lot of problems I would think for
the brand, is stepping down. So he's done just that.
Speaker 1 (44:34):
Yeah, how I are you surprised?
Speaker 2 (44:37):
You think that's actually not at all surprised, because I mean,
look at the stock chart. It just goes from the
upper left hand corner to the lower right hand corner, down, down, down.
I think one of the board members this week actually
quit because he wanted SITES to leave immediately, and SITES
(44:58):
is staying on until they find its accessor.
Speaker 1 (45:01):
So we don't know who's coming next.
Speaker 2 (45:03):
We don't know who's coming next. But I think at
Harley Davidson they had the same problem as a lot,
you know, most motorcycle makers, and also that Buele is
going to face, which is that they just don't sell
products that are affordable or accessible to the kind of
people that start riding bikes. Who rides bikes like you
start when you're a teen, right, nobody picks it up
(45:23):
in his forties. So and you can't afford to pay
twenty seven thousand dollars for a road glide when you're
you know, a seventeen year old or when you're you know,
twenty one, you know, working on the factory floor, like
you need to buy something that costs multiple thousand dollars
and only royal Endfield is really doing that right now,
(45:45):
or maybe.
Speaker 1 (45:46):
Even copies are expensive and those are you know.
Speaker 2 (45:49):
Accessible supposed to be yeah to a.
Speaker 1 (45:53):
Younger rider or a smaller rider or a newer rider
or any of the above.
Speaker 2 (45:57):
Yeah. So I mean, I think the CEO previous to Sites,
matt levitych was pushing like a more inexpensive kind of
mobility oriented product and Sites came in and was like, no,
we're doing like the big expensive stuff or you know,
relatively expensive stuff. And also we're gonna do like major
(46:19):
DEI and ESG, which doesn't gel with like the Harley Faithful, right,
and we're gonna start producing stuff like in India. That's
not what the Harley Davidson Forum likes to hear.
Speaker 1 (46:32):
So that's too bad. I mean that that does seem
to be a fundamental problem that any company would be
known for being not diverse.
Speaker 2 (46:43):
It's not I don't know if it's about not diverse,
but it's about.
Speaker 1 (46:47):
I'm putting that in a very polite way. I mean,
to me, that's just kind of unforgivable.
Speaker 2 (46:53):
I don't think that they're I don't think that that's
the case though, because they are I think a very
diverse in terms of like ethnicity.
Speaker 1 (47:03):
Oh, I'm not talking about reality. I'm talking about the perception,
the reputation and the perception. Yes, we all have friends
who are people of color who ride Harley's. I can
list you off several, but that is not the brand reputation.
The brand reputation is like, you know, older white dudes.
Speaker 2 (47:26):
True, But I think the problem wasn't that they were
aiming for diversity in terms of their customer base. I
think the problem was that the probably we shouldn't even
talk about this stuff on that.
Speaker 1 (47:35):
I mean, I can, I can really dive into this.
Speaker 2 (47:38):
Let's not. Let's not, let's not since.
Speaker 1 (47:40):
We are not a political podcast.
Speaker 2 (47:43):
In fact, let's wrap it up. Sebastian's like, let's wrap
it up.
Speaker 1 (47:47):
The producers like.
Speaker 2 (47:51):
Is there anything you got coming up next week?
Speaker 4 (47:53):
Uh?
Speaker 1 (47:54):
You know what, Well, the Long Beach Grand Prix is
this weekend. So that's that's that's big for car lovers
in LA. I actually think I'm going to a British
car show on Saturday, which is out sort of toward
the valley and it's just old British cars. It's sleepy,
it's very cool. It's not about influencers or content it's
(48:17):
just a bunch of old Rolls Royce owners.
Speaker 2 (48:20):
Uh. Well, I'm glad there is diversity in that because
they're foreign.
Speaker 1 (48:23):
Right, what about you, I what do you do?
Speaker 2 (48:26):
Well? I, like I said, I'm gonna go ride this Harley,
these Harley Davidson's with al at the Connecticut the Danbury,
Connecticut dealership, and I'm gonna be ringing out this M
two on the way up and the way back.
Speaker 1 (48:39):
Well, that's such a fun car.
Speaker 2 (48:41):
I mean, it's so much fun. It's it's just classic.
It is classic, crazy fun. I still think the price
is a little high, you know, eighty two and a
half grand. That's before tax, so you know, out the door,
it's like ninety thousand dollars for an M two. That's
to me, that's a little crazy. But I guess this
(49:02):
is the cheapest you'll get it, you know. Yeah, right,
So yeah, I'm looking forward to talking to you again
next week at the same time, the same place.
Speaker 1 (49:13):
And you know what, I'm going to be in New
York next week.
Speaker 2 (49:15):
Oh a different places. Cool.
Speaker 1 (49:16):
I will see you live and live and in living color.
Speaker 2 (49:19):
Right on, all right, I'll introduce you to Bill Melvin
while you're here, as well wonderful.
Speaker 1 (49:24):
I'm Matt Miller, I'm Hannah Elliott, and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio news. I'm Matt Miller and
I'm Hannah Elliott, and this is hot Pursuit.
Speaker 2 (00:20):
All right, we are tariff tariff tariff today, right on repeat.
Speaker 1 (00:26):
Yeah, I mean sorry, sorry, not sorry, we're talking about tariffs.
Speaker 2 (00:30):
Well you have to talk about because it's going to
change everything. I mean, it's completely reorganizing a century old
system of global trade. So and cars are such a
big part of that.
Speaker 1 (00:42):
This is this is like the entry of a bullet,
where the entry point is smaller and then the destruction
or the chaos is as the bullet moves through. And
I'm not a ballistic expert, but you know, I think
the ramifications of that are going to be massive. Obviously
(01:03):
you're smiling, you're are you laughing at my No?
Speaker 2 (01:07):
No, I love it. First of all, I do love
your comparison. I love fallistics.
Speaker 1 (01:12):
But yeah, I think you know the fallout is going
to be increasingly massive.
Speaker 2 (01:16):
Well, and we've already seen like crazy fallout. My day
job is covering the markets over the opening bell every
day from nine to eleven on Bloomberg Television or bloomber
dot com. And you know we focus in on single
stock stories and on on industries, and I'm always kind
of fighting with people who want to cover banks, and
(01:38):
people want to cover retail, and people who want to
cover energy, and people want to cover industrials, you know,
but I care about cars. And the fun thing for
me about this tear off chaos, beyond the fact that
you know, chaos makes things more interesting, is everybody wants
to talk about automakers. Like all of my producers like, yes,
now's the time to focus on cars because there's such
(02:00):
a huge part of this story.
Speaker 1 (02:02):
Yeah, I know, it's it's this. I've actually always known.
I will cop to that because cars influence everything, and
you know, most people don't think about cars on a
day to day daily basis, but they are so woven
into the fat fabric of our culture. You know, once
you start messing with the car world, it's going to
(02:23):
have very wide effects. So I, in a weird way,
love to hear that all of your people on your
side want to talk.
Speaker 2 (02:31):
Cars well, and we have the perfect guest to talk
about it today, Eric Aaron Keating from Cox Automotive, which
has done in such an incredible job researching and putting
out intel on the business side of the industry. Plus
she's a car lover herself. She goes and test drives
new cars and has opinions on them, just like you
(02:51):
and I do. And they own Mannheim, which does the auctions,
the wholesale auctions for dealerships.
Speaker 1 (03:00):
Yeah, she's one of my favorite people to talk to.
And she's just it's funny. She had a planned scheduled
vacation this week, so talk about timing for her. She's
just I don't think she got much vacation, but I'm
so glad she could join us.
Speaker 2 (03:13):
All right, let's get straight into it. This is Aaron
Keating from Cox Automotive. I just have a couple of
personally specific questions. I've seen Cox doing great coverage on
a number of different issues. One of them is affordable cars,
Like it seems as if these tariffs, especially if there
were so called reciprocal tariffs, go back into place in
(03:36):
ninety days, there won't be any affordable cars for Americans
to buy in this market.
Speaker 3 (03:42):
So you know what I want to just emphasize here,
and this is and we were just talking about this
as a team this morning. The costs that we're seeing
at are coming in are costs and cost only So
when we're looking at a tariff, we're saying the automaker
or the importer of record, which is typically the automaker,
is going to get hit with this twenty five twenty
seven and a half percent tiara. How that shows up
(04:03):
for the customer completely different story. And honestly, I'm not
sure how quickly automakers are going to jump in to
jack up the prices on individual models. In fact, I
would bet almost all of them will look across their
entire portfolio, and you know, the vehicles that you guys
are a lot of the times focused on luxury are
going to get the bump because profitability is there to
(04:26):
be able to absorb some of that TARA so that
they can keep competitive at the entry level models and
or just the vehicles that are available for lower price.
So just because a thirty thousand dollars vehicle is going
to get hit with twenty five percent, say like a
Chevy Tracks, which we know is completely brought in from Korea,
I can't imagine, at least in my head, how Chevy says, oh,
(04:48):
let's let's make that thirty thousand dollars car bear the
hit of that twenty seven and a half percent, right
or twenty five percent. I think they don't have the
original MFM, But so I think that that's that's what
everyone kind of has to keep in mind, is that
the automaker has a lot of different levers to pull
to figure out how does this ultimately impact the consumer?
Prices will rise naturally demand and supply, and the and
(05:11):
the pull a head buying that we have right now,
and the fact that inventory might get impacted because OEMs
might pull back on producing as much until they can
figure out how they're going to deal with the economic
challenge of this. But it's not apples to Apple's tariff
price increase.
Speaker 1 (05:28):
All right, interesting, and that would that that would be
dependent on the automaker too. Like sare to say, some
automakers believe that their customers will be tolerant to a
slightly and some may think, no, we're not, We're not
going to do that.
Speaker 3 (05:42):
I think it's going to vary across automakers. I think
it's going to vary across segments models, you know, I
think maybe even down to regional areas, because again, you're
going to get impacted by what the dealer is seeing
on the in the market level conditions. Because MSRP is
is one way the price changes right. Another way the
price changes is list price what gets put out to
(06:04):
the consumer.
Speaker 1 (06:06):
How much is that also related to the breakdown within
each specific vehicle of which percentage of components are sourced
or made in the US anywhere else? And I asked
I of LA like yesterday and that's obviously an American brand,
And they're not really able to answer right now.
Speaker 2 (06:26):
They don't put that on the Monroney because yeah, and
the Maroney.
Speaker 3 (06:31):
What it shows you, Yeah, so the Monroney typically will
show you assembly. Remember for Monroney purposes. According to Nitza,
US and Canada are combined, even though we know the
terror situation is Canada MASA right, well not all of
North America, right, because.
Speaker 4 (06:44):
Mexico is not.
Speaker 3 (06:45):
So it's when it says it's US, it's you'll see
US slash Canada. So it throws those two into the
bubble together, even though we know tariffs is actually being
addressed as Canada Mexico US. So that's a little bit
interesting and difficult for people to parse through the data.
Second of all, it will matter based on okay, So
there's three ways basically at least that we can see
that the tariffs are going to get put onto the vehicles. One,
(07:08):
you completely import the assembled vehicle, you pay the full
bear of the tariff from any other country outside.
Speaker 4 (07:14):
Of North America.
Speaker 3 (07:15):
If you import Canada and Mexico, you get hit with
the twenty five percent, but they'll give you credit for
US content, And we don't yet know how they're going
to certify which pieces really consist of US content. And
then the third way that they're going to teariff you
is if you're US assembled, but any componentry parts, steel,
an aluminum, anything else that's coming into the country that's
(07:35):
helping you build that vehicle that will have been tariffed
on its way into assembly.
Speaker 2 (07:39):
Does that make sense, yes, But it's worse than that.
According to Bloomberg. For example, an Audi Q five assembled
in Mexico gets hit with a twenty five percent tariff
for being a car coming in from outside the US
YEP also a twenty five percent tariff for being a
non USMCA compliant Mexican product coming from Mexico, and a
(08:05):
two and a half percent surcharge for not being US
MCA compliant. If that makes sense, So total tariffs for
the AUDIQ five coming in from wherever San Luis Bispo
is going to be fifty two and a half percent.
Speaker 3 (08:17):
Yes, so you're correct the auto tariffs and I haven't
looked specifically into that car, but you're correct in the stacking.
So when March twenty six came up, Trump indicated, Hey,
these auto tariffs are going to be stacked on top
of existing tariffs that I've already been put into place,
which included the February first IEPA authorization of twenty five
percent on Canada, Mexico and the ten percent on China,
(08:39):
which the ten percent went to twenty percent, and at
the time they gave the USMCA compliant exemption. So if
a car is not USMCA compliant, you're correct they were
subjected to that twenty five percent under the IEBA order
February first, and that would get stacked on top of
the twenty five percent that was then issued on March
twenty six.
Speaker 4 (08:58):
You're correct on that.
Speaker 2 (08:59):
And by the way, is our understanding and do they
have to? So I'm driving a BMWM two right now,
test driving it, and it's amazing not currently no, but
you have that yes, I'm not actually yeah, but so
I have it and twind in his hair and yeah,
my hair is flying in the wind.
Speaker 4 (09:16):
No.
Speaker 2 (09:17):
So on the Monroney it says parts content information and
then it lists major source of foreign parts Germany twenty
seven percent, Mexico fifteen percent assembled in Mexico, and then
US Canada parts content six percent.
Speaker 3 (09:36):
Yes, you're right, and the Monroney label. So yes, I
started to say there and then I and I jump
to another fact. The Monroney label does. Yes, it will
typically tell you where the engineer transmission is from, what
the other percentage of content is, and then what's available
in the US, and then where it was assembled. I
have seen varying, so admittedly I haven't done too deep
(09:58):
into what is the like what does every manufacturer have
to put on them, but most of them do have those.
Speaker 4 (10:04):
Four or five different outlines exactly just helpful for consumers.
Speaker 2 (10:08):
This engine was put together in Austria, the transmission was
built in Germany. The whole thing prices out at eighty
two five, which is already kind of steep for an
M two. If you think about it, like when you
were a kid that was that would have been an
M three and it would have been like forty five
(10:28):
like Max so sure. And now if if they're not
USMCA compliant, this M two is going to sell in
the US, assuming BMW doesn't eat the costs for one
hundred and like at least one hundred and thirty thousand dollars,
that's nuts.
Speaker 3 (10:46):
In theory, Well it would cost it would cost them
manufacturer that much.
Speaker 4 (10:49):
Yes, so correct whether.
Speaker 3 (10:51):
They end up you know, fully giving that to the client.
And we know BMW has already said, hey, we're gonna
we're gonna eat the cost for now, I think through
the end of May, is it? And that, you know,
likely is an exercise of the automaker to say, what
does this.
Speaker 4 (11:07):
Look like moving forward? Where do we put the costs?
Speaker 3 (11:10):
How do we afford this so that we don't make
the end to completely irrelevant?
Speaker 4 (11:14):
Or do we get rid of the end too?
Speaker 3 (11:16):
Because you know what, no matter which way we slice this,
we're not going to be able to make this at
an affordable price, and therefore we're gonna.
Speaker 4 (11:22):
Get rid of the model. I mean that's certainly possible
as well.
Speaker 1 (11:25):
I know, Matt, have you had anyone call and ask
to buyer in too? Because I'm thinking the idea that
dealerships are calling people yeah, can we buy.
Speaker 2 (11:35):
Well, this is something else that I wanted to ask about.
Cox has been doing awesome coverage of the Mannheim Well,
I think you own the Manheim auctions man, Yes, we do. Yeah,
but I have heard that we're already seeing like nutsoe
prices at these auctions. Have you heard any you know,
anecdotal evidence that dealers are paying sure high prices.
Speaker 4 (11:57):
Sure?
Speaker 3 (11:57):
Yeah, No, we've been seeing increased sales conversion. Jeremy rob
one of my colleagues, did his monthly movie call on
Monday with some great you know figures around what we're
seeing in the used car market. But absolutely, we're starting
to see the sales conversion rate go up, We're.
Speaker 4 (12:14):
Starting to see the.
Speaker 3 (12:15):
Wholesale costs go up, and we're starting to see listing
prices go up.
Speaker 4 (12:20):
So one hundred percent.
Speaker 3 (12:22):
You can tell the dealers are saying, you know, we
got to stack up and make sure that we have
good supply of new and used.
Speaker 2 (12:27):
So I wonderful'll be back in the situation. When I
bought my Silverado in twenty twenty two, I went to
the Chevy dealer to collect the truck when it was
finally delivered from Mexico, where it was assembled, and they
had an identical truck on the lot that was used
with like ten thousand miles for ten thousand dollars more
(12:47):
than I was paying MSRP. Are we going to start
seeing that again?
Speaker 4 (12:51):
We might. I mean, I think we're going to see
a lot of the same.
Speaker 3 (12:54):
Things that we thought about as part for.
Speaker 4 (12:58):
The course during Cold cod.
Speaker 3 (13:00):
The difference is going to be that we're probably going
to be in a period of high.
Speaker 4 (13:04):
Frenzy, high profit.
Speaker 3 (13:06):
But at the end of the day, we have a
very different economic situation now for the country as a
whole than we did in the pandemic, which I think
is going to slowly but surely towards the end of
the year tamper demand. We don't have the federal stimulus
coming into the economy. We know that consumers are not
as financially stable as they were that and we know
(13:26):
that that used to be when you know, interest rates
were at crazy lows and now they're at crazy highs,
so on and so forth. You know, people aren't moving
as much, which usually when someone moves it it spurs
on a purchase of a vehicle. So there's so many
other things that are happening in the market that lead
us to believe that while demand might froth quite a
bit right now, it will likely taper off as we
get further into the year because of all the other
(13:48):
extenuating circumstances.
Speaker 1 (13:49):
Are you following it all? This sort of ongoing confusion
when it comes to vintage vehicles and cars that are
older than twenty five years, you know, it seemed like
they were going to get hit and then now there's
a carve out, but they're still going to get hit
by the parts tariffs. Do you have any clarity on
that to share?
Speaker 3 (14:09):
There's a great question. And I listened to you guys
talking about this the other day, so I love it. Yeah,
And I had just read yes, yes. So as much
as I have tried to steep my interest here in
tariff and myledge grow my knowledge, I have yet to
officially become a trade lawyer, but I play one on
TV and I can tell you that it is confusing.
(14:33):
Low and behold, we're going to have a whole new
well not news services industry. But let me tell you,
customs brokers, it's your day. Get out there, go for it, man.
But I do think there is some confusion because there
did seem to be an exemption.
Speaker 4 (14:46):
For vehicles that were over twenty five years.
Speaker 3 (14:49):
But then depending on what comes, what specificity there is
in the annex one, and what actually hits the federal register,
these are all things we never knew we would know
anything about. That will tell us a little bit more
information about which parts and specific will get hit with
tariffs at what level. So would they get hit by
the automotive terrafs this is March or twenty sixth if
they don't appear in that schedule, didn't they get hit
(15:11):
by the ten percent tariff that was put on all
countries and eventually bet the reciprocal tariff. It's anyone's guess
at this point. So this is why you see a
lot of analysis, you know, paralysis analysis.
Speaker 2 (15:23):
It seems impossible because because Hannah, if you if you
already don't know the origin of the components of a
new Cadillac, try figuring out the origin of the components
of a nineteen ninety seven six thirty five CSI like, right, Well, that's.
Speaker 1 (15:40):
My question is is this deliberately confusing and chaotic or
is it a question of no one actually knows what
they're doing? And I mean, is this completely deliberate or
is this a case of the people in charge making
the rules are sort of learning as they go and
(16:00):
figuring out as they go along.
Speaker 3 (16:02):
You know, it's a great question and what I would
actually say, and I think you guys would agree with this.
It is the massive uncovering of why we love automotive,
right but why you know, industry specific information is incredibly
important when you're thinking about doing blanket moves that might
impact multiple sectors, and the global automotive industry literally touches
(16:25):
nearly every sector of the economy. It is incredibly and
highly complex, and I don't believe it's as deliberate as
some people might think it is, although there could be
some deliberate components of it.
Speaker 4 (16:38):
I think it truly is.
Speaker 3 (16:39):
Even people in automotive who've been in it for thirty
five years are going, huh, actually, where does that come from?
Or how did that get into our supply chain? So
I think by its very nature it's incredibly complex, which
is why, you know, the more individuals that are out
there that have been doing this for a long time
and have that deep, deep knowledge of the supply chain
(17:00):
are going to come in real handy.
Speaker 4 (17:01):
To trying to dig this apart and figure out Wait
a minute.
Speaker 3 (17:05):
Because you hit you need a trade layer, you need
a customs broker, you need a supply to it expert.
You know, you're going to need several people at the
table to mince through all of the details because you're
likely to cross over a couple of different areas of
expertise to make a final declaration of like, aha, yes,
this part subject to sixteen point five percent effective terrorfreate right.
(17:28):
You know, I think it's gonna it's going to take
a lot of people to get there.
Speaker 1 (17:31):
Yeah, okay, good.
Speaker 2 (17:32):
I did I have I know you got to go,
but I have one last question. You don't just do
the business end of this. You also love cars. And
I know last time we talked to you, you were
on a press junket. So I was going to ask,
what's your favorite car of the currently assembled in the
(17:52):
US vehicles, Like, if you had to pick one that's
not assembled outside of this border, what would you choose?
And it's not like there's a broad variety to choose from, right,
because they're mostly trucks.
Speaker 3 (18:05):
Yeah, yeah, exactly fifty percent the chicken tags. That's something
we should all consider in looking at this right now.
Oh my goodness, you asked a tough one. Because I've
been so focused on what's imported. I don't know that
I've been paying a ton of attention to exactly what's
actually built in the US.
Speaker 2 (18:19):
Like, I mean, do you like the Rivan? Do you
like the Lucid? So you were going to ev No, no, no, no,
I wouldn't choose an EV. I would probably choose an
F one fifty also, or yeah, or a Tahoe. I
like the Tahoes and suburbans, you know, I.
Speaker 3 (18:35):
Mean Honda and Toyota both. Yeah, they both have a
ton of vehicles. I mean eighty percent of Toyotas are
assembled in the US.
Speaker 4 (18:42):
Same thing with Honda.
Speaker 2 (18:43):
There's Mustangs and Corvettes, right.
Speaker 4 (18:46):
There's Mustangs and corvettes. Yeah, I mean I could list
you fifty cars that are not assembled in the US
right now. You put me on the spot.
Speaker 2 (18:53):
Well, the Mustang is the only one of the only vs.
The vights you can get with a stick can be
listed on two fingers, right, Mustang GT and Cadillac CT
five V black wing. Right, and that'd probably my choice.
Speaker 4 (19:07):
Yeah, I'll go with your choice. I'll let you check
I'll let you.
Speaker 3 (19:10):
Pick it out for me about that, Thanks Aaron, I
trust your judgment, really appreciate your time.
Speaker 1 (19:15):
Thank you, Aaron. We all know my answer to that.
There's only one answer, and that's the Corvette.
Speaker 2 (19:20):
You know what, I might agree. I have this internal
dilemma or this internal debate all the time if I
were going to choose a sports car or like, would
I choose a Cadillac CT five V black Wing or
would I choose a Corvette? And there you could have
also a ZO six or ZL one.
Speaker 1 (19:43):
I don't know, thanks American specifically American branded HIC.
Speaker 2 (19:49):
I mean, if I had another one hundred and thirty
forty fifty grand to buy a sweet car, those two
would be way up there my short list, way up there,
And I don't know which one I would rather have.
You know, they're different. For you can't get a stick
with the Corvette. But do I care that much about
three pedals? Maybe not?
Speaker 1 (20:07):
Oh, I mean, I guess because the.
Speaker 2 (20:09):
Cadillac is horrible to look at it. It's very ugly, I know.
Speaker 1 (20:13):
But you could fit your kids in the back and.
Speaker 2 (20:15):
It has a supercharger. You know, you can't get a
new Corvette?
Speaker 1 (20:19):
Was the real question is what is more important to
you the engine or the transmission setup.
Speaker 2 (20:25):
It's a yeah, this is we can have a whole
show on the Corvette versus the Cadillac Cet.
Speaker 1 (20:33):
Everyone to email us with what you think is more important.
Speaker 2 (20:36):
I think, right, yeah, that would be a great email.
Our email is hot pursuit at Bloomberg dot net. Isn't
that right?
Speaker 1 (20:43):
Yeah, hot pursuit at Bloomberg dot net. I honestly would
like to hear what is more important to the born
and bred automotive file.
Speaker 2 (20:52):
I wonder who else has this internal debate? Probably a
lot of people, because those are two kind of halo vehicles,
right right. One of them is looks really cool and
has an amazing and complex interior, maybe not the best
sort of reputation. The other one looks awful but is
(21:15):
just mind blowing in terms of the powertrain, has a
stick shift option and a very elegant, I think interior.
Speaker 1 (21:24):
You know, I think about this a lot when it
comes to houses in a way, like would you rather
live in a house that looks very nondescript on the
outside but it's really cool on the inside, or something
that looks really beautiful on the outside. But it's not
especially charming on the inside.
Speaker 2 (21:39):
Definitely the former, Definitely the former. Yeah, you know, when
I started when I started doing when I started going
a lot to southern Spain, and because my wife is Spanish,
I do that now a lot. I noticed there's this style,
especially like in Sevilla Cordoba, Granada, and I think it's
from the Moors when they, you know, ruled they ruled
(22:00):
Spain for hundreds of years, and they have this thing
where on the outside they don't want to show their wealth,
so it just looks like, you know, a stucco building,
a wall, and then you go in and these gardens
are beautiful and the interiors are amazing and there's like
water fountains, and yes, I would rather have that for sure.
Speaker 1 (22:20):
Yeah, I'm with you on that. I'm really with you
on that, because you're when you're inside, that's your space.
You're inhabiting that.
Speaker 2 (22:26):
I mean, yeah, I need to make a quick correction,
speaking of email, before we get flooded with I said
nineteen ninety seven six point thirty five CSI and the
E twenty four six series. They stopped making it in
nineteen eighty nine.
Speaker 1 (22:42):
So okay, if anyone would have called you out on that.
I would have. I don't know the difference. I would
have been very surprised.
Speaker 2 (22:51):
I've been talking with some car blogger bros. A lot lately. Yeah,
this is one of those things that they in on instantaneously.
Speaker 1 (23:02):
You know, I will never Honestly, those guys are the
best fact checkers because you get I mean, you get
nothing past them. I will. I will never be able
to get anything past that type of reader, which is
a good thing, you know.
Speaker 2 (23:17):
Yeah, for sure, if I ever had written nineteen ninety
seven six thirty five CSI on opposite lock, I would
have been lambastard, you.
Speaker 1 (23:27):
Know, as a fool for such a careless error.
Speaker 2 (23:31):
What a great car though the twenty four to six
series No.
Speaker 1 (23:36):
I was with Cadillac this week for their Celestic.
Speaker 2 (23:40):
Ah cool, all right, so.
Speaker 1 (23:43):
You should talk about that because Cadillac is on the
brain this week.
Speaker 2 (23:46):
Let's do it. And you also have driven the Escalade IQ.
Speaker 1 (23:52):
Yes, and that review is going live on Monday. It'll
be in Business Week magazine and the print issue and
it will be online on Monday after this episode goes live.
So yeah, we should talk Cadillac and I drove the
Celestic yesterday all day all around lap up in the
mountains in Hollywood, in downtown.
Speaker 2 (24:12):
So wait, is this the like three hundred thousand dollars.
What's the story with the Celestic because it has got
a polarizing design.
Speaker 1 (24:20):
Which I applied polarizing and I might have I might
have figured it out. So this is the three hundred
and sixty thousand dollars all electric vehicle that it's a
two plus two car. The wheelbase is as long as
an escalade wheelbase, and it is, but it is as
(24:43):
tall as the CT five, so it's the same height
as a sedan. But it's wheelbase is as long as
an escalade. It has a hatchback rear and Cadillac is
not marketing this as a wagon, but I think with
the rear end, the rear end is problematic. It's difficult
(25:06):
to digest. And I really think their launch color of
bright orange, like a McLaren style orange, has really really
hurt that car because it's not flattering to the car
at all.
Speaker 2 (25:19):
Yeah, it doesn't look good enough.
Speaker 1 (25:20):
I did have the opportunity to see the car in
multiple different colors this week, and I also started sort
of framing the car as a wagon and that helps
me to understand the car better. You know, that car
in like sort of a smoky brown metallic is actually
(25:41):
rather beautiful, and I started imagining it sort of like
the Lamborghini Espata from the seventies, or a citron An
sm or even a Portion nine twenty eight. And when
you start talking about it in those terms, I can
kind of see it. I can see it. And I
don't think any of those cars was particularly critically or
(26:06):
popularly acclaimed when they debuted, but of course now as
vintage models, we really love them. So so yeah, Cadillac
is swinging for the fences, as it were, with this one.
They have been working on this for really for fifteen years,
with a lot of concepts, like if you remember the Eskala,
(26:28):
the Cadillac I think it was this, but.
Speaker 2 (26:29):
Not always as an electric, right, because that's where you
do when you say hybrid.
Speaker 1 (26:34):
Yes, so the last five years they committed, you know,
they committed to making this an electric vehicle five years
ago when it looked like everyone was going to be
electric by twenty twenty five. Obviously that hasn't happened. And
I did ask multiple of the engineers yesterday, could you
have pivoted two years ago, when you guys, when everyone
(26:55):
kind of realized hybrids are important and they might be
here to stay for quite a while, you have pivoted
to hybrid and they all said, yes, yes, but we
wanted to stick with the plan and stay the course
and you know, make a very audacious move. So this
is their audacious move. Matt, tell me your thoughts. I
can see you looking, I can see you sort of
(27:17):
studying this car. I'm dying to know what you think.
Speaker 2 (27:19):
So I'm not a fan of French cars, and I
think the comparison to Citoya is pretty spot on. Yeah,
for sure it. I like it much better when I
think of a nine to twenty eight. So I think
that's a really interesting way to frame it. I do
applaud any car maker that is willing to take such
(27:41):
a bold step, and it doesn't matter if I like
it or not. For example, I think the Tesla cyber
truck is horrendous, but I think it's so cool that
they actually made that. That was before you know, Elon
lost his mind. But uh, but for me, like three
(28:02):
hundred and sixty thousand dollars, When you say that and
then you follow with all electric I'm like tuning out
because I don't care anymore. You know, you were talking
with Aaron about retailers that go away from technology, right
or or your your take. I like on luxury, which
is that things have to be real wood, leather, and
(28:25):
I need to smell, you know, the gas. Like I
know that an electric powertrain is also real, But there's
something to me about the mechanical moving parts of an
internal combustion engine and the way it operates, probably because
of my you know, my age and my history, but
a lot of us have that. So yeah, I can't.
(28:47):
I can't think about luxury and electric in the same breath.
I could be wrong. I've never driven like the Rolls
roy Specter and you have so, and I understand why
that would be perfect for that magic carpet ride. Like effort,
this motivation totally, and so my whole thinking on this
could be changed when I drive, when I drive one
(29:08):
of these things, but I haven't yet.
Speaker 1 (29:10):
So I bet you, I bet you will have that opportunity.
I think Cadillac has had that car out and about
and they're going to have it more out now. I
totally agree. You know, Cadillac is going to make twenty
five of these in the first year. They've told me
they've sold twenty two of that twenty five, so they're
you know, they're not mass producing them. I'm sure they're
(29:31):
This is a lost leader, and it's about trying to
recapture some of what Cadillac used to mean. And we
did talk a lot about how to tap into I mean,
Cadillac used to be the standard of the world. As
their tagline was, it was this the world's standard for
luxury at one time. And I do think it's very
(29:55):
fascinating that now we're being forced to consider what does
American luxury mean when when we're thinking about tariffs affecting
a lot of our other wonderful luxury atoms that are
being imported. To your point about the electric vehicle, I agree,
you know, it's I don't think it's wrong that Rolls
(30:17):
Royce made an electric powertrain for the Specter that does
go at. Rolls Royce had already talked about making electric
vehicles one hundred years ago, so that seems very in
a way authentic Cadillac. It's a little bit different, I
can tell you. I'm I'm undecided. I know it's a
really bad time to be selling a really expensive EV
(30:39):
nobody wants them. I don't necessarily think it was wrong
they did it. I can't talk more about it because
I'm under a bargo, but I.
Speaker 2 (30:47):
Don't I'm sure. I'm sure that it drives amazingly well,
and I have driven, by the way. I was talking
to some listeners recently who who reiterated the idea that
I'm antiev which isn't true. I've driven electric vehicles that
I found to be rewarding and luxurious. I really enjoy
(31:08):
I really enjoy the Audi Etron, for example. I really
enjoy the Mercedes EQS and it's super luxurious, right, and
I think the electric power train fits. I love the BMW,
the electric BMW seven series, the I seven. That's a
very luxurious car, and it's very expensive, and I think
it's probably to some extent worth it. But I and
(31:32):
I'm and I'm sure that the Cadillac Escalade IQ is
going to be my favorite electric vehicle of all time,
because you know, I love the pickup trucks, the electric
pickup trucks like the Sierra EV, and I love the
GMC Hummer. I feel like I feel like Cadillac IQ
is the perfect vehicle for that because it's not as
sort of doesn't have the silly image as much of
(31:54):
as the Hummer does. And it doesn't I won't feel
like I'm overpaying, which I would with like any Tron
or else. Yeah, you know, two hundred kilot hour battery
does a lot to win my money, but I don't
know for me. The I mean, if it's really luxury,
like four hundred thousand dollars, then you.
Speaker 1 (32:16):
Know, a big, a big selling point to this vehicle.
And really what they're leveraging is the fact that each
one will be made tailored to the customer specifications. There's
no standard entry level Celestic. Each one is a made
to order thing that you you will you know, pick
(32:37):
the colors. It's not it's not extensive bespoken, but it's
it's pretty good, you know. So if you want, if
you already owned a Rolls Royce and a Bentley and
an Aston Martin and you thought, oh, it'll be really
fun to have an American vehicle that I can have,
you can know, I can tell a story with the
colors and the trims and all of that. You know,
(32:59):
it's it's a bit of a high price point vehicle,
but yeah, I mean they don't have to sell that
many of them. I had dinner with Michael Simcoe, who's
the head designer, the other night, and he still believes
that electric vehicles are the future, even though nobody wants
(33:22):
to buy them.
Speaker 2 (33:23):
Now, I'm sure he's not wrong.
Speaker 1 (33:25):
He really doubled down and said, hey, eventually, this is
where we're going, no question about it. So we're staying
the course.
Speaker 2 (33:34):
It's for sure. It's true as a utility, you know,
as a as an appliance, it makes total sense. But
that's not what this is supposed to be. Right. In
any case, I think a lot of it has to
do with my own biases. I'm still confers founded by
(34:01):
the effect these tariffs are going to have on the
ultimate driving machine, on the nine to eleven on Ducati motorcycles, Like,
what's going to happen? I just I look at this.
When I saw this, Monroney really really drove it home
for me and for those who don't know. Car makers
(34:22):
put out these labels that are I think regulated by
by NITZA, and they have to include certain pieces of
information like vehicle content. So again the M two it
says US Canadian parts content six percent. Major source of
foreign parts Germany twenty seven percent, Mexico fifteen percent, Final
(34:44):
vehicle assembly San Luis, Potosi, Mexico Engine, Austria Transmission, Germany.
This car is not getting sold in the US without
massive tariffs. And I think, you know, BMW obviously produces
so much here, and I think I think BMW is
one of the biggest exporters in America. They export double
(35:04):
digit billions of dollars for their products. But those are
all X series, so that it's X three x five
x seven, you know, the M two, or that any
two series three series, which ironically is what they started
producing here in the US and the seventies. But none
of that's made here. So what are they gonna do?
(35:26):
And I think of my beloved Ducoatti motorcycles, you know,
I mean, they're already pretty pricey. I can put together
a multi strata on the configurator and get well into
thirty thousand dollars. And if and if it's gonna be
tariffed at twenty five percent, which I'm not positive about,
I don't know how motorcycles will be handled. But it's,
(35:48):
you know, all of a sudden, it's it's gonna cost
closer to forty right.
Speaker 1 (35:53):
So yeah, I don't it. Do you think that now?
I mean, it would seem natural that now a car
like a BMW would be even more of a status symbol.
I mean it, five years from now, if these tariffs
stick and you know, everything continues down this path, five
(36:14):
or ten years from now, hypothetically those cars will be
considered extremely like signifiers of status.
Speaker 2 (36:22):
Yeah, but like the point of the three series is
for uh, you know, I know someone who's just made
it to middle management, or you know, a young person
who's just started on Wall Street, or or someone who
saved money and cares about driving, like I imagine that BMW
if this kind of thing, if this tariff sticks, I
(36:42):
imagine they'll have to assemble them at Spartanberg again. And
for a company like I don't know, Ducati is Italian
is in its DNA right, so they'll they'll never be
able to make a Panagali here, but I imagine they
might at least consider, you know, for the dirt bikes
(37:05):
they're making off road vehicles now, to assemble those somewhere
in the US.
Speaker 1 (37:09):
You know, are you getting a sense just with the
people that you're talking about that some of the people
who may have voted for Trump because they thought that
it would help their bank accounts are now extremely frustrated
and disappointed. You know, besides anyone in the headlines, just
normal people that they kind of thought, well, maybe I'll
(37:31):
vote for him because it's going to do this and
this and this for my portfolio or my business.
Speaker 2 (37:36):
But now it's like, especially the ladder, especially the ladder,
I hear from so many people. We get a ton
of small business owners writing in when I do my
TV show every morning, saying there's no way for me
to move my supply chain around. Basically, you know, I'm
(37:56):
not even for Apple, it'll be impossible. But for these
big companies, they can at least pretend to move the
supply chain or make you know, multi billion dollar commitments
to the Trump administration that will last as long as
he does in office, and then you know, keep making
everything in China. But these smaller businesses, they can't do
those things. So I got an email this week from
(38:17):
someone who makes light fixtures in the Southwest. She designs
them herself. She has a brick and mortar store front.
You know, she employs Americans, but you know, when they're made,
they're put together, they're assembled in Asia. I got a
message from a guy who runs a chocolate confectioner in
(38:39):
New Jersey and they, you know, they make the product
in New Jersey, but the ingredients come from Canada and Mexico,
so they can't get around those twenty five percent tariffs.
And you know, these are people who voted for Donald
Trump because they agree read that maybe cars should be
(39:01):
built in the US, but didn't expect it to hit
their own business's bottom lines. And now they can't hire employees,
maybe they have to let some go, they can't reinvest.
But for the car makers, it's just an absolute nightmare.
I mean, if you're GM or Ford, I guess you
can move some production, but you're not going to build
a new plant that takes like minimum three or four years,
(39:25):
probably five to seven. And by the time you have
done that, someone completely different as an office, I mean
needs stability and long term to do long term planning completely.
Speaker 1 (39:37):
You know, talking with the folks at Cadillac again this week,
their big thing is we just want a target that
doesn't move whatever it is. We just need something that
isn't going to change that we're worried about being kicked
down the road a bit or whatever, because then we
can plan for it. But at the moment, it's impossible
(39:58):
to make any plans because everything is so volatile. So
Cadillac is you know, even with regulations, emission standards all that.
I think if they know the target, they will do
their best to hit it. They'll make it work. They
just need to know that it's going to remain stationary.
Speaker 2 (40:16):
Yeah, I think they're probably not going to get a
lot of stability in this with this administration, and I'm
not that's not a value judgment. I don't think that
that's what Trump administration is aiming for. Stability is not
the name of the game for them. I also think,
like I appreciate products made in the US. I guess
we've talked about this before, Like I I will spend
(40:37):
extra money to buy something made in America.
Speaker 4 (40:40):
But.
Speaker 2 (40:42):
If it's at these levels, right at sixty seventy eighty
thousand dollars, if you're talking about raising those prices ten
or twenty percent, I'm just out of the game. I
can't afford to, especially since I have to buy two
cars right for my family, and can.
Speaker 1 (40:58):
Speaking of can I ask how your motorcycle viewing went
last weekend? Do you want to give us another so Harley?
You went to look at a Harley?
Speaker 2 (41:06):
No, no, I I'm doing that this weekend. I'm going to
Danbury on Saturday to ride a road King and a
Fat Bob. But this last week I've been riding this
Buell Supercruiser and I don't think I've ridden something that's
as unique and exciting and cool in the motorcycle space
(41:28):
for years. For years.
Speaker 1 (41:32):
That's quite a statement.
Speaker 2 (41:33):
It's I mean, I don't know if it's people say
it's vapor ware, like they don't think it's ever going
to really come to market. But this week on my show,
this coming week on Wednesday, I'm going to interview the CEO,
Bill Melvin, who bought the manufacturer, bought the patents, bought
the the name from Eric Buell, and he claims to
(41:58):
have taken an over six one thousand pre orders for
this Buele Supercruiser. And that's you know, people put down
one thousand dollars a piece for a pre order and
that they're going to start making them in the fall,
like I'm very likely to put down my own deposit,
and I kind of hope that I won't get it
until like late in twenty twenty six, when I can
(42:19):
afford to buy it. But that's the one thing that
concerns me is the price. It's pretty high. Twenty six thousand.
I think it's even twenty six nine nine nine, so
twenty seven thousand dollars for a motorcycle that is just
a V twin in a tubular frame with a bule
swim arm.
Speaker 1 (42:37):
Where does that price come from? How do they arrive
at that figure?
Speaker 2 (42:40):
I don't know. That's a good question. I will ask
Bill when I have them on Ask the show on Wednesday.
Speaker 1 (42:46):
And speaking of I'm driving this Lotus Electree suv this
week and it's interesting. It's an electric suv. The pricing
starts at two hundred and thirty thousand dollars and that
seems insane. That's a lot, truly insane. And I'm going
(43:08):
to ask them as I start writing the review, which
I haven't yet, but can you walk me through how
you arrive at this price point? And automakers hate to
do that because that's, you know, their proprietary business advantage information,
but I don't. I clearly am not I'm not understanding
and not seeing where that price comes from in the vehicle,
(43:31):
you know what I mean. Yeah, so I'd be curious
to hear the Buele folks.
Speaker 2 (43:35):
I mean for them, for them, they're starting up, right,
So this is a design that Rolling Sands did for them.
I'm sure he doesn't come cheap.
Speaker 1 (43:44):
And Sands did that.
Speaker 2 (43:45):
Yeah, he designed it and they're building it, you know,
in house in Detroit, so they're there. They have to
put up a factory staff it, you know, get the
parts and they're mostly American sourced parts. So I think
I can't remember the number now, but it's over sixty
percent of the components are going to be American.
Speaker 1 (44:04):
They're the most American.
Speaker 2 (44:07):
They do claim that the most American made brand. I
don't know. I haven't asked Harley Davidson about the claim that.
There was an engineer at Buel who told me that
Harley Mates gets thirty to forty percent of their parts
are American sourced. That sounds low. And by the way,
you know Harley's CEO, Yolkin Sites, who has been the
(44:29):
source of a lot of problems I would think for
the brand, is stepping down. So he's done just that.
Speaker 1 (44:34):
Yeah, how I are you surprised?
Speaker 2 (44:37):
You think that's actually not at all surprised, because I mean,
look at the stock chart. It just goes from the
upper left hand corner to the lower right hand corner, down, down, down.
I think one of the board members this week actually
quit because he wanted SITES to leave immediately, and SITES
(44:58):
is staying on until they find its accessor.
Speaker 1 (45:01):
So we don't know who's coming next.
Speaker 2 (45:03):
We don't know who's coming next. But I think at
Harley Davidson they had the same problem as a lot,
you know, most motorcycle makers, and also that Buele is
going to face, which is that they just don't sell
products that are affordable or accessible to the kind of
people that start riding bikes. Who rides bikes like you
start when you're a teen, right, nobody picks it up
(45:23):
in his forties. So and you can't afford to pay
twenty seven thousand dollars for a road glide when you're
you know, a seventeen year old or when you're you know,
twenty one, you know, working on the factory floor, like
you need to buy something that costs multiple thousand dollars
and only royal Endfield is really doing that right now,
(45:45):
or maybe.
Speaker 1 (45:46):
Even copies are expensive and those are you know.
Speaker 2 (45:49):
Accessible supposed to be yeah to a.
Speaker 1 (45:53):
Younger rider or a smaller rider or a newer rider
or any of the above.
Speaker 2 (45:57):
Yeah. So I mean, I think the CEO previous to Sites,
matt levitych was pushing like a more inexpensive kind of
mobility oriented product and Sites came in and was like, no,
we're doing like the big expensive stuff or you know,
relatively expensive stuff. And also we're gonna do like major
(46:19):
DEI and ESG, which doesn't gel with like the Harley Faithful, right,
and we're gonna start producing stuff like in India. That's
not what the Harley Davidson Forum likes to hear.
Speaker 1 (46:32):
So that's too bad. I mean that that does seem
to be a fundamental problem that any company would be
known for being not diverse.
Speaker 2 (46:43):
It's not I don't know if it's about not diverse,
but it's about.
Speaker 1 (46:47):
I'm putting that in a very polite way. I mean,
to me, that's just kind of unforgivable.
Speaker 2 (46:53):
I don't think that they're I don't think that that's
the case though, because they are I think a very
diverse in terms of like ethnicity.
Speaker 1 (47:03):
Oh, I'm not talking about reality. I'm talking about the perception,
the reputation and the perception. Yes, we all have friends
who are people of color who ride Harley's. I can
list you off several, but that is not the brand reputation.
The brand reputation is like, you know, older white dudes.
Speaker 2 (47:26):
True, But I think the problem wasn't that they were
aiming for diversity in terms of their customer base. I
think the problem was that the probably we shouldn't even
talk about this stuff on that.
Speaker 1 (47:35):
I mean, I can, I can really dive into this.
Speaker 2 (47:38):
Let's not. Let's not, let's not since.
Speaker 1 (47:40):
We are not a political podcast.
Speaker 2 (47:43):
In fact, let's wrap it up. Sebastian's like, let's wrap
it up.
Speaker 1 (47:47):
The producers like.
Speaker 2 (47:51):
Is there anything you got coming up next week?
Speaker 4 (47:53):
Uh?
Speaker 1 (47:54):
You know what, Well, the Long Beach Grand Prix is
this weekend. So that's that's that's big for car lovers
in LA. I actually think I'm going to a British
car show on Saturday, which is out sort of toward
the valley and it's just old British cars. It's sleepy,
it's very cool. It's not about influencers or content it's
(48:17):
just a bunch of old Rolls Royce owners.
Speaker 2 (48:20):
Uh. Well, I'm glad there is diversity in that because
they're foreign.
Speaker 1 (48:23):
Right, what about you, I what do you do?
Speaker 2 (48:26):
Well? I, like I said, I'm gonna go ride this Harley,
these Harley Davidson's with al at the Connecticut the Danbury,
Connecticut dealership, and I'm gonna be ringing out this M
two on the way up and the way back.
Speaker 1 (48:39):
Well, that's such a fun car.
Speaker 2 (48:41):
I mean, it's so much fun. It's it's just classic.
It is classic, crazy fun. I still think the price
is a little high, you know, eighty two and a
half grand. That's before tax, so you know, out the door,
it's like ninety thousand dollars for an M two. That's
to me, that's a little crazy. But I guess this
(49:02):
is the cheapest you'll get it, you know. Yeah, right,
So yeah, I'm looking forward to talking to you again
next week at the same time, the same place.
Speaker 1 (49:13):
And you know what, I'm going to be in New
York next week.
Speaker 2 (49:15):
Oh a different places. Cool.
Speaker 1 (49:16):
I will see you live and live and in living color.
Speaker 2 (49:19):
Right on, all right, I'll introduce you to Bill Melvin
while you're here, as well wonderful.
Speaker 1 (49:24):
I'm Matt Miller, I'm Hannah Elliott, and this is Bloomberg
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Hannah Elliott
Matt Miller
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