The California DMV is mad at Tesla, wholesale used car prices largely stayed stagnant through July, Maserati launches a 10 year extended powertrain warranty option. 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.
The California DMV Is Pissed Off At Tesla
I think we all saw something like this coming, right? Reuters reports that the California DMV has an ax to grind with Tesla over the Texas-based automaker’s advanced driver assist systems and potential penalties could be severe.
In complaints filed with the state Office of Administrative Hearings, California’s Department of Motor Vehicles (DMV) said Tesla misled prospective customers with advertising that overstated how well its advanced driver assistance systems (ADAS) worked.
Tesla “made or disseminated statements that are untrue or misleading, and not based on facts,” the DMV said in complaints dated July 28 and which it made public on Friday.
Vehicles equipped with Autopilot and Full Self-Driving technology “could not at the time of those advertisements, and cannot now, operate as autonomous vehicles,” the DMV added.
The DMV is seeking remedies that could include suspending Tesla’s license to sell vehicles in California and requiring the company to make restitution to drivers.
You know what? Good. While Level 2 advanced driver assistance systems are interesting feats of engineering, Tesla has contributed massively to myths around advanced driver assistance systems, and the Full Self Driving Beta project has proven dangerous at best. We’ve already seen FSD attempt to go the wrong way down a one-way street and try to crash into a tram. Plus, Autopilot has been at the focal point of several fatal crash investigations. Here’s to hoping that the DMV’s complaints actually go somewhere and that Tesla will start to see consequences for misleading owners and the general public on the abilities of advanced driver assistance systems.
Used Car Wholesale Values Stayed Mostly Flat Through July
July recently ended, which means that it’s time for an updated from the Manheim Index. While used car wholesale values are a fairly selective view of the used car market, Manheim’s sheer scale as one of America’s biggest auction houses and the historical tendency for most private party used car prices to track along with wholesale values means that the index still offers useful data. Let’s see what the latest report has to say.
Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 0.1% in July from June. The Manheim Used Vehicle Value Index declined to 219.6, up 12.5% from a year ago. The non-adjusted price change in July decreased 3.2% compared to June, leaving the unadjusted average price up 10.2% year over year.
Yep, no surprise to see not much change there. What’s unexpected is that wholesale value declines seem to be hitting most gas-guzzlers harder than sensible cars despite falling gasoline prices. On a month-over-month basis, full-size cars lost nine percent of their wholesale value, while vans, luxury cars, and sports cars saw wholesale values drop by between 1.5 and 1.6 percent. On the other hand, compact car wholesale values were up 0.9 percent, while midsize car wholesale values were up by 0.5 percent. Not bad news if you’re looking for a really, really, really ridiculously good-looking Volvo S90, but not great news if you’re in the market for a Toyota Corolla.
The latest Manheim Index report also estimates a 31-day supply of wholesale cars, up from 26 in June and 22 in July 2021. More potential inventory is typically a good thing for easing used car prices, as is greater consumer leverage. The report estimates that used car retail sales dropped 13 percent month-over-month and 16 percent year-over-year, so consumers appear to possibly be weakening their stance on buying used cars.
So what does this all mean? Well, there are two ways of looking at this latest Manheim Index report. The first is that we’re still in an absolute nightmare of a used car market. Wholesale prices are still up 12.5 percent year-over-year and wholesale value stagnation is unlikely to give buyers the relief they’re looking for. The second is that the chance of already having hit peak used car craziness is growing. Wholesale prices are still down from market peak earlier this year and an increase in wholesale vehicle supply tempers fears of a return to peak prices. Either way, don’t expect a crash in used car values. New car supply remains tight which should have an effect on used car values for years to come.
Carvana Goes Into Cost-Cutting Mode
Even an outsider could tell that Carvana’s business model wasn’t sustainable. With sky-high offers for buying used vehicles, big acquisitions, and aggressive hiring, Carvana really put “move fast and break stuff” into the automotive retail sector. Automotive News reports that Carvana is now working to cut costs as financial losses continue to mount.
Carvana’s back-to-back quarterly net losses in the first half of 2022 were the largest in company history. The second-quarter loss of $439 million came one year after the retailer announced its only quarterly net profit since going public in April 2017.
Carvana CFO Mark Jenkins last week said the company saw “meaningful” expense savings quarter over quarter, as it trimmed advertising costs by $24 million and payroll expense by $20 million.
“As we’re looking out over the rest of the year, we really do see opportunities across all areas of the business to continue to drive” expense efficiency, Jenkins told analysts.
While cost controls will happen across the business, payroll will be one “of the bigger buckets,” Jenkins said, as Carvana continues to work on better matching staffing levels to its sales volume.
I feel quite sorry for the Carvana employees who have the dark specter of potential layoffs looming over their heads. It’s not nice to potentially be out of a job in an era of rampant inflation, and it seems like a shaky time for the automotive retail industry so finding a like job might not be easy.
Maserati Launches 10-Year Extended Warranty
Italian cars. They’re known for passion, flair, and style, but not necessarily reliability. For a little peace of mind, Maserati announced last week that customers will soon be able to purchase a ten-year extended powertrain warranty. Details on the new warranty are a bit sparse, so we’ve reached out to the Italian company for more information. In the meantime, here’s what the press release says:
Maserati introduces the new Extra10 Warranty Program, to extend the coverage of powertrain components – engine, gearbox, transmission – until the car turns 10 years old. Offered in addition to the existing program to extend the warranty to four or five years (known as “Extended Warranty”), the service is available worldwide*, for all customers who own any Maserati model**
Aside from the fact that “gearbox” and “transmission” are generally interchangeable terms for the same thing, there are lots of asterisks in this chunk of body copy. Let’s see what’s really going on in the fine print.
* Available for USA, Canada, and Latin America starting from October 1st, 2022.
** Within nine years and six months from the registration date, with no mileage limit.
Ah, that’s certainly a big limitation. Fortunately, the ice-cool GranTurismo coupe ended production in late 2019, so there’s still some potential value here for enthusiasts rather than just real estate agents with Ghiblis. That old F136 naturally-aspirated V8 occupies the space between operatic and pornographic and is a wonderful shock to the senses in an age of turbocharged everything. Regardless, I’d love to know what the warranty actually covers and how much it will cost. There’s no way something like this could be cheap, right?
Whelp, time to drop the lid on today’s edition of The Morning Dump. August is shaping up to be a busy month here at The Autopian which means I should probably start thinking about a winter car. For anyone outside of the rust belt, a winter beater is a cheap banger for salty conditions that lets you tuck away cars that you actually care about. For those of you subject to road salt, brine, and other corrosive nastiness for roughly half the year, what’s been your favorite winter beater?
Lead photo credit: Courtesy of Tesla, Inc.