AAH #742 - 11 Car Brands That Tariffs Could Force Out of U.S. Market

TOPIC: Industry Insight PANEL: Huibert Verhoeven, Harman; Paul Waati, AutoPacific; Gary Vasilash, shinymetalboxes.net; John McElroy, Autoline.tv

Episode Transcript

Speaker 1 (00:00):
Auto Line After Hours is brought to you by Bridgestone Tires,
Solutions for Your Journey and by Borg Warner. The automotive
industry continues to evolve, and so do the opportunities to
define it. Borg Warner, one of the world's most admired companies,
gets partners where they need to go. Let's do something

(00:21):
big together.

Speaker 2 (00:25):
Thanks everybody for joining us on Auto Line after Hours.
Got a lot to talk about today. We can get
into some interesting technology in the first half of the show.
We'll get into the news of the week. Paul Wattie
will be joining us for that part of the show.
But Gerry, you got a question to stomp us today.
Something significant happened on this date in the automotive industry.

Speaker 3 (00:46):
Something significant did happen on the state industry. Okay, what
was and okay, so May eighth, eighteen seventy nine, a
patent was filed.

Speaker 2 (00:56):
Uh huh.

Speaker 3 (00:58):
The patent wasn't granted until eighteen ninety five, but this
patent had big significance on the development of the auto industry.

Speaker 2 (01:09):
Okay, I'll bet I know what it is.

Speaker 3 (01:12):
I know, I know, you know what it is.

Speaker 2 (01:14):
It's going to be the Selden patent.

Speaker 3 (01:15):
It is the Seldon patent.

Speaker 2 (01:17):
So most people don't know this story. It's a great
story that Selden, very visionary, predicted that the automobile was
going to be developed because there was a lot of
things going on. Any patent to the automobile, and the
US Patent Office granted him that.

Speaker 3 (01:33):
Well, so he patented what he called quote road engine. Okay,
so this engine was powered by gasoline, and it was
in the way it was written up, it was in
a four wheel vehicle. Okay, So any type of four
wheel vehicle that would use a gasoline powered engine was

(01:54):
covered by this patent.

Speaker 2 (01:55):
And so every manufacturer in the United States back then
paid Selden a royalty. And in fact, I want to
say Rolls Royce built cars in the United States back then.
I think Renault. Oh no, I'm getting off track. That
was with mag until Henry Ford came along and he said,

(02:18):
the heck, if I'm going to pay you any money
for you you didn't invent nothing, right.

Speaker 3 (02:22):
So yeah, So Selden established the Association of Licensed Automobile
Manufacturers and that was the organization that collected royalties. And
so Ford just said, you know, I'm suing you so
in nineteen eleven, Ford sued in one and that basically
busted the patent.

Speaker 2 (02:40):
The best part of the story is to prove that
Selden's patent was no good. He forcedat Selden to build
a car and to show the court that Selden had
to show the court that it actually worked. It didn't work.
In fact, there's a great picture of the car parked

(03:00):
by the side of the curb with about a three
foot geyser of steam shooting out of the radiator. And
so that's how Selden lost the patent because Henry forced
him to build a car and he couldn't do it.

Speaker 3 (03:15):
Doesn't fit. Must have quit.

Speaker 2 (03:16):
Yeah, that's right.

Speaker 3 (03:20):
So Hubert Verhoven, Senior Vice president Digital Cockpit at Harmon,
is sitting here wondering why the hell these two guys
are talking about this. Yeah.

Speaker 2 (03:28):
Yeah, it's kind of cool though.

Speaker 3 (03:31):
All right, So people might be wondering I mentioned Harmon.
People might say, you know, these guys have a guy
who's gonna come and talk about audio systems for thirty minutes.
That's not what Harmon is, right, Well.

Speaker 4 (03:42):
It is what Harmon is.

Speaker 5 (03:43):
It would be cool actually to talk about it.

Speaker 4 (03:45):
Also because as you said, I think Gary, most people
know Harmon and Harmon Cardon and brand named for audio
and for really good audio right on the consumer side,
and also an atomotive. Right you get into a car,
it's very likely it's one of those brands actually, and
audio is a Harmon is a Harmon brand, and for
us that is tremendously important.

Speaker 3 (04:04):
Right.

Speaker 4 (04:04):
We have customers who for decades come back to us
every time to get better sound quality, better sound experiences.

Speaker 5 (04:11):
Sound zones and all that.

Speaker 4 (04:13):
But what people don't see, and that's my business, is
that we for many of our car OEMs, we do
the entertainment systems. We do the clusters and in the
future also data systems. Those systems are typically not branded,
so you wouldn't see a Harmon label on it. But
how you interact with that technology and the technology suite
that you see the hardware and in many cases the

(04:33):
software is what my my group does.

Speaker 3 (04:36):
And I mean and so when you say you know
entertainment systems software, you know, people think, oh, you know,
they have it's easier to change stations or switch to
a different media. But you, guys, I mean there's AI involved.
I mean, I mean, talk to us about some of
the depth that you guys are getting to.

Speaker 4 (04:54):
I think there's always AI evolved these days, right, but
I think we're actually genuine about it. So if you
look at traditionally your car, the questions.

Speaker 5 (05:02):
Do you have a better radio? And we go back
and we make better radios.

Speaker 4 (05:06):
The question is do you have a display? Is the
display bigger? And yes, we make displays. We make really
good displays, and certainly as part of Samsung, we have
something very meaningful to say on displays. But for us,
it's really the whole experience that it ties together, right,
So we talk about in cabin experience more than about
the individual technologies.

Speaker 5 (05:25):
So when you go.

Speaker 4 (05:25):
From your home, you're getting your car, does it feel
like there's continuity there or do you have to adjust everything?
Does a car anticipate what you want to do? Not
just you get in and the seed goes back?

Speaker 3 (05:36):
Right?

Speaker 4 (05:36):
Yeah, that's cool, But why would you have to have
pre sets of everything? Why would the car not know
where you're going? But also when you talk AI, you
see more and more cars that come with like an avatar, right,
and that tries to you know, well, you.

Speaker 2 (05:49):
See that in China you don't do anywhere else well.

Speaker 4 (05:51):
So I just came back from Shanghai. So in China
you see the moving avatar and in mednern though is what.

Speaker 5 (05:57):
Can I do for you today?

Speaker 4 (05:58):
And certainly you can say hey when the passenger left window,
it's good. But what we are focusing on is more
the empathetic side of AI. Can you really have a
conversation and can it actually get information sometimes self contained
on the vehicle, right, because you're not always connected. But
can it also tie all these information sources together like
a large language model can give you answers, sure, but

(06:20):
it can also now have a dialogue. It's context aware, right,
It may know that you're getting tired, and it can
actually say It can turn your econo thing up or down.
It can also say, hey, I suggest this and this
so at ces what we showed actually was that context aware,
empathetic AI. And people started thanking the avatar and our
avatar is Luna, and people said Luna, thank you after

(06:43):
like being in the car for fifteen minutes. And this
is kind of crazy, but it actually played out five
times in a row with different customers.

Speaker 2 (06:52):
I'm curious. I can see where this is going over
well in China because Chinese customers seem to be totally
into it. What about Europe.

Speaker 5 (06:59):
German custostomers, Yeah, yeah, German customers.

Speaker 4 (07:02):
Americans too, Americans, Yeah, I would stay the Germans tend
to be a little bit more skeptical in general. But
I was shocked, and it was business people, it was engineers,
and it just happened.

Speaker 3 (07:13):
Okay, so let me read this description. So Harmon Ready
Care is an AI driven in cabin monitoring system that
tracks driver distraction, drowsiness, in stress levels using neuroscience, cameras
and radar. It offers real time interventions like climate adjustments
and soothing music while meeting stringent EU safety standards. So
that Germans.

Speaker 5 (07:33):
That's a mouthful, right, So I.

Speaker 3 (07:35):
Mean, so the cameras looking at you and sensors are
sensing you.

Speaker 4 (07:40):
I mean, well that was the first question probably five
years or ten years ago. Are people going to be
nervous about cameras looking them? But today, if you look
at the overall safety systems of in cars, there are
cameras that are driver.

Speaker 5 (07:54):
Facing and occupant facing cameras.

Speaker 4 (07:57):
In many cases you can see them because they could
be infrared cameras that are behind materials where you don't
see it's a camera. In fact, some of our displays
right I ready display products have the cameras behind the display,
so you wouldn't even see the camera. But that camera
can actually not just pick up are you looking at me?
Am I looking at the road, And sometimes you get
like these warnings of hey, you seem distracted, but it

(08:18):
can tell your cognitive load. It can tell you are
you engaged in what you're seeing because you can clearly
look out of the window.

Speaker 5 (08:25):
And be completely spaced out, so it can do the
cognitive load.

Speaker 4 (08:28):
And certainly you can comple that to intervention, right, more
than just a pop up window. If you look at that,
it's not just putting in a new camera. It's actually
repurposing cameras that are there for other purposes to actually
do that. And recently I saw one of our products
where you can pick up a single heart beat or
the heart beat based.

Speaker 5 (08:48):
On the camera.

Speaker 4 (08:50):
It's just crazy, right, And that in itself is maybe
not that interesting because you don't really want to show
you know, you have like seventy two beats a minute.
But based on that, we have taken a number of
the algraths that on the sampsum side we use and
watch is in fitness equipment to start doing what more
can you do with that?

Speaker 3 (09:06):
Right?

Speaker 4 (09:06):
And we're very close right now to doing things like
blood pressure for example, based on camera information. And then
you talked about radar, right, and then radar Yah, you
can detect do you leave your baby in the back seat,
which is very serious business and mandate it. But you
can do a lot more. You can now see all
the passengers. You can extract the skeleton out of that,
and you can see what five people are doing in

(09:28):
the car, and you can just accordingly entertainment equinizing whatever
you want to do. And it's just it's not just
the rdware, right, It's not.

Speaker 5 (09:36):
Just the software.

Speaker 4 (09:37):
It is the AII algorithm behind it that extracts the
information out of these sources that come out of different
points in your vehicle.

Speaker 3 (09:44):
Well, well, you mentioned that harmony will get more involved
in aight as systems. And so when we get back
to this heartbeat situation, I mean, okay, if you see
it's seventy two beats for me and you say that
it's okay, if it's zero beats per minuted, you might
want the car to do something.

Speaker 4 (09:58):
Yeah, you may first want to make sure it's actually
not an issue with the measurement system, sure, but right, Yeah,
and I think there you see the systems that when
you talk about urban navigation, right, but also highway navigation.
The question is what happens if something goes wrong with
the driver?

Speaker 1 (10:12):
Right?

Speaker 4 (10:12):
And that could be that somebody's slumped over the steering,
for sure, but it could also be arrhythmia.

Speaker 5 (10:17):
Right.

Speaker 4 (10:17):
And there are right now, certainly algrams that then safely
get you off the highway, right, and that's safely call
emergency services at that point.

Speaker 2 (10:25):
What about intoxication? I believe there's a legislation in place
now that mandates drunk driver detection. I want to say,
in twenty twenty seven in the US market, would this
system be able to do that? Yeah?

Speaker 4 (10:37):
I think there's a lot of information on what it
certainly does to your eyes, not just how you look
at people, but also the pupils et cetera, et cetera. Right,
So we have algorithms that we believe to be very
applicable there. I think there's always the question of with
this new technology, can you meet mandates? Right, legal mandates,
which is important. The question is also can you offer
the driver something more than then is legally mandated as

(11:02):
value to them. Right, So the drunk driving has value
to the driver. But I think there are many other
things where the combination of information borders on the well being, fitness,
convenience that goes well beyond what is le legally mandated
sets as bring driving detection.

Speaker 2 (11:18):
Let me talk about something very practical that I run
into in the different test cars that I go through
Visa VI the center screen on some cars I just
got out of one. You hit the screen very slow
to react, or sometimes I have to tap a certain
area on the screen at least twice, sometimes even three times.

(11:42):
And even when I'm touching that part of the screen
that I want to get it to activate something, it'll
react visually showing that I touched it there, but nothing happens.
Why Why?

Speaker 4 (11:56):
There are many whys actually that go into A good
screen seems easy, right, M right, And it's not, And
a good touch screen is.

Speaker 5 (12:03):
Actually tremendously harder.

Speaker 4 (12:05):
I would say, I've seen some cases where people build
bad touch screens or screens that were poorly integrated into
a vehicle, where things like EMI and EMC, which is
the emission of everything else in the car starts impacting
the touch functionality. And maybe not to go too technical,
but touch generally is a capacitive sensor of a very
small signal. So if you have like radio things that

(12:25):
start coupling into that, you can get very unpredictable behavior.
So you've found some screens where you knew what you
had to do to work around it, which is super annoying.
But there are also situations where you get something that
becomes contact sensitive or impredictable.

Speaker 2 (12:39):
Could it also be the microprocessor that's driving the whole
thing and a good processor is going to really yeah, okay,
yeah no.

Speaker 4 (12:45):
And I think then it gets really interesting because if
you look at a modern vehicle, it becomes a little
unpredictable what is really running on these entertainment systems Because
we also enable the an app store, so you can
download now application. So the question is which applications runs
and if your system is undersized, then people start downloading
all kinds of apps. What does it do to performance?

(13:08):
So as much as we talk about consumer experiences, we
always talk about consumer experiences automotive grade because you're still
driving and that thing still needs.

Speaker 2 (13:16):
To work another practical thing. So many times I'm driving
down the road and I want to touch some part
of the center touch screen, but the road's bumpy and
it's hard to hit the exact spot. What are you
guys doing about that?

Speaker 4 (13:32):
I think it turns out that OEMs are actually have
very distinct opinions. Not so long ago, someone with OEM
would say I don't want a touch screen. It was
as simple as I don't want fingerprints on my screen.
I think everybody has gotten over that, right. So we
have some customers who say, hey, give me a touch
screen because some customers like it, some drivers like it,

(13:53):
but also give me a secondary control mechanism, right.

Speaker 5 (13:56):
So some of the German.

Speaker 4 (13:57):
Cars you see also the ability to have a button
in order to have something that controls the screen, and
I think that's a very personal choice. On the touch
screen side, I think there is the fact that the
screens have become better and they anticipate more where the
actual buttons in the touchstones. Are you have taptics where
it gives you at least the feedback and are you
touching something? And I would also say there's a generational aspect.

(14:19):
I think my eighteen year old has no issues with
compensating somehow for movements on the car to still hit
the touch screen. So technology is getting better. I think
the if it's really a bumpy road, I think a
secondary control thing might work. A voice is becoming more
and more modality, where it has been in cars for

(14:40):
twenty years, but the.

Speaker 5 (14:40):
Last couple of years.

Speaker 4 (14:42):
Also, because these systems are now coupled between on car
as well as cloud based, you can actually say navigate
me to something without having to hit the navigation thing
and the typing in an address.

Speaker 3 (14:53):
Right.

Speaker 2 (14:55):
You know.

Speaker 3 (14:55):
One of the issues that the auto industry has faced
for a long time is the criticism that, whereas consumer
electronics rapidly change, that vehicles change at a glacial pace. Right,
a long long time. Now, you guys have developed something
called the ready Upgrade domain controller that allows the OEM

(15:20):
to refresh the hardware every twenty four months. Explain this
to me.

Speaker 4 (15:25):
Explain that, Yeah, that sounded kind of crazy, right, It's like,
why would you do that?

Speaker 5 (15:30):
You're absolutely right.

Speaker 4 (15:31):
It's not just when you buy a car that at
that point the hardware is fixed traditionally, but also the
hardware you see was developed four years earlier, right, because
of the traditional qualification cycles, et cetera. So now you
get from the get go a four year old system.
So you can overprovision that and get the fastest processor
that you can find and pay for that. Right, but

(15:53):
still it's an old system. So what can you do
about it?

Speaker 2 (15:56):
Now?

Speaker 5 (15:56):
You can buy a new car. That's a solution, it's
a simple solution.

Speaker 4 (16:01):
But we came up with this idea of why would
the hardware be completely different in every generation. Why couldn't
you standardize with a future proof connect to the type
of signals that you get into the box. Why couldn't
you have software that is actually compatible on those different
boxes at different performance levels? And why would you not
be able to take a box out at the dealer.

(16:22):
You could go as far as saying even the driver
could take it out, but why wouldn't you be able
to do that to get to a fundamentally higher performance
level two or three years in So it's kind of
the mid life upgrade that today OEMs do to their vehicles,
but here it's something where you can upgrade the whole
brain of the thing in a matter of minutes.

Speaker 2 (16:40):
So this would be a plug and play screen.

Speaker 5 (16:42):
Well, the screen actually stays the same, okay, but at
the the guts over that drives it.

Speaker 4 (16:47):
There have been thoughts also about could you replace the screens,
and when you look at some of the screens today
that are more the screens that are the slap you
could think about systems certainly that could also update display technology.

Speaker 3 (17:00):
But so literally it's a plug and play system that
would allow an older car, an existing to have completely contemporary.

Speaker 5 (17:12):
Capabilities contemporary hardware.

Speaker 4 (17:14):
I think it is even better than that because a
lot of the capabilities of what feels old is the software. Right,
So most of the vehicles, Harmony is a leader in
the over the air updates side of things, where the
AD customers who used Ota once a year for a
bug fix right now, they may use it once a
month to actually deploy new experiences in the software.

Speaker 5 (17:34):
Right.

Speaker 4 (17:34):
So, yeah, the hardware can be plug and play replaced,
but every month you can actually get fundamentally new features.
And I think that's when again I talked to my
son and my daughter. They say this car is boring. Why, Yeah,
I can chaste the color of the clock, but they
said the best we can do, right, So, yeah, for
us ready, upgrade is not just the hardware, that's the
complete experience of Yeah, you can stop the hardware, but

(17:56):
also continuously you can increase features while keeping the software compatible.

Speaker 2 (18:02):
You know, we're talking all about the center screen and
on the instrument panel. What about rear seat passengers. One
of the things I saw at the Shanghai show on
a couple of cars were movie screens that would deploy
out of the headliner, you know, so that the people
in the back seat and look like a projection screen
as well. So are you working on things like that?

(18:22):
What about rear seat passengers?

Speaker 4 (18:24):
Race seat is that's a difficult topic, right because again
there if I ask my kids, they would say, well,
I'm on my phone right, so don't give me this
theater experience. But I saw those same screens, right, So
now you have a movie theater experience is to full
width almost of the back seats. I think there's something
in there. So we have not developed per se projection

(18:45):
technology for.

Speaker 5 (18:45):
The rear seat.

Speaker 4 (18:46):
But when you talk about when you're sitting your car today,
if you sent a console and you have like these gauges,
right and more and more, it's not mechanical, it's a display.
But then if you think one step further, you have
that and you have ahead of this and certainly We
in Ready Vision also make head up displays and ar software.

Speaker 5 (19:05):
But we want one further.

Speaker 4 (19:06):
We said, why can't you have information displayed on the
bottom part of your windshield, the black part of the fritz.
Can you make it a little bigger, and can you
display your information where.

Speaker 5 (19:15):
Your eyes actually should be.

Speaker 4 (19:16):
So we have right now customers who take out the
cluster and who actually display the information that was in
the cluster now on the windshield. Leads to all kinds
of complexities of how do you make it bright enough sunlight,
et cetera. But it gets your eyes to where it
needs to be, which is not looking down on the
steering wheel, but looking in front of you.

Speaker 2 (19:33):
So and just for the viewer's sake, when you say
you projected on the fritz, now fritz is the blackout
around the window?

Speaker 4 (19:40):
Yeah, so you make that black part may be a
little bigger, but now you have an ideal production projection
area that goes from one pillar to the other pillar.

Speaker 2 (19:48):
So sort of like a head up display with all
the expanse of a head up display.

Speaker 4 (19:53):
Yeah, except head of display typically projects it at least
virtually onto the road. This actually puts it right in
front of your right at win Shot friends. Yeah, and
you know you can context the way you can put
have you clustered there? Your passenger can show other information there,
whether that is the weather or whatever you would like
to show there.

Speaker 3 (20:13):
So you know, it's interesting. You mentioned your kids and
their expectations of what technology ought to be in vehicles,
and so every day you're working with this stuff, I mean,
are are you? Are you finding out opportunities for the
business from from what your children are telling you about

(20:34):
what their expectations are.

Speaker 4 (20:36):
To a degree, I think maybe a little differently right,
and it's not quite my kids, But we have interns
consistently at Harmon where we actually put them on things
that are not like, you know, menial tasks. We put
them on innovation projects and we get surprised because sometimes
you put them on something and they say, yeah, but
I would never use this. What if you were to

(20:56):
do this, this and this. So we have, you know,
people who are in undergrad who say, you know, I
don't think that makes sense. And the nice thing with
our technology is right, everybody can have an opinion that
you don't have to be an expert in anyone area.

Speaker 5 (21:11):
Just say hey, as a user, I would use that
or not.

Speaker 4 (21:14):
Maybe back to my kids. My son was at the
last day of our intern's presentations. We just happened to
be from California. He was so blown away that he
decided on the spot that he wanted to become an
electrical engineer, and he's that's what he's going to do
next year.

Speaker 3 (21:28):
That's great. So you mentioned so you're based in San Jose.
We're glad you're joining us here in Detroit and it's
a great opportunity for us. So tell us about bad
environment in Silicon Valley in what you're seeing there as

(21:48):
compared to whether it's Detroit or Beijing or Tokyo or
Frankfurt or yeh.

Speaker 4 (21:56):
I think, first of all, if you look at our developments,
they are all over the globe, right, So I don't
want to stereotype things. I think China.

Speaker 5 (22:04):
Everybody says, hey, look at the speed and.

Speaker 4 (22:06):
The technology that you get. I would say, being in
Silicon Valley and I've been there for over twenty five years,
but it's interesting is that people are willing to try something,
and people are willing to take technology that came out
of one area and say, okay, but maybe I could
do something with it. On the other hand, I think
sometimes automotive is just difficult, right because you know, right

(22:28):
now you see a lot of car OEMs who are
opening or have opened offices in Silicon Valley, have hired
a lot of engineers in Silicon Valley from a lot
of the tech companies, and some of them are struggling
with the fact that automotive it has the boundary conditions
of safety for sure, but it also has the complexity
of being a highly fragmented industry. Right the product mindset

(22:50):
that we are trying to get with our ready products.
When eighteen months you can take something that is actually
ready to go and put it in a car, Traditionally
that's not too automotive worked. So the first time we
started coming out with products, people said, but I don't.

Speaker 5 (23:04):
Need it in eighteen months.

Speaker 4 (23:05):
So right now in Silicon Valley, what you see is
what China has demonstrated as everybody woke up and said
what clearly speed can be done. And right now you
see like this whole impulse where ten years ago everybody
would talk about smartphones, right now a lot of companies
in Silicon Valley are saying there's automotive stuff.

Speaker 5 (23:23):
It's actually pretty cool, but it is difficult and it
is different.

Speaker 4 (23:27):
Right, But I see every day now when I drive around,
I see certainly the Googles in the apples, but I
see also big GM officers or other OEMs coming up
that not just with a small present, but with large,
large presents automotive, which is really cool to see.

Speaker 2 (23:41):
We're going to have to wrap this segment up soon.
But what are the automakers asking from you? You know,
where do they want to take all this digital cockpit?
Or conversely, what are you telling them here's where you
should be going with that?

Speaker 4 (23:56):
I think is what is actually what I enjoy a lot,
is that it is actually more and more conversation. Right
if you go back ten years ago, it would be
you would get five thousand papers of paper. That's that,
these are the specifications, go build.

Speaker 5 (24:08):
It more and more.

Speaker 4 (24:09):
Right now, you get these discussions of hey, what do
you think this is our brand identity? If we were
to do this, this, and this, and we proactively go
in and say, hey, have you thought about doing like
this projection technology?

Speaker 5 (24:21):
You start talking about yeah, but maybe I have to
move my firewall and how do I do that?

Speaker 4 (24:25):
So I would say the fact that there is this
collaboration through collaboration.

Speaker 5 (24:30):
Is actually what's changing the industry.

Speaker 4 (24:32):
I would say also, where a lot of companies are
talking right now is how do you make this software development?
You're talking about systems around twenty tow one hundred million
lines of code.

Speaker 5 (24:42):
How do you make that faster and more reliable? How
do you integrate new features?

Speaker 2 (24:46):
Right?

Speaker 4 (24:46):
So, some people call it, you know, a SDV software
defined vehicle, but it's really how does the industry collaborate
to deliver vehicles that work well? Because no one party
really can develop the complexity of a full car anymore. Again,
gets to the collaboration. What traditionally you OEM may say, hey, harmon,
you build the whole thing, go do it, or they
would say we do it all internal. Right now you

(25:07):
have all these in between models of how do you
truly co define and co make and co own what
goes into a vehicle? I think that's super unique and
it's a great time to be an automotive.

Speaker 2 (25:19):
Listen, it's really good to hear there there's more collaboration
and they're not handing you a big stack of specifications
because that slows everything down. So very interesting to hear
about that kind of a development.

Speaker 5 (25:32):
It's fun. It's actually totally fun.

Speaker 2 (25:34):
Well here we're going to close up this segment of
the show, but thank you so much for joining us.

Speaker 5 (25:39):
Very interesting, great, thank you for having me.

Speaker 2 (25:41):
Thank you.

Speaker 1 (25:45):
Knowing that a little rain won't slow down your day.

Speaker 3 (25:49):
That's what really matters. Bridge done to runs the yatract tires,
confident control in wet conditions.

Speaker 1 (26:00):
Automotive industry continues to evolve, and so do the opportunities
to define it. Borg Warner, one of the world's most
admired companies, gets its partners where they need to go.

Speaker 2 (26:09):
Let's do something big together. All right, we're back and
now we got Paul Watti here with us.

Speaker 3 (26:20):
Great to be Yeah, so what's autopacific looking into of late? Well,
actually I wanted to ask him a few questions. You know,
one of the things we've been talking about, and we've
been noticing in our data is that younger consumers are
actually asking for less tech than what automakers are wanting

(26:42):
to serve up at this point. And it's kind of
surprising that it happens to be the younger end. You know,
the same same ones that are interested in evs, the
same ones that are interested or at least open to
Chinese brands. You would almost think it would be the
opposite end, But there's there's still you know, the older

(27:03):
consumer tends to, you know, still appreciate technology that is helpful.
But we're getting to a point where it seems like
there's technology just for technology's sake and it's not necessarily
you know, making people's lives easier, you know, to a
certain extent. Uh So we're you know, I was interested
to hear his opinion on how you know, a supplier

(27:25):
can can straddle that line of giving consumers enough tech
but without overbloating it. So that's something we've we've seen
in our data recently. But don't you think it's you know,
we were saying that the the OEMs are basically labeling
this on because that makes them look right high tech,

(27:47):
and and maybe the younger generation basically saying, you know,
I've got my phone, that's basically where my life is.
Why do I need an a pillar to a pillar screen? Right?
And you know, Hyundai has recently said that they're pulling
back on some of the digital aspect and they want
to go back to analog controls. And then another one
that brought all of this into focus recently is Slate,

(28:09):
you know, which is bare bones. You know, if you
want more tech, you bring your own.

Speaker 2 (28:13):
In fact, doesn't even have a center screen exactly your
own exactly.

Speaker 3 (28:17):
I mean, the only screen is right in front of you,
and it's tiny, and it's because they have to have
the reverse cam, you know. So it's just in interesting
times that you know, there's so much technology and where
where is that fine line? What do consumers actually want?
How much how much control do they want themselves? And
I think, you know, we're in this period where everybody's

(28:38):
trying to figure that out, and you know, to his point,
he kind of said that automakers are having that conversation
right now, what's what's the right mix of tech and analog?

Speaker 2 (28:47):
I gotta believe too, they're they're looking at this with
the tariffs. Tariffs are going to drive up costs. How
do you take cost out? One way is don't load
up these cars with so many.

Speaker 3 (28:57):
Features, right, I mean, you know, pass and you screens
are becoming a huge, huge deal. But every car that
I've had, my passenger hasn't even touched it, you know,
because they have their phone. So there's an area right
there that you could cut some costs, I believe. So
I thought it's interesting you said the younger people are

(29:17):
receptive to Chinese brands. Yeah, that's our data is showing.
You know, obviously the older generations aren't quite so open.
My generations kind of in between. But the you know,
kids that grew up on TikTok and they're much more
open to you know, global brands and particularly Chinese.

Speaker 2 (29:38):
Plus they're probably more aware of Chinese cars that are
out there, the thing exact they got, and especially the prices.

Speaker 3 (29:44):
Right.

Speaker 2 (29:45):
And I believe even older Americans or whether it's in
Europe or other places too, when offered a car with
all the features they want at a price that is
significantly lower than they can get from any other traditional
law to make, they're going to be interested in Chinese
brands too, right.

Speaker 3 (30:03):
And to your point, it's it's awareness, you know, because
they're they're seeing more of this in their everyday life.
And you know, an older someone who isn't on TikTok
or you know, in social media all the time, might
not be seeing the latest and greatest all the time.

Speaker 2 (30:20):
He speaking of the tariffs, you know, there's about at
least eleven brands that I've identified that I think are
seriously threatened by the tariffs because they have zero manufacturing
in the US. Have you guys been looking into this
and what they might be doing or I'd love to
get your insight on it.

Speaker 3 (30:37):
Yeah, I mean there's it's kind of hard to believe,
you know, like Audi is one in particular that you know,
there's been discussions about bringing their Q lines, you know,
the SUVs to the US somehow. You know, the fact
of the matter is that these things don't happen overnight.
So and do we know if these tariffs are going

(30:59):
to last forever? Is is you know just right now?
That's how it seems.

Speaker 2 (31:03):
But b TOW came out this week and said they think,
at least for BMW, not for the EU, this is
gonna get resolved by July, which I thought was quite
a bold prediction.

Speaker 3 (31:16):
Yeah, and this this is perhaps why the European Union
just came out with a ninety five billion euro countermeasure
package in response to uf US tariffs and European goods.

Speaker 2 (31:26):
I mean, they just.

Speaker 3 (31:27):
Announced this and it's just like they're they're getting ready,
and you know, it seems that you know, you're having
these these countries are saying, no, it's gonna last.

Speaker 2 (31:37):
It's not going to be it's gonna last.

Speaker 3 (31:39):
Right.

Speaker 2 (31:39):
I think that's what you have to assume right now.
But you mentioned Aadi, I'll rattle off some of the
other names, Alfa Romeo Zero US Presence, Fiat, which I'm
not even sure it's going to survive in the US
market with or without tariffs, Maserati, Porscha, what's Porsia gonna do, Mitsubishi, Mini, Aston, Martin, Jaguar,

(32:00):
Land Rover, and then you know, you get into some
of the highly specialized McLaren and brands like that. We
did learn certain certain things. Automotive News had an interesting
report that Mitsubishi's going to get a version of the
Nissan Leaf. The Leaf has made in Tennessee. We had

(32:20):
also reports this week that Audi is looking at building
some vehicles at the Volkswagen plant in Chattanooga, getting some
portion of the Scout production the Scout plants being built.
And then they said a third facility too, and that
got me thinking what could it be? And then I
wondered what Volkswagen group of which Audi is a part,

(32:44):
has got this deal going with the Rivian. Rivian's building
a humongous new plant in Georgia. It's going to take
them a long time to fill that. Can Audi get
production there?

Speaker 3 (32:56):
That certainly seems like a good scenario for both of them,
because Rivian I feel that they would struggle to fill
that capacity anytime in the near future, not that it's
not possible, but they have to be looking at business
side of it, well, how are we going to make
the most out of this? How are we going to
make the most out of these jobs that we promised?

(33:19):
And so I think it could be a mutual benefit
to both of them to look into that. So what's
your sense of Okay, so, as is well known, EV
sales are not exactly setting the world on fire, and
they're not setting the world on fire in the United
States either that, Okay, Rivian builds another plant to build

(33:40):
what more electric vehicles? Do you think this would be
a case where Audi might say, well, you know, we've
got a line of electric vehicles and maybe we've got
to build them there. Or would they build ice vehicles there? Yeah?
I mean that's a good question, and I think it's
hard to say what the future is really going to bring.

(34:02):
But right now, you know, we're still forecasting you know,
well below what people were saying, you know, five years
ago at the turn of the decade, we're still thinking
in terms of EV, in terms of EV market share,
I still don't think it is going to crest into
the thirties until into next decade, particularly here in the US.
I'd be surprised if it's in the teens. Well yeah,

(34:26):
and especially because more automakers are talking about hybrids now
and again you know that's come back into the forefront.

Speaker 2 (34:32):
You know, another interesting thing, Mitsubishi has got to deal
with Fox KHN. Now Fox Cohn's going to build I
think it's an EV for Mitsubishi in Taiwan for export
to Australia and to New Zealand. And that got me thinking.
Fox CON's got the old GM Lordstown plant, which my

(34:56):
understanding is that thing's sitting empty right now. I don't
think they're building anything there.

Speaker 3 (35:00):
Large large town plan.

Speaker 2 (35:02):
It would would Mitsubishi get a deal with fox Con
to start building vehicles there.

Speaker 3 (35:08):
I mean, mitsubi needs volume in this market and and
you know, having an EV for sale is not going
to get them the volume they need, right And that's
what I wonder about you know, we're talking about the
you know, the possibility of getting a a a Nissan.
They have the pathfinder right now that what is their
version of it called the the cash Guy. No, no, no,

(35:28):
the oh it size suv that that mits is is
that the one based on the Nissan Landers Sport. I
thought it's a would, but I mean it's just like
I mean, it's it's it's the plug in hybrid version
of it. It's identical car, I mean, And so they're
already got to deal with them.

Speaker 2 (35:48):
Yeah. Well, look, I think Mitsubishi only sold like sixty
six thousand vehicles in the US last year. That's I mean,
you can't run a plant on sixty six thousand. But
I gotta believe that the low word'stown plant phone is ringing.
There's got to be somebody talking to them to say, hey,
we need we need us capacity asap.

Speaker 3 (36:09):
Is there anybody in the plant that's answering the phone. Oh,
they opened up space for Fisker and you know how
that worked out.

Speaker 2 (36:16):
Yeah, exactly. But Paul, how do you think that these
automakers that have either zero US manufacturing presence or brands
that are part of bigger companies. I'm thinking of Infinity
as being part of Nissan Leaxus being part of Toyota
Minimal minimal us manufacturing footprints there. How do you think

(36:39):
they might deal with all this?

Speaker 3 (36:42):
I think we're going to see soon. But you know,
like Ford, they just said what they were going to
do with their Mexican built products. I feel like, you know,
they set a precedent there, to be honest, I think
it was a good move on their part to do
it early. You know, you're reflecting you know, honest pricing
at least for the moment. We're going to see a

(37:03):
lot of you know, dealer tactics. Uh, there's finance tactics
that they can use to try and you know, increase
some margins, uh, trim trim levels, shuffling. Portie is also
said that you know, they're they're just going to make
their cars more expensive if they if they're going to
continue to sell them here. And unfortunately, I think that's

(37:24):
the reality of what's going to happen, is that the
consumer is going to get the butt end of it.
It's going to catch up. But all of them are
going to fall into line somehow.

Speaker 2 (37:33):
Uh.

Speaker 3 (37:33):
They it's it's an unsustainable scenario the way that it
is now, and like we talked about, you know, these
massive plants take years to build and that's not going
to help in the short term. So you know, there's
got to be something else that's going to have to
happen in between now. And if they are thinking of
doing a plant, what are they going to do in

(37:54):
the meantime? They have to raise the price? Uh, to
stay alive?

Speaker 2 (37:59):
H Gary, what do you think of Forward raising prices
on it? It's Mexican built medicle.

Speaker 3 (38:02):
All right. So so before I have to say that
I was wrong, it wasn't the Pathfinder, It's the Rogue,
and you were right. It is the l Landers and Specie. Okay,
That's why I was confused the Pathfinders. I'm confused constantly.
So yeah, I mean that that that, you know. It's
it's interesting that the situation with Ford and upping the
price on the Broncos Sport, the Mustang moc E, and

(38:23):
the Ford Maverick because, as our our friend Mike Martinez
from Automative News pointed out to me, the day that
the price increases for those vehicles up to two thousand
dollars was announced, that he pointed out that Farley had
just said the week before that they were going to
wait and see what the other OEMs were doing, and

(38:43):
he made a quote which said, um that that Ford
is only in the quote first or second inning of
a nine inning game, meaning that you know, we got
to see how this thing plays out. But you know,
they also announced that they are going to take a
one point five billion dollar hit as a result of

(39:03):
the terrafs. I think it was two and a half,
two and a half in GM was four and a half, right,
I believe right, three to four.

Speaker 2 (39:09):
I think they were Oh no, no, four to five
is what GM said. And then Toyota came out today
and said it's going to shave twenty one percent after
operating profit. I dug out the numbers. That's six billion dollars.
And that's not Ford and GM are talking about added cost.
Toyota's talking about taking that amount of profitability away.

Speaker 3 (39:31):
So the question becomes, Okay, if you're Ford, you're building
those vehicles there so you can bring them here and
sell them an affordable price and get volume. Could they
build the Maverick here and have the same sort of price.

Speaker 2 (39:48):
Where where would you build it? Well?

Speaker 3 (39:50):
I mean, that's the thing. Those are those specific products
are on the CD four platform, which is you know,
they don't have tooling here to do that. So again
it's where they're going to open up capacity at a
different plant and put in what is being phased out,
a technology that's being phased out, a platform that's being
phased out, and all of a sudden add that here.

(40:12):
I mean, that doesn't make much business sense either.

Speaker 2 (40:14):
You know, because there's a lot of talk about well,
there's excess capacity. The Union, the uaw's talking about that, Oh,
there's open capacity, they can bring it back. Well, yeah,
there is open capacity, but that doesn't mean you can
take a vehicle like the mock E and stick it
in a plant in the US or the Maverick or
the Broncos Sport. I mean, you know, you get into
very basic, uh you know, issues like does it fit

(40:38):
in the paint booth, does it go down the line
in the body shop? You know things like that that
you know people just think, well, you got access capacity
builded there. It's not that easy.

Speaker 3 (40:48):
Well, and all those products in particular are not really
profit heavy in the first place, so it's a good
place for them to start at least, you know, before
the margin erosion really hits. Uh, start at the ones
that are not really that. I mean, Maverick might be
a little more profitable, but Maki certainly probably isn't.

Speaker 2 (41:10):
No, they lose money on the Maki. Yeah, so we
all know that.

Speaker 3 (41:14):
You know, they're not saying they have little exposure uh
to other markets, because they do build a lot here,
which is good for them. Obviously there's still parts that
come in, but I think it's it's a good way
for them to stay ahead. They're also telling investors that, hey,
we're taking this seriously, and we're not. We're not gonna

(41:35):
let this just eat away at everything yet, you know,
so I think getting out ahead of the game is
probably going to play in their favor in the long run.
But why do you make an announcement that you're gonna
wait and then you see, Well that that part is confusing.

Speaker 2 (41:48):
So what what do you think Farley saw? Well, I
think if you say we're gonna wait and see what
others are gonna do before we raise prices, the next
week he raised prices. What do you think he saw?

Speaker 3 (41:58):
I think he saw that this is going to be
the real problem going forward, and that he was going
to be an inevitability. And as you say, he's going
to get ahead of the curve, and you know you
might as well because you're going to do it sooner
or later anyway. And oh, by the way, they've got
you know, made in America form America until July fourth,
that's fourth. I wonder why they make that date. You know.

Speaker 2 (42:17):
The thing that I see is, let's say that the
freight on board price, the factory price of a Maverick
coming across the border, for argument's sake, make the math easy,
is twenty thousand dollars. You know, they mark there's dealer
mark up and shipping costs and blah blah blah blah.
That at you know, change the MSRP. But if it
comes across the border at twenty thousand dollars, for argument's sake,

(42:40):
it's twenty five percent, that's five thousand bucks. And yet
Ford's only raising the price two thousand. That means it's
eating at three a three thousand dollars tariff. And I
got to believe for the mock e the tariff has
probably double that. It's probably closer to ten grand, maybe
even more so. That means Ford's eating eight thousand dollars

(43:00):
on top of all the losses that's already got with
the Maki. That's what I think Farley saw. I think
his finance people came to him and said, Jim, we
got to raise prices.

Speaker 5 (43:10):
Now.

Speaker 3 (43:10):
Well, I mean, arguably, the Maverick is I mean, such
a hot vehicle they're sell you know, Machi sales, you know,
I know you think they're a lot. But and Bronco
Sport is not doing terribly well, especially if you compare
it to grab for Sierrav or even Equinox. But again,

(43:32):
like those are three products that are kind of specialized.
When you walk into a showroom and you want a Maverick,
you know you want a Maverick, even if you've got
to pay two thousand dollars more. Maybe instead of getting
the high end trim, maybe you drop down a trim level.
I think for the products that they chose to do
it out initially, it makes a lot of sense. And

(43:53):
I think, you know, Farley did say, we're not passing
the full cost of this tariff on to the consumer.
Like to your point, it say it's five thousand, they're
eating two, they're they're charging too, and they're eating three,
you know, and so it's it's still a net benefit
to the consumer in the long run, because, like I say,
there's gonna be hidden tactics. There's all kinds of levers

(44:15):
that they can pull to tweak extra profit, you know,
increase the hand shipping and handling. You know. It's like
you see the MSRP, but then you get to the
sign the documents and it's like, where did this extra
three thousand come from? I thought it was like a thousand,
But I mean those three vehicles are basically Fords vehicles
that are not built here, right, Yeah, I mean what.

Speaker 2 (44:37):
Else Nautilus from China? And that's about it. Yeah, they
don't build anything in Canada as of the moment.

Speaker 3 (44:44):
So what are the gonna do with the Nautilus?

Speaker 2 (44:46):
Same thing?

Speaker 3 (44:48):
There's how many grand will that be increased by if
you have one hundred and forty five percent? Another qu
what are they going to do with Oakville?

Speaker 2 (44:55):
Well, yeah, Oakville was supposed to go to heavy duty trucks, right,
super duties, and now there's a tax on that, so
that plan might get deep six, and same with the
Nautilists might get deep six. And that's what I'm coming
back to you know, I kicked off this conversation saying
I've identified eleven brands that have zero U I'm talking

(45:16):
major brands that have zero US footprint. What the heck happened?
So if you're part of a company that maybe like Volkswagen,
maybe Audi can get a little bit of capacity, maybe
Mitsubishi can work a little bit with Nissan, but the
others they got nothing.

Speaker 3 (45:32):
Okay, But several of those companies are Stilantis brands, and
of course there is Stilantis capability in the United States,
and you could say, maybe there's going to be some
sharing done there, right, maybe yeah, I mean maybe not
for Maserati, but.

Speaker 2 (45:50):
Or Alpha or even Fio Alpha.

Speaker 3 (45:53):
I mean Tanali and the Hornet.

Speaker 2 (45:55):
Yeah, no, that's a good point. You could probably do
that here.

Speaker 3 (45:58):
But in the way that their platform are going, there's
supposed to be you know, standardized platforms that you know,
hopefully there would be a lot that is going to
be common parts. That was Tavars' you know, right. He
wanted sister cars, so to speak, and so they could
be built on the same lines and they could use
similar technologies and a lot of shared components.

Speaker 2 (46:17):
So and one other development too, Dave, is Trump signed
a trade pack with the UK. Looks like anything coming
out of the UK, which is England is going to
have a ten percent tariff. And when you think about,
they're already paying a two and a half percent tariff,
so it goes to ten. So that's really only a

(46:38):
seven and a half percent increase.

Speaker 3 (46:41):
So the deal because on Liberation Day he announced that
the UK had a ten percent tariff.

Speaker 2 (46:48):
Oh did he really?

Speaker 3 (46:49):
Okay, well then no, I mean, but no, I understand
that they've announced the deal, but I mean, I just loot.
It's just like, well, what kind of deal is?

Speaker 2 (46:55):
But I think the ten percent was just across the board.
I think it was still twenty And another thing that
Trump said, and that's the thing, it's so hard to
keep track of what he's really saying and meaning. But
he was saying all vehicles twenty five percent, except for
the ones from China they one hundred and forty five
percent or whatever you quoted. But let's let's get to
the most important news of the week. They're bringing back

(47:19):
the UGO. Paul, what do you think about that? The
you go, why would you even think of trying to
bring it back?

Speaker 3 (47:27):
You know, I don't really know. I didn't even know
that that happened.

Speaker 2 (47:31):
I'm sorry, Oh yeah, yeah, I know that that news
broke today or late.

Speaker 3 (47:34):
So obviously they're at autopacific. You guys are like burning
the midlight oil, going when is Yugo going to come back? Exactly?
I've been waiting for this. You better factor that is,
start researching the hell out of this. It's gonna happen.

Speaker 2 (47:46):
Garry, what do you think? You go?

Speaker 3 (47:48):
Ah, I think that there are people who have more
money than they have sense, and it's it's not a thing.
I mean, it's just not going to who's behind it.

Speaker 2 (48:04):
It's some Serbian because remember the Yugo based in Serbia,
the former Yugoslavia. Some investors got the money, or allegedly
have got the money together. They're working with former Ugo
engineers and they're coming up with this little electric hatchback,

(48:25):
very modest. It's got like a forty kilowa hour battery
pack zero to sixty and twelve seconds, but priced under
fifteen thousand euros. So I bet if we.

Speaker 3 (48:38):
Look, there's probably like a dozen companies in Europe that
have that exact same vehicle that we have never heard of. Before,
and we'll never hear of period.

Speaker 2 (48:48):
Look, the only reason we know about this is because
they're using the Yugo name, all right. If they had
called it something else, we wouldn't even be talking about.

Speaker 3 (48:56):
What if somebody announced that they're going to have the
trebant and bring it here. I think that would be
more successful.

Speaker 2 (49:01):
Nobody in the US knows what the trabant. We we know,
but the public has no idea. Everybody in the US
heard about the Ugo, remember the one that blew off
the And that's the only reason they heard of it
off the macinab ridge.

Speaker 3 (49:14):
How did they even get the rights to the day
there's somebody connected with it that.

Speaker 2 (49:18):
Was who knows, Maybe there was, maybe the name had
been dropped. I don't I don't know that. That's a
good question. I don't know how they got the name.
They probably got it for pennies.

Speaker 3 (49:28):
Right, Yeah, highly valuable brand. Well, you know, going back
to Ford I thought it was interesting and we've talked
about ford Pro before and apparently at the shareholder meeting,
Jim Farley announced that they're going to keep Ford Pro.

Speaker 2 (49:45):
So ford Pro just for those who don't know, that's
the commercial truck and Van part of Ford Mortar can right.

Speaker 3 (49:49):
So then rather than spinning it off and have it
as a standalone that none, No, We're going to keep it.
And you know, it occurs to me that questions like
that come up caused by something. You know, there's a
little little bit of sand that turns into the pearl,
and I'm just wondering what that little bit of sand
might be in this case. Get any sense, Paul. I mean,

(50:11):
Ford Pro is definitely a profit driver for them, and
there's been so much development in the software capabilities that
they're trying to bring in to the fleet customers. I
don't know why they would want to spin it off,
to be honest, but.

Speaker 2 (50:26):
I don't think they would. I mean, when you look
at their first quarter earnings which they reported this week,
I mean virtually one hundred well not one hundred percent,
but like ninety percent of all the profits that Ford
reported came from ford Pro. There Ice operations, what do
they call that, Ford Blue. It barely made any money

(50:47):
at all. The EV stuff lost, you know, well, actually
they made some improvement, it didn't lose as much, so
that's saying something. And then Ford Finance kicked in some
money for the bottom line too. But Ford Pro is
the is the profit engine at the Ford Motor Company.

Speaker 3 (51:06):
So would it not be more valuable to investors were
it to standalone versus having these other parts of the
business that aren't doing as well.

Speaker 2 (51:17):
The only way that would benefit shareholders is if Ford
spun it off and as an existing Ford shareholder, you
got stock in the new Ford Pro. But I think
it's going to be very difficult to spin it off
because you know the way it works. Ford Blue actually
sells all the trucks and vans that Ford Pro sells

(51:40):
to Ford Pro. Ford Pro has to buy the cars
and trucks. This is how the internal financing works at
Ford Motor Company. They have to buy those vehicles and
then they sell them, so which is where the big
markup is. But so how do you I guess you
could spin it off. But if I'm a shareholder, what

(52:00):
becomes a Ford Motor Company if you spin off its
most profitable operation.

Speaker 3 (52:04):
I mean you just mentioned all those profits and where
they came from. I mean, what's going to booy the
regular company if if not for Ford Pro. So if
I'm a Ford Pro owner, I don't care, right right,
It's just like but it's like, I don't care about
that electric vehicle stuff. But point, what about all the
investors that are invested in Ford right now? I mean,

(52:26):
do they get a choice? Do you want to stick
with this one or you want to go with this
one that well usually you know, not the one that
makes it are one one that doesn't.

Speaker 2 (52:34):
Well, you know, it's really going to come down to
the Ford family, and the Ford family loves getting the
dividends that it gets. You notice that Ford doesn't do
any stock buybacks. General Motors has been poring billion, tens
tens of billions of dollars into buying backstock. Ford has
never put a I don't think a penny into buying backstock.

(52:56):
Why the family doesn't want that. The family wants div
it ends. So if you spin off Ford Pro and
what's left over doesn't make any money, it doesn't pay
any dividends. I don't see the Ford family going along
with this at all, which means it's not going to happen.

Speaker 3 (53:13):
Yeah, I'm i'm I didn't know that that was even
that they were thinking about that.

Speaker 2 (53:17):
We neither Gary brought that up. He was paying attention
to the the shareholder meeting.

Speaker 3 (53:22):
All right, and I just want to make it clear
you guys were wrong. I already admitted that I was
wrong earlier about the Nissan. It's a busy situation. So
it is one point five billion that Ford said it's
going to lose, not two point five Okay.

Speaker 2 (53:33):
Yeah, okay, that they're going to lose one point five billion, correct, Okay,
not to I think the two.

Speaker 3 (53:41):
Since I'm doing this whole whole Ford pro thing spinning off,
and you guys are defending them, I want to make
it clear that I have their best sistress at heart
well as well. So okay, So Paul, what do you
think is going to happen to auto sales July August?

(54:03):
I mean we're probably you know, like there's there's still
people like buying things, you know, fractically right now. What's
going to happen? Then it's anybody's guess at this point.
I mean, like, like I said, no, I'm good to guess.
And I think I think we're going to see Q
three is when we're going to start to see everybody saying, hey,

(54:23):
we gotta we got to raise the prices somewhere. I
do think we're going to see uh, new vehicle sales
start to tail off, and I think use used car
market is definitely going to get saturated with new buyers,
and those prices are going to go up.

Speaker 2 (54:39):
They're already going up whole exactly full sale, and it's
just a matter of time before it's at at retail.

Speaker 3 (54:45):
Right So, uh, I think sales are going to be down.
I don't want to give any numbers because we're working
on our forecast right now, but I do think they're
going to be down quite a bit from what people
expected coming into the year. What do you think you do? Okay, Okay,
here's the question. Do the sales decline or do the sales.

Speaker 2 (55:08):
Cre creater crater creater? And look, it's easy to say.
We saw some brands last month have unbelievable increases in sales.
Infinity was up like thirty three percent, Lexis was up
in the thirty percent region, Lincoln was up forty percent.
All those buyers are rushing into the market right now

(55:29):
because they know prices are going to go up. I
want to get that Nautilists and they want to get
that Nautilus exactly right. And so I think sales in
May will also look pretty good. There's still more people
running into the showrooms going they know the price hike
is coming, and so June, I think we're going to
start to see things look shaky, and July to your
month there, that's when I think they take a nose dive.

Speaker 3 (55:52):
So okay, we all know that there are undoubtedly discussions
going on that you know, Mary bear is talking to
the White House and Jim Farley's talking to the White House.
And but even if they get relief, there are still
the aluminum and steel tariffs that exist and those are

(56:16):
twenty five percent.

Speaker 2 (56:18):
But I thought they were lifted for cars. Yeah, because
I thought that the Trump White House said, wait a minute,
we can't have tariffs stacking up on top of.

Speaker 3 (56:27):
Tariffs, so if you're bringing in im but it was
it was a stacking thing, but it was. It was
stacking theme on parts though, wasn't it. No, Well that too,
pars and materials.

Speaker 2 (56:36):
I thought, yeah, I think there is. I think, and
see again, this comes back to it's so hard to
you know, and I go to the White House, you know,
and I read the press releases and it changes constantly,
so I I but I believe at this moment there doesn't.

Speaker 3 (56:53):
Change those big headlines though that are right, So I
believe for the moment right now now there are no
tariffs on steel and aluminum used in the auto industry
in the US. I think, well, I'd be pissed if
I made cans.

Speaker 2 (57:08):
Yeah. Hey, another quick thing before we wrap up the show.
Have you guys seen the pictures of the new interior
of the Corvette? Paul, What do you think?

Speaker 3 (57:20):
I just got out of a Corvette a couple of
weeks ago, and I like it, I personally of the
new one you got in no, no, I know, in
the twenty five, in the exist in the existing one,
and you know, I think there's there's a lot to
like about the driver focused. I think this is just
another next level. I'd like to see it in person

(57:41):
and sit in there because it really, you know, sitting
in a Corvette is It's just just a special thing,
you know. And when I first said it, I didn't
think I would like all the controls and the way
that the spine there for the HVAC, but it worked.
I like the new interior and I think it's gonna

(58:03):
do well. So what what what do you see as
the future for Corvette? I mean, I hope that they
retain ice. I know that there are working on electrified
versions beyond the E ray. Does the E rate ever
come up in your research? I mean, does anybody even

(58:23):
know that? It not really, I don't know how, I
don't even know. They obviously don't break out sales values,
but I don't think I've I've seen any except for
I know somebody in the industry that that just bought
one recently. But yeah, it's something that I don't think
many people are necessarily going out looking for at this moment.
But it's cool technology.

Speaker 2 (58:45):
Have you seen You've seen the pictures? What's your reaction.

Speaker 3 (58:51):
I think that in the corvette space is where General
Motors can prove its technological and design relevance to the market.
You know, I'm not big on the Celestik as you
well know, and I just think that's not not germane
to their mission. But I think doing stuff like that

(59:11):
for the Corvette can can help drive the company forward
in terms of the way it executes, the way it's
a halo product, So you know that's but you could
have a halo product and it could be like, yeah,
but this, I mean you can tell that there is
you know, a level of commitment and passion by the
people who get that assignment. Right. If you get if

(59:33):
you're a designer and you get on the corvette team,
you know that's something special. If you get on fill
in the blank, and there are many of them, it's
just like, that's nice.

Speaker 2 (59:43):
But the thing that I liked about it is, you know,
you mentioned there's sort of a grab handle spine on
the center console that I had a whole bunch of
switches on it, and a lot of people hated that
it's gone. There was sort of like a little flip
up flap thing on the center console. If you opened
it up, you could drop your keys in there. There

(01:00:04):
was a cup holders. Now there's just sort of molded
in cup holders. But everything it's got nice bezels on it.
It's got a nice Corvette logo at the bottom of it.
There is French seams and a lot of stitching everywhere.
They're really emphasizing craftsmanship, which is a puzzle why they
didn't do this from the get go. They were probably

(01:00:27):
doing things to a budget and realize, you know, if
corvettes are starting to get up into prices in the one
hundred and fifty hundred and eighty thousand dollars range when
you're in zero ones and ZO six's and all that
sort of thing, it's got to look like it costs that.

Speaker 3 (01:00:40):
Okay, but don't you think that For the C eight,
they basically said, hey, you know, we want to make this.
We got to do something for the cockpit and make
it like a cockpit rather than something that is like
a fine coach built execution. Right, we want to make
this like a fighter jet. And because you know you're saying,
when you sit in a cor it's a different feeling, right,

(01:01:01):
you know, you sit in the car, you're enveloped in
this thing. And I think that that was that was
their thinking about, like, okay, let's let's make this as
Lockheed as possible rather than automobile or coach building.

Speaker 2 (01:01:17):
Well you know, now they're seriously, uh maybe not from
a brand standpoint, but from a total vehicle standpoint, they
can stand toe to toe with Ferrari and Lamborghini, and
absolutely the interior better look like as good as a
Ferrari or a Lambeau, is right, And I think they
they said, come on, let's spend the money and do
it right.

Speaker 3 (01:01:36):
And to your point, they may have had elements of
this new design in mind from the beginning, but budget
obviously comes into play and you always got to have
something next. And you know, so this is kind of
their mid cycle.

Speaker 2 (01:01:49):
You know, that's a really good point. Maybe that was
part of it all. You know, you're right, you need
a mid cycle enhancement. Yeah, and this is with the.

Speaker 3 (01:01:57):
Corvette because they have all the different variants. You know,
they're not necessarily changing the xterior. It's about the experience
on the inside, right, that really matters, especially to a
Corvette driver. Right. So well, and you got to think that,
you know, when they went to the mid engine that
they had to fight that battle, and they probably didn't
want to have to fight a battle of Gee, that's

(01:02:17):
really a sophisticated interior that you have there. That's not
a Corvette at all.

Speaker 2 (01:02:23):
All right, any other burning thing? Or should we wrap
it up?

Speaker 3 (01:02:26):
Should wrap it up?

Speaker 2 (01:02:27):
Going to wrap it up? Paul, thanks so much for
being on the show. Always good to have you here. Great,
We'll keep on doing it. I want to thank all
of you for having tuned in.

Speaker 1 (01:02:37):
Auto Line After Hours is brought to you by Bridgestone
Tires Solutions for your Journey and by Borg Warner. The
automotive industry continues to evolve, and so do the opportunities
to define it. Borg Warner, one of the world's most
admired companies, gets partners where they need to go. Let's

(01:02:57):
do something big together.

Speaker 2 (01:03:00):
Six