Automotive Industry Trends

There has been much handwringing about the increasing credit problems of subprime borrowers and the fallout on the financial system and economy. Subprime borrowers are indeed suffering serious financial stress. The delinquency rate on #subprime loans (loans to borrowers with below a 660 Vantage score) jumped to 8.3% in September. This is the highest delinquency rate in September since 2010 in the immediate wake of the Global Financial Crisis. And the direction of travel is disconcerting. It is just more evidence of how hard-pressed lower and middle-income Americans are. However, worries that losses on subprime loans will be a big blow to banks and other financial institutions are overdone. Subprime loans outstanding as of this September total $2.63 trillion, equal to 15.3% of all household debt outstanding. At their peak in 2007, they totaled $3.38 trillion, equal to 28.2% of outstanding debt. Outstanding subprime first mortgage loans are a shadow of what they were in the lead-up to the GFC, and there is about the same amount of subprime bank cards outstanding. Consistent with the recent bankruptcies in the auto sector, there are more subprime auto loans outstanding than prior to the GFC. Still, even so, they amount to just over $400 billion in outstanding. Not enough to do the financial system or the economy in. At least not yet.

India is losing one of its most successful export stories without realising it is happening. We are the world's largest two-wheeler exporter. Bajaj, TVS, Hero, Royal Enfield dominate ICE two-wheeler imports across Asia, Latin America, and Europe. But these exact same markets are now shifting to electric. And in the electric race, India is nowhere. .. Look at 2025 data: - China exported 9.5 million electric two-wheelers globally. - India exported 8,278 units. The entire country, in one year. Of even those 8,278 units, the TVS BMW CE 02 alone accounted for 59.4% of total Indian e2W exports. Now overlay this on markets we have dominated for decades. .. Nepal. India holds 98% of ICE two-wheeler imports. China has 76% share of e2W imports, led by Yadea, NIU and Sunra. Nepal wants 60% e2W penetration by 2030. Already, 20 to 35% of new two-wheeler sales there are electric. Take Austria. India has 11% of ICE imports. China holds over 40% of e2W imports. Austria is targeting 100% e2W penetration by 2040. Argentina. India has 15% of ICE imports. China has 75 to 85% of e2W imports. Argentina wants 100% e2W by 2050. Today, electric is only 3% of two-wheeler sales there. Mexico. India holds 20% of ICE imports. China commands 78% of e2W imports. Demand is surging from e-commerce, food delivery, and gig economy fleets. .. The pattern is identical across every market. India owns the past. China is buying the future. And the painful bit: these are not new markets we need to enter. These are markets where Indian dealer networks, brand recognition, and consumer trust already exist. Why did this happen? Hardly a handful of Indian players have made e2Ws which are competitive against Chinese players. And, the whole of the PLI support is going to e2W makers that are only focused on domestic markets (Ola, Bajaj, Hero etc). How else do I put it? We are incentivising players, who don’t want to compete abroad in e2W space, and leaving the innovators with zero support to fight Chinese subsidised giants. ..  It is happening now, in 2025, in the very markets where we are strong. If we do not move in the next 24 months, we will look back in 2030 and realise we quietly handed over a crown jewel. What is the plan? Our investors must ask that to the industry. And likewise, the industry must ask that to the Govt! .. PS: I share several biz/economy deepdives daily, with 40k+ people on WhatsApp. Do check out here: https://t.ly/h2jq1 Best, Jayant

📊 Analysis of New Vehicle Registrations in the German Automotive Market (January – November 2024) 🚗The latest figures from the German automotive market indicate a largely stable development, with 2.592.610 new registrations, reflecting a marginal decline of -0.4 % compared to the same period last year. Within these overall numbers, diverse dynamics can be observed across manufacturers and regions of origin: Market Leaders and Established Players ➡The Volkswagen Group solidified its position with a moderate increase of +4 %, driven by strong performances from Škoda (+24.0 %) and Seat (+17.2 %), while Audi faced a decline of -18.0 %. ➡BMW posted a slight growth of +1 %, whereas Mercedes-Benz AG recorded a decline of -8 %. ➡Stellantis showed modest gains, with brands like Opel (+4.3 %) and Peugeot (+43.6 %) performing well, while Fiat saw significant losses of -21 %. Asian Manufacturers ➡Japanese brands achieved overall strong growth of +13 %, led by Toyota Motor Corporation with an impressive +24.5 %. ➡In contrast, South Korean manufacturers experienced notable declines, with Hyundai Motor Company (현대자동차) (-9.2 %) and Kia Europe (-8.7 %). ➡Chinese brands reported moderate growth of +6.6 %, largely driven by Volvo Cars, whose registrations increased significantly by +45.5 %, underscoring Volvo’s key role in boosting the presence of Chinese manufacturers in Germany. ➡US Brands: Ford Motor Company (-14.8 %) and Tesla, with a sharp drop of -43.6 %, struggled to match last year’s figures. The data highlights a stable German automotive market, albeit with marked shifts among different players. While established manufacturers faced mixed results, Asian and Chinese brands—led by Volvo—continue to gain traction. The full report is available in English and German ($): https://lnkd.in/e9ENmkFz 📩 Subscribe to "AutomotiveCOMPASS": Stay ahead of the latest automotive trends with exclusive insights and data-driven analysis from the Center of Automotive Management (CAM): https://lnkd.in/ehGCnrzK  #AutomotiveMarket #MarketAnalysis #Germany #VehicleRegistrations

Transformation thrives when people are empowered to make the most of technology. 🚀 My recent visit to the Bosch production facility for automotive and eBike drives in Miskolc, Hungary, showcased this perfectly. I was deeply impressed to see firsthand how their progress in digitalization and the implementation of the Bosch Manufacturing and Logistics Platform (BMLP) is reshaping their manufacturing operations. BMLP is a globally standardized, open IT platform that connects all stages of production and logistics. During an insightful plant tour, I observed a successful example of how the platform leads to significant improvements in efficiency, quality, and data transparency across the plant. What stood out most was seeing the passionate and enthusiastic team at Miskolc leverage this technology in action and achieving great results towards operational excellence. Here are three key areas where BMLP is contributing to the plant’s digital transformation success, powered by our NEXEED IAS: 1️⃣ Enhanced Efficiency & Reduced Downtime: The module Shopfloor Management enables a closed PDCA cycle in production by consequent integration of all relevant information in one system. This leads to quick reaction in case of deviations to minimize downtimes and safeguard the daily performance targets.   2️⃣ Improved Product Quality: Continuous monitoring throughout production stages helps the team identify issues early, ensuring top-tier quality while driving process improvements.   3️⃣ Change Management: Change management plays a crucial role in digital transformation within a plant. As seen in Miskolc, effectively managing change ensures that the workforce is engaged, and equipped to embrace new technologies, driving sustainable success. In Miskolc we have seen solutions using gamification that help to involve all associates, making the transition both engaging and effective.   I was also excited to see AI in action with a live demo of 8D Analysis using GenAI, cutting failure analysis time by half. By automating the root cause analysis process, engineers are now spending less time on administrative tasks and more on proactive problem-solving – a great example of how technology empowers people. Beyond the production lines, the most rewarding part of the visit was engaging with the team. Their passion for digitalization, commitment to upskilling, and their drive for innovation truly brought home the message: technology is only as strong as the people behind it. A special thank you to the entire Miskolc team for the inspiring discussions and warm welcome – along with Volker Schilling, Klaus Maeder, Joerg Klingler, Volker Schiek, Norbert Jung, Stephan Brand, Aemen Bouafif, and everyone who joined us on this great trip. I’m excited to see what’s next on this incredible digitalization journey!

The 21% Yield Illusion in Subprime Auto Lending: A 21% weighted average coupon on a loan portfolio sounds enticing, right? That’s enough margin of safety for solid returns. Maybe not. When 580 FICO-score borrowers take a loan to purchase a used car at 100% LTV (no money down), the math gets ugly fast. Start with 21% WAC. Subtract 1.5% for the originator’s spread (amortized upfront premium) and ~3% annual servicing fees for small-balance loans. Then deduct ~8.5% for the annual loss rate, which is the real kicker. Net result: that "juicy" 21% yield dwindles to just ~8% after fees and losses. Here’s the bridge (show in the chart below): a) 21% WAC b) -1.5% (originator spread) c) -3% (servicing fees) d) -8.5% (expected losses) = ~8% net yield Shockingly, the loss rate exceeds the final net yield! Losses vary by vintage, borrower profile, and originator, but if they hit the high end of historical rates and leverage is used, returns could flatline at zero. In subprime auto ABS deals, the equity tranche is often underwritten for 15-18% returns, yet many issuers see negative realized returns. Some originators inject extra equity to shield BB/BBB-rated tranches from impairment, protecting their brand and origination pipeline. Repossession cost: recovered used cars fetch ~35¢ on the dollar at auction after repossession and special servicing costs. Non-bank subprime credit cards and unsecured personal loans (also 20-25% interest rates) are similar in return profile, with potentially worse results since there is an ~10¢ recovery when a credit card or personal loan is written off and sold to a debt collection agency. Consumer finance is an important and massive slice of the ABL/ABS market, but at Marathon Asset Management, we steer clear of subprime auto loans for exactly these reasons. High headline yields may be misleading.

Electric vehicle sales are up 26.2% in Europe: Recent registration data shows a 26.2% increase in electric vehicle (EV) sales across Europe, compared with overall car sales growth of 1.9% so far in 2025. Battery-electric vehicles (BEVs) continue to gain traction. More than 2 million BEVs have been registered this year, representing 18.3% of all new cars, up from 15.4% in 2024. Despite ongoing political debate and uncertainty around the planned 2035 phase-out of petrol and diesel vehicles, adoption continues across both private buyers and fleet operators. BEV market share varies significantly by country: - Norway: 95% - Denmark: 66% - Sweden / Netherlands / Belgium: ~35% - United Kingdom: 22% - France: 19% - Germany: 18% Italy, Poland, and Spain continue to show slower uptake relative to the European average. By volume, Germany and the UK remain the two largest EV markets in Europe, each recording solid year-on-year growth in 2025.

For the first time in our Future Readiness Indicator's history, Tesla has lost its top position to BYD, scoring 98.1 to BYD's perfect 100. But this historic power shift isn't an anomaly. Instead, it’s the culmination of years of strategic patience and relentless innovation from Chinese manufacturers. Here's how the automotive competitive landscape has fundamentally transformed in 2025: BACKGROUND: Traditional automotive manufacturers are in crisis. Stellantis, VW, BMW, and Mercedes have reported declining revenues while Chinese EV makers like BYD, XPeng, and Li Auto are experiencing substantial growth. We've spent years analyzing why this historic power shift is happening: - Chinese EV makers aren't just winning on cost—they're reimagining cars as "computers on wheels" - BYD's R&D intensity grew 23.35% (3Y CAGR) while obtaining 1,880 new patent authorizations last year, a 113.64% increase compared to 2023 - Traditional OEMs are stuck in hardware-centric models with 5-7 year development cycles - EV makers iterate in 18-36 months with startup-style organizations In 2019, I would have bet on Tesla maintaining dominance indefinitely. Their software-first architecture gave them a seemingly insurmountable advantage. But Chinese manufacturers didn't try to beat Tesla at its own game. They played the long game. XPeng adopted an "experience-first" strategy, designing user interfaces and autonomous features before mechanical elements. Li Auto's rapid iteration cycle meant yearly upgrades incorporating real-time customer feedback, while incumbents were still retooling factories. And BYD? While Tesla stagnated (-9.4% Q1 2025 sales growth), BYD's revenue grew 52.8% (3Y CAGR) with inventory turnover at 6.17—operational excellence at scale. The lesson is clear: EVs are becoming commoditized, but software ecosystems and rapid iteration cycles are not. For automotive executives, this means three essential strategic shifts: 1. Treat cars as "computers on wheels" where software features and rapid updates are paramount 2. Build supply chain agility with digital tracking systems and localized production of critical components 3. Invest in brand differentiation; as technology becomes commoditized, trust will determine winners The most important insight from our research: future readiness is never a finished state but a continuous process of adaptation. Even market leaders can be challenged when competitors commit to the long game. The race is far from over, but the rules have fundamentally changed.

£3bn revenue. Sales down 75%. Most brands panic. Jaguar hit reset. A carmaker that once sold 180,000 cars a year drifted into a decade of fading relevance - ageing models, collapsing demand and profitability close to zero. So Jaguar Landrover did something no automotive group has the nerve to do. They stopped almost all SKUs and went big on the electric. The (estimated) FY24/25 numbers: → Revenue: ~£3bn of JLR’s £29bn → Units sold: 48,445 (down 75% from 2018/19) → Profitability: near-zero for years (according to the BBC) → EV investment: part of JLR’s £15bn electrification plan → Cash: £4.2bn on hand (£1.8bn annual profit across JLR) So what’s the strategy? 1️⃣ The contraction before the reboot Jaguar didn’t lose momentum - it lost direction. → An ageing lineup with no meaningful updates → I-Pace left untouched since 2019 → Electric XJ cancelled at the last minute → China volumes collapsed; US range cut back → With an ageing buyer base and shrinking demand, profitability evaporated. 2️⃣ The deliberate firebreak JLR chose a clean cut, not a slow decline. → Retired most legacy models → Shifted spend from marketing to EV architecture → Paused production to reset operations → A new CEO incoming - a finance operator to enforce discipline 3️⃣ The “Copy Nothing” rebrand Jaguar isn’t returning as a volume brand - but as a statement brand. → Type 00 revealed as the new design language → A car-free campaign sparked outrage → Sales goal: ~30,000 units at £100k+ → Positioning now shifts customer spend from BMW/Mercedes to Bentley/Porsche Mass appeal is no longer the goal. Distinction is. Plenty of carmakers optimise for output. JLR is optimising for emotion - and Jaguar is the sharp end of that bet. -- I’m John - a CFO who loves brand and co-owner of Traction. Follow for insights on how - and why - brand building belongs on the balance sheet

Every dealer I talk to right now — large groups, single points, franchise and independent — is saying the same thing: Business is getting tougher. Margins are shrinking. Affordability is the biggest challenge on both new and used. For the first time in years, the market feels a lot like 2018 again… maybe tougher. Here’s what I’m seeing across the country: 🔹 Affordability has hit a ceiling. Interest rates, insurance, and high transaction prices have pushed payment-sensitive buyers to the limit. 🔹 New-car gross is tightening fast. Inventory is back, OEM programs are ramping up, and competition for qualified buyers is intense. 🔹 Used-car margins are compressed. Acquisition costs are high, negative equity is rising, and the fight for trades and consumer cars is fierce. 🔹 The “COVID gross era” is over. We’re back in a market where discipline, process, and leadership matter more than ever. But here’s something a lot of people aren’t talking about: We don’t just have an inventory or affordability problem. We have a people and training problem. And this is where strong operators pull ahead: ✔️ Salespeople need to be trained to prospect again. Many don’t even understand the word. They’ve never been taught how to build a book of business, make outbound calls, promote themselves on social media, or create their own opportunities. That skillset is becoming essential again. ✔️ Service advisors and techs need to be retrained on the basics. Proper multipoint inspections… reviewing recommended maintenance… adding lines and hours per RO… communicating value to the customer. The service lane is the heartbeat of the dealership — and it needs consistent coaching. ✔️ Sales managers need situational awareness. What’s happening on the lot, in the showroom, and in the digital showroom. Who’s aging. Who’s waiting. Who needs a follow-up. Managers can’t spend the whole day behind a desk anymore — they need to lead from the front. ✔️ Dealers must acquire aggressively from consumers. Service drive, equity mining, instant cash offer funnels — everything matters right now. ✔️ Recon must be tight, disciplined, and fast. Speed to market is non-negotiable. ✔️ Older, affordable inventory is critical. More customers are payment buyers. Sub-$20k retail is a must. ✔️ Expense control has to return to 2018 levels. The 2021–2022 expense model doesn’t work anymore. ✔️ Technology and AI are becoming competitive advantages. The dealers who adopt it first will win on efficiency, training, follow-up, and acquisition. The market has shifted — and it’s not shifting back anytime soon. This is the moment where real operators separate themselves. If you’re feeling the pressure, you’re not alone. And if you’re doubling down on fundamentals, training, and accountability, you’re already ahead.

Yesterday, I showed you the Q3 2024 global sales for electric vehicles. Today it’s time for the year-to-date figures (January-September 2024). - Tesla keeps leading with 124,000 units ahead of BYD. That’s less than the 276,000 units that separated both companies in Jan-Sep 2023. The American maker posted a 2.6% decline vs +11.6% for BYD. Will the Chinese outsell Tesla by the year end? - Geely is the big winner of the year with its volumes up by 51%, climbing two positions in the ranking and outselling Volkswagen Group (-4.7%) and Hyundai-Kia (-8.1%). Geely is being boosted by the success of the Volvo EX30, Galaxy subbrand and ZEEKR. - BMW Group was the best performer among the big non-Chinese BEV makers. It recorded a 19% increase in contrast to -22% from Mercedes (Smart included) and -6% from Audi (included in VW Group). - GAC along with Mercedes were the worst performers of the top 10. GAC’s is feeling the impact of a product revamp at AION and Hyptec brands. The German maker struggles with the luxury models like EQE and EQS (too different from Mercedes DNA?). - Stellantis also struggles with volumes down by 17% following lower sales of the Fiat 500, and the delays on the introduction of the Citroen e-C3 in Europe. - Outside the top 10: Leapmotor doubles its sales and seems that has finally taken off in China; GM is the other non-Chinese winner with sales up by 56% thanks to the positive response of American public to Chevrolet Blazer EV, Cadillac Lyriq. In contrast, Ford lost 17% with a flopped F-150 Lightning and lack of enthusiasm around the European made Explorer EV. - Xiaomi impressed with almost 70k units sold so far. The upcoming SUV will accelerate even more the growth; Vinfast (+107%) seems to take off in Vietnam and the Philippines thanks to the small VF 3. Source: OEMs, estimates #carindustryanalysis #felipemunoz #automotive #ev #electricvehicles #electricvehicle #carsales #carstats