GM Not Interested In EV Price War, Mary Barra Says

0

Tesla and Ford Motor Co. may be engaged in an EV price war but General Motors Co. CEO Mary Barra says her company isn’t playing. Combine the prospect of the Fed raising interest rates, still high transaction prices and a lumbering return to full vehicle production and it all adds up to little relief for consumers looking for a good vehicle deal.

Indeed, a new credit report released Wednesday by TransUnion revealed monthly auto loan payments are continuing to rise and an analysis by Cox Automotive shows auto loan interest rates in a steady climb creating an even more onorous burden for consumer financing their vehicles.

When Tesla announced 20% price cuts in January, Ford countered by reducing the price of its battery electric Mustang Mach-E from $600-$5,900 depending on the model. Volkswagen almost immediately said it wouldn’t follow suit by cutting the price of its electric vehicles.

The prospects of a full-scale EV price war, however look slim, but clearly the premium for the battery-powered vehicles is a barrier to consumers who are either not able, or interested in paying the extra cost to give up their fuel-burners.

What’s likely to occur is some sort of price moderation or discounting short of a wholesale sticker price slashing.

During a conference call with financial analysts Tuesday to discuss full-year 2022 and Q4 financial results, GM CEO Mary Barra made it plain the automaker was quite satisfied its pricing is in line with demand for its products.

“When we look at our strong current product portfolio and the interest that we have at the prices that we’ve always already announced, we feel that we’re well positioned,” said Barra. “Even going into the first month of the year, we’ve seen a very strong customer interest in our products, and so, you know, we think right now we’re priced where we need to be. Of course, we’re going to monitor it and we’ll make sure we remain competitive.”

Sticker price, however, doesn’t tell the full story for auto shoppers who must finance the purchase of a new or used vehicle. According to the TransUnion study, despite average transaction prices ebbing from record highs, monthly auto loan payments increased.

“The fact that new vehicles made up more than 40% of all cars financed this quarter for the first time since the end of 2021 is a sign that the new vehicle inventories are improving from significant supply shortages earlier in the year,” said Satyan Merchant, senior vice president and automotive business leader at TransUnion in a statement. “However, despite a decrease in the average amount financed for both used and new cars, inflation and rising interest rates continue to impact consumer affordability, with monthly payments for both new and used vehicles continuing to rise, albeit more slowly.

According to the TransUnion study, the average monthly payment on a new car loan was $718 during the last quarter of 2022, compared with $654 during Q4, 2021. The average monthly payment on a used car loan was $530 during the final three months of 2022, up from $493 in the same quarter of 2021.

Similarly, in his weekly auto market report, Cox Automotive Chief Economist Jonathan Smoke sprung further bad news related to auto loan interest rates.

“The volume weighted average new auto loan rate on Dealer Track so far in January has increased another 39 basis points to 8.41% and is up 311 basis points year over year,” reported Smoke. “The volume weighted average used auto loan rate is up 52 basis points to 12 point 88% and is up 348 basis points from a year ago. That change in auto rates causes payments to increase by 10%.”

While supply chain issues and other Covid-19 pandemic-induced production interruptions caused dealer inventories to dwindle, automakers pulled incentives and discounts since there really wasn’t much metal to move.

Production is working its way to a return to pre-pandemic levels, raising inventory levels and consumers are demanding some sort of break.

Smoke reported the share of new vehicle financing transactions featuring a 0% annual percentage rate increased to 5.9% in January, mostly at the beginning of the month but would rise even further.

“With limited supply fewer 0% financing offers were made last year, but consumers are looking for them this year with interest rates much higher,” Smoke said.

GM shoppers may be able to look for them, but with the company not joining the pricing wars, the monthly payment may still be steep. Indeed, as chief finanical officer Paul Jacobson indicated during the call with financial analysts, a yin and yang combination of some price hikes and return to discounts is likely this year.

“We’re not contemplating big ones this year. We have some new launches,” said Jacobson. “We are assuming that there is going to be some steady increase, normalization of incentives.”

So, a kind of wash. Certainly, no hope for anyone specifically shopping a GM electric vehicle hoping the company will eventually relent and join the EV price war.

Digging in when pressed by one financial analyst, Mary Barra gave such talk a final brush off with, “We’re well positioned, and the strength of our product portfolio, I think is what is giving us the confidence of where we sit right now, we’re feeling we’re priced appropriately.”

Stay connected with us on social media platform for instant update click here to join our  Twitter, & Facebook

We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.

For all the latest Automobiles News Click Here 

Read original article here

Denial of responsibility! Rapidtelecast.com is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
Leave a comment