Rough Markets In Europe Could Make Your Next Order Of Car Parts More Expensive

morning dump car parts

Inflation and a European energy crisis could make car parts more expensive, the EU isn’t happy about the Senate’s EV credit proposal, Mercedes-Benz reportedly kills the Metris. All this and more in today’s issue of The Morning Dump.

Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.

Things Are Looking Bad For European Automakers And Parts Suppliers

Continental Tire Production car parts
Photo credit: Continental AG

Between inflation and an energy crisis, now seems to be a particularly rough time for European automakers and suppliers. Bloomberg reports that increased costs and decreased customer demand is creating choppy waters in Europe.

Customers are debating whether to buy a vehicle or push the leasing contract ahead a month over concerns including surging energy prices, Frank Fiedler, the chief financial officer of VW Financial Services, said on Monday. That follows warnings from BMW last week that new-vehicle orders are retreating from high levels, particularly in Europe.

While Continental confirmed its outlook for the year on Tuesday, the German parts maker said it has to shoulder some €3.5 billion ($3.6 billion) in additional costs for raw materials, energy and logistics, with prices for overseas shipping containers jumping eightfold in some cases.

Continental CFO Katja Duerrfeld described conditions as “rather like a hurricane” and predicted these pressures “will not subside any time soon.”

Well, there are two ways of looking at this situation. On a positive note, a lull in Europe could give European automakers the opportunity to build up inventory in undersupplied markets. Imagine actually seeing new Volkswagen GTIs and Golf Rs stay on dealer lots long enough to test drive. On a negative note, rough conditions for suppliers could have rippling effects throughout the automotive world. Not only would an increase in OEM parts prices drive up the cost of new cars, vehicle owners like you and I could soon be paying more money for OE replacement parts. Suppliers will need to find revenue somehow, and hiking the prices of replacement parts is one avenue they could pursue. Keep a close eye on the cost of quality car parts over the next few months, I have a feeling we’ll see some increases.

The EU Says U.S. EV Credit Proposal May Violate Trade Rules

Mercedes Eqe
Photo credit: Mercedes-Benz

Remember that recent Senate deal about tax credits for electric cars? The one with stipulations for U.S. origin of battery components? Well, a growing number of critics are unsurprisingly opposed to that protectionist measure. Reuters reports that the European Union thinks the tax credit proposal may breach World Trade Organization rules.

“We think it’s discriminatory, that it is discriminating against foreign producers in relation to U.S. producers,” said European Commission spokesperson Miriam Garcia Ferrer. “Of course this would mean that it would be incompatible with the WTO.”

Garcia Ferrer told a news briefing the EU agreed with Washington that tax credits are an important incentive to drive demand for EVs and promote the transition to sustainable transport and a reduction in greenhouse gas emissions.

“But we need to ensure that the measures introduced are fair and … non-discriminatory,” she said. “So we continue to urge the United States to remove these discriminatory elements from the bill and ensure that it is fully compliant with the WTO.”

While I’ve never been an elected official, “don’t piss off your trading partners” is likely a good rule to keep in mind when running a country. If the EU isn’t happy about this tax credit proposal, I have a feeling that America’s USMCA partners likely aren’t happy either. If the proposal is judged to violate trade agreements, that could represent a significant roadblock for EV tax credit expansion.

Mercedes Is Reportedly Killing The Metris

Mercedes-Benz Metris
Photo credit: Mercedes-Benz

It’s a sad week for the commercial van community. Automotive News reports that an internal memo says Mercedes-Benz will kill the Metris towards the end of next year.

The automaker told dealers in a memo Thursday it will discontinue sales of the four-cylinder gasoline engine that powers the Metris and Sprinter commercial vans.

“As a result, the Mercedes-Benz Metris and gasoline Sprinter models will no longer be offered in the U.S. market after Q3 2023,” the brand’s U.S. vice president of commercial vehicles, Nicolette Lambrechts, said in the memo obtained by Automotive News.

While it’s a bit of a shame to see the Metris ride off into the sunset, I can’t say I’m terribly surprised to see it go. While the Metris was a wonderful size and generally quite practical, it’s been around since 2015 and businesses haven’t been especially receptive towards it. Plus, crankcase ventilation valve replacement calls for around 12 hours of billable work, an obscene amount of labor for a common replacement on these vehicles. The Metris may fit in parking garages and be fairly comfortable, but cost of ownership and downtime really matter to fleets.

I’m also not terribly surprised that the gasoline-powered Sprinter is being phased out. The M274 engine shared with the Metris has largely been superseded by the M264 across most of the Mercedes-Benz passenger car range. While the death of a Mercedes van may be sad, it precedes the birth of another. Expect an electric Sprinter to make its way over to North America in the next few years.

Rivian Sees A Larger Second-Quarter Loss Than Expected

2022 Rivian R1t 14
Photo credit: Rivian

It’s no secret that market downturns hit startups the hardest. While established automakers generally keep their balance sheets in the black, startups are burning tons of cash scaling up production. Case in point, Rivian. Reuters reports that Rivian’s financial performance through the second quarter is both better and worse than expected. Let’s start with the good news.

Revenue was $364 million in the second quarter, compared with the $337.5 million expected by analysts, according to IBES data from Refinitiv.

While an extra $26.5 million in revenue is good news, it doesn’t really offset the losses that Rivian expects to announce.

Rivian said it now expects to post an adjusted loss before interest, taxes, depreciation and amortization of $5.45 billion, compared with a previously projected loss of $4.75 billion.

Still, Rivian built fewer than 7,000 vehicles in the first half, but reaffirmed its full-year target of 25,000.

The Irvine, California-based company said it plans to add a shift to its Normal, Illinois, assembly plant by the end of the third quarter, but also noted that it expects higher raw material costs and other supply-chain challenges to continue.

So, not great news overall, then. An extra 700 million in losses doesn’t sound particularly promising, which is a bit of a shame. It sucks to see a startup in a tight spot, especially when it’s already delivering production vehicles to customers. Here’s hoping that Rivian eventually sees a tighter delta between revenues and losses because the R1T really does look brilliant.

The Flush

Whelp, time to drop the lid on today’s edition of The Morning Dump. I’d love to be able to ask everyone a question related to the news and be able to read all your responses in a timely manner, but I’ll actually be in the air by the time you read this. So, in the free-for-all spirit, I’d love to know what your favorite thing is about your current daily driver.

Lead photo credit: Continental AG

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39 Responses

  1. What I love about my daily (Zafira Tourer) is that one day I can haul around my wife and five friends and their cargo, and the next one I can pick up furniture on IKEA, and those long packages fit inside the car. Just hauled a 2m sofa like it ain’t nothing. Technically I had a 11 seat car for the duration of that ride!
    I’m sad that practical minivans and MPVs are going away. Mine is at the limit for the residential parking spaces where I live, so going full van is not an option. And SUV and crossovers… Well, I saw a lot of those disappoint their owners at IKEA loading area 🙂

  2. Favorite thing about my daily driver? The fact that I don’t care about it at all. It’s a 1995 Toyota Corolla with currently 259,000 miles on it that I paid $500 for two and a half years ago. I never wash it, because it’s the color of dirt. I don’t worry about where I park it, because it’s all dinged up anyway. I’m about to leave it in airport long-term parking for a couple days, and as long as it’s still there and starts when I get home, that’s all I expect of it. It has good strong air conditioning and reasonably comfy seats and gets a reliable 26-27 miles per gallon with me flogging the hell out of it in traffic. I love it, because I don’t like it very much. It’s weird.

    1. I used to have a “throw away” car as my DD years ago. It was a ’97 Altima, manual EVERYTHING, bought for only $550 and in the 3-4 years I had it I only put gas in it, replaced the tires with the cheapest set, and would top off the oil if it was low. Part of me feels guilty for being a bad car owner as that is not how I’d normally treat my cars. But it was a fun little shit box to drive to work and bang through gears without a care if something happened to it. But nothing did, it was reliable, I only got rid of it because it was rusting away to the point of being dangerous.

    1. As a fellow Volvo driver, I concur. Although the captains chairs in my ’97 Eddie B. Expedition were damn comfy for long distance highway driving. For anything in the twisties, however, captains chairs are a nogo. Volvo seats are some of the best all-around for comfort and support.

  3. Isn’t the idea to piss off our trade partners?
    The entire world got so screwed over with the global economy and international trade shutting down. Combine that with what is going on with China and Taiwan and Russia and Ukraine, and aren’t we as a world supposed to realize that maybe the global economy as a means to preserve peace has some holes in its logic?

  4. “I have a feeling that America’s USMCA partners likely aren’t happy either. ”

    Canada and Mexico are specifically included in the tax credits for manufacturing. And US FTA partners are included in the battery sourcing rules.

    As always, the US should pursue FTAs with the EU, UK, and the TPP countries anyway.

      1. Well perfect time to discuss the issue. Not that I expect Diaper Joe to make a good decision rather than a payoff. Then again I don’t know if anyone can actually get the rebate with all the caveats. IMHO make it available for every EV under $50,000, and cut in half for a used EV if trading in a licensed and registered ICE car that gets dismantled for parts only.

  5. wonder if the Metris Postal Vans will be affected. Or maybe they did a fire sale to the post office to clear out scheduled inventory. seeing far more of the Metris Postal vans than that Gruman failure.

  6. Best thing about my daily? I don’t pay for it, work truck. It’s a Ram 2500, nothing special but it’s got that cool Cummins that makes boost noises.

    Best thing about a car I actually own? The cam lope in my Mustang. It sounds faster than it is but I love it.

  7. The thing I like most about my DD (2014 Sportwagen) is how nice it still is. We went down to one car about six months into the pandemic because we literally weren’t driving anywhere. The one car is now doing the work of two, but now that I don’t commute, total annual miles are still way down. I’m good about fluids and scheduled maintenance, and won’t abide garbage being left behind, but otherwise the car gets used for both minivan kid-hauling duties and light pickup truck duties (mulch and home depot runs, etc),. It lives outside and doesn’t get babied beyond the occasional vacuum and armor all dash wipe, but it has been solid for all the years we’ve owned it, and is comfortable and fun, and (at least when freshly vacuumed) still looks darn near how it did new.

  8. Too bad Mercedes never sold the V-Class/Viano over here. It’s like the Metris/Vito, but it has more features and is actually usable as a minivan.

    If Kia can charge 60k for a Carnival, Mercedes can charge 70-80k on a V-Class

  9. Favorite thing about my daily: its fuel economy. 40+ mpg is very welcome for a lot of reasons. Less time spent fueling, less cost, and less range anxiety. And even beating the stuffing out of it still often returns 25-28 mpg.

    I hope Rivian survives and thrives. The R1S is a compelling option. Making a cheaper dual motor option with most of the outdoorsy bits otherwise intact would be a great tradeoff between cost and capability. With brake simulated lockers it would get most places while keeping costs lower. The slow speeds would keep brake temps down for longer periods while still offering increased traction.

  10. Quick and easy answer on my favorite thing would be no payments.

    But really, I’d say my favorite thing is that it’s “mine”. Meaning that keeping up with maintenance, and changing or upgrading things to suit my needs to how I like, gives it personality and sets it apart from every other cookie cutter Tahoe. Like the after market stereo and better speakers, upgraded shocks and suspension to handle towing better. Best change by far – done with daily and towing in mind – was a complete brake upgrade with drilled/slotted rotors, pads, calipers, braided stainless lines. HUGE improvement over the “high performance” pads/rotors I threw on the year prior, braking distance feels like it is half what it used to be.

    Since my SO isn’t driving anymore, her newer Forester has been the DD more frequently. It’s ok (better on mileage!), but it doesn’t have the same personal feel to it.

  11. Favorite thing about the DD? The three-pedal anti-theft device.

    I’ve been in contact with the VW dealer where I’ve/family bought 3 new cars from the same salesman. He’s now the manager. I told him 5 months ago to let me know when he gets an allocation for a stick shift R, ideally in blue. He got excited…. and I haven’t heard from him since.

  12. Question: if an EV startup fails, are they required to provide parts for existing vehicles? I remember when Delorean and later Saab went under, they still made parts available for customers.
    I am thinking of my buddy who just got his Rivian, and wonder if 5 years from now it’ll be an immobile driveway ornament.

  13. My favorite thing about my early wrx is the boost. With help from the lightened flywheel it changes from a tarted-up sedan to a Fun Machine when boost comes on. I left the exhaust stock so I can hear that little turbine drown out the chatter of the day.
    Yeah: boost, and it’s fairly lightweight, so (see username)

    1. I always wonder how that works given gasoline does start to degrade at some point. Does Chevy indicate you should specifically use the engine periodically in order to use up the gas in the tank so it doesn’t get too old?

      1. It’s got a really slick system that tracks the engine use and will start the system occasionally to draw down the fuel and make sure everything is still fine on the ICE side. It’s a classic GM product: some amazing engineering coupled with the worst product management on the planet.

      2. Exactly as stated above – ~6 weeks since the last usage of gas, the car will start EMM (Engine Maintenance Mode), which will start the engine and run it, on and off, to a certain temperature. It uses roughly 0.03-0.07 gallons of fuel and just kind of cycles everything through. If you used gas within that period, it just resets the clock.

        Now, once your fuel hits a calculated average of 12 months (I say it that way because it can calculate it based on if you filled up a non-empty tank), it’ll activate what is known as FMM (Fuel Maintenance Mode) in which it will run the engine at all times (except when stopped – it more or less acts like the car does if you have the vehicle in “Hold” mode) until the tank has been emptied, and then instruct you to fill the vehicle back up.

        I’d really like if it could hold out to two years, as my best ever “tank” would have been even more than the 7122 miles it ended up at when I filled up after FMM emptied the remainder of my tank.

    2. I’ll second that, as our primary car is a bolt. We burned through a couple tanks of gas in a rental car on a trip a couple months ago, but our secondary vehicle, an old Jeep for offroad use, has only been to a gas station once since last November. It’s nice to forget how to use a gas pump after not using one for several months.

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