They raised almost $30 billion, ($20 billion in investor money, and almost $10 billion in debt. Of the recent car startups, the only one that is producing significant numbers of cars is Tesla. Launching a NEW car company into an industry that already has more vehicle production capacity than customers strikes me as the classic definition of how to make a small fortune: “Start with a large fortune.” And this is Ford, which already has a fully-staffed design and engineering organization. Buying Volvo Cars (and Volvo’s car designs) for $6.5 billion was apparently cheaper than designing their own cars. Do you have an extra $20 to $40 billion dollars burning a hole in your pocket? Then you might be a great candidate for starting a new car company.īack in 1999, Ford had a problem – their car designs were seriously long in the tooth and they desperately needed new designs. Cars (even “simple” ones) are massively complicated machines with thousands of parts that have to be assembled with almost unbelievable precision. I’ve seen multiple estimates that put the cost of designing a car (even a cheap one) at several $Billion. Mostly, I’d say the barrier to entry is the high cost of starting up a new car company. Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here. Click on the beer and iced-tea mug to find out how: GM, Ford, and FCA may never be able to fully recover from this monumental blunder.Įnjoy reading WOLF STREET and want to support it? You can donate. And with gas prices where they are now – $6.15 a gallon of regular at my local gas station – those cars sure come in handy. GM, Ford, and FCA just surrendered this business to Toyota, Honda, Tesla, and the other automakers that are still making sedans. Car sales were down 25% from a year ago, as Toyota cannot make enough of them due to the chip shortage, and it too is prioritizing high-profit-margin trucks and SUVs, whose sales also declined as dealers ran out of inventory, but there is enough demand for cars. Toyota’s sales included 142,523 cars, Toyota and Lexus models combined, with 47,501 Corollas at the low end and 78,151 Camrys at the higher end. Toyota’s sales in Q1 fell by 14.7% from a year ago, to 515,592 vehicles, but this surpassed the sales of GM (512,846 vehicles) and Ford (432,132). GM, Ford, and FCA just walked away from the market to please some analysts at Wall Street banks, which will likely go down as one of the stupidest decisions ever in automotive history. Tesla is making the Model 3, its lowest-priced model. Honda and other foreign automakers are still selling lots of sedans as well – many of them lower priced cars that get great gas mileage. “Unlike other brands that have exited the sedan market, we’re choosing to double down,” he said. “Cars are still an important part of the market,” he said. “A lot of our market share growth is really in the car side of the business,” Bob Carter, executive VP of sales for Toyota Motor North America, told reporters at a briefing Wednesday. But it sold lots of those hated sedans, including lower-priced sedans that cost a lot less than SUVs and pickups, that the others have walked away from.Īnd Toyota is now rubbing it in publicly. This time it also suffered from chip shortages and its sales were also down from a year ago. Toyota was #1 for the first time ever on a quarterly basis in Q2 2021, largely because it still had access to chips, while others didn’t, and it blew everyone away.īut in Q1 2022, Toyota was #1 again. The former #3 in new vehicles sales in the US, and then the #2 after Ford walked away from sedans, is now #1. It was a move, designed by some corporate idiot perhaps with the support of some lavishly paid recently graduated MBAs at some big-name consulting firm, to please short-termism-infected analysts on Wall Street.Īnd Toyota is having the last laugh. But the whole mainstream lineup of sedans is disappearing.Īt Ford, for example, outside of the Mustang, every car model got axed, from the entry-level Ford Fiesta that had a starting MSRP of $14,200 in 2019, its last year of production, to the Ford Fusion Hybrid, a large well-designed car that got around 40 mpg, which would be sorely needed at today’s gas prices. They kept their muscle cars, and Cadillac kept two models. GM stopped taking orders for the Malibu in February. To please Wall Street and concentrate on the highest-profit margin trucks, SUVs, and crossovers, GM, Ford, and FCA have killed nearly all their sedan models. Abandoning them was an idiotic move to please Wall Street that’s now haunting the Big Three US automakers. There’s demand for cars, often lower priced.
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