Toyota Doesn’t Expect New Car Supply To Catch Up With Demand Until Deep Into 2023

Morning Dump Toyota New Car supply Shortage

Toyota expects new car supply to remain low well into 2023, GM plans another battery plant, Volvo wants to try putting charging stations at Starbucks locations. 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.

Toyota Expects One More Year Of Tight New Car Supply

2023 Toyota Highlander
Photo credit: Toyota

So much for predictions that shortages would ease towards the end of 2022, huh? Automotive News reports that Toyota USA sales chief Jack Hollis expects the new car supply shortage to last well into 2023.

“We’re going to be dealing with this for one more year,” said Hollis. “I do not believe we’re going to see growing dealer stock for one more year. I think we’re going to be in a situation, speaking for Toyota and Lexus, where whatever we wholesaled is what we’ll retail.”

Hollis said dealer inventories are likely to remain tight — he noted that Toyota dealerships have been down to a 36-hour supply at certain points recently — for the foreseeable future, but said he doubted that any automaker would return to inventory practices that were commonplace prior to the pandemic.

“They just won’t,” Hollis declared, adding that the advent of widespread digital retailing tools have given consumers a level of comfort with ordering or buying vehicles that are still in transit or waiting to be assembled.

It sounds like it’ll be a slow return to anything resembling normal for Toyota, and reading between the lines, I wouldn’t be surprised to see fewer vehicles on dealership lots when everything’s said and done. This is probably bad news for anyone looking to leap on slow-moving stock for below MSRP in the next few years, as leftover cars will likely prove hard to come by even after new car supply stabilizes.

General Motors Might Be Building A Fourth Battery Plant

Blazer Ev Ss
Photo credit: Chevrolet

GM has some big plans for its Ultium battery ecosystem over the coming years, from collaboration with Honda to electrifying every market segment from commercial vans to crossovers. It’s a road map that will require massive investment, and Reuters reports that General Motors might be building another battery plant in Indiana.

Ultium Cells LLC “is developing a competitive business case for a potential large investment that could be located in New Carlisle, Indiana,” she said, adding that Ultium had submitted a tax abatement application that it hopes will be approved later this month.

Last month, the U.S. Energy Department said it would loan Ultium $2.5 billion to help finance construction of battery cell manufacturing plants in Ohio, Tennessee, and Michigan.

Last month, GM said it struck multi-year agreements with LG Chem Ltd and Livent Corp to secure key raw materials used in manufacturing batteries for electric vehicles. GM said it was on course to reach its goal of producing 1 million EVs annually in North America by the end of 2025.

A target of one million EVs per year will require a lot of batteries, and given the impending battery sourcing mandate, it only makes sense for GM to be considering a fourth battery plant in America. New Carlisle, Ind. would be a convenient location given its proximity to vehicle plants such as Fort Wayne Assembly in Roanoke, Ind., Wentzville Assembly in Wentzville, Mo., and Fairfax in Kansas City, Kan., and a battery plant there could signal plans for some of those aforementioned assembly plants.

Volvo Will Try Putting Charging Stations At Starbucks Locations

V60 Cross Country B5 Awd, Onyx Black
Photo credit: Volvo

This is one of those stories that will make you go “what did it take so long for?” It’s no secret that EV charging locations are inconsistent at best and can be downright sketchy, so Volvo has a plan to change that. Automotive News reports that the Swedish automaker is partnering with Starbucks to pilot building a charging network.

As part of a pilot program, Volvo will install up to 60 fast chargers at 15 Starbucks stores across a 1,350-mile route from Denver to Seattle by year end. The chargers will be from ChargePoint but include Volvo branding.

Alex Tripi, Volvo Car USA head of electrification, described the Starbucks tie-up as an “amenities-first” approach to EV charging.

“We want to send drivers to where there are the amenities that they expect — a clean restroom, a snack, a well-lit parking lot,” Tripi told Automotive News. “Who better to do it with than Starbucks, given their footprint?”

It just makes so much sense to set up charging stations at Starbucks locations. Not only are most Starbucks locations owned by the company to streamline installation, but Starbucks brings a level of consistency to EV charging. Stop by, have a yogurt parfait, sip back some coffee that’s probably better than gas station bean water, and let some indie radio station serenade you while you wait for your EV to charge.

The 2023 Geneva Motor Show Goes To Qatar

Geneva Motor Show new car supply
Photo credit: Alexander Migl – Own work, CC BY-SA 4.0

The pandemic has been a rough era for auto shows, with COVID restrictions piling on top of already falling show attendance. As such, it’s not entirely surprising to hear of another auto show casualty. Reuters reports that the Geneva International Motor Show in Geneva has been canceled yet again, although for rather puzzling reasons this time.

[The organizers] said they would focus instead on a complementary motor show, the Geneva International Motor Show Qatar, due to be held in Doha later in 2023.

“Due to the uncertainties in the global economy and geopolitics, as well as the risks related to the development of the pandemic, the organisers have decided to focus exclusively on the planning of the event in Doha in 2023,” the organisers, the permanent committee of the Geneva International Motor Show (GIMS), said in a statement.

The car show in November in Doha, Qatar, which was initially planned as a complement to the Geneva event, is now going to be the only GIMS show in 2023. It is scheduled to take place every two years, the organisers said.

That comment on geopolitics seems a bit odd. I’d have expected Geneva to be more palatable from a DE&I standpoint than a country with a less-than-excellent track record of human rights. Then again, money talks, and Qatar’s oil-based economy seems like the perfect fit for supercar debuts and high-end tuners like Mansory.

The Flush

Whelp, time to drop the lid on today’s edition of The Morning Dump. I definitely understand why auto shows are dying in an age of digital debuts and tight new car supply, but that doesn’t make their decline sting any less. There’s nothing quite like seeing a new car with your own eyes instead of through heavily-edited press photos, plus you can compare interiors and cargo space of new vehicles without being badgered by half a dozen salespeople who are just trying to do their job and sell cars. I’d love to know what your favorite auto show memory is, for motoring exhibitions are often core memories of our automobile-enthused adolescences.

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43 Responses

  1. They assert that the monthly sales figures are rather impressive. Their lot is never vacant. You can find a dealer in the next town over with a mostly full lot, several nice markups, and other nonsense. I’ve always had a passion for vehicles, and I recall that when I was young, my father would occasionally ask me if I wanted to visit a car show on the spur of the moment. As a result, we would wander around the Wichita Rod and Custom Show or even simply haphazard late-night street displays in the city. My best memories were spending time with my dad, who didn’t really care about the show but took me anyhow since he knew I’d like it.

  2. From their point of view, why should it ever? If you can make the same profit making fewer cars by increasing demand and by extension, increasing your margin on every car sold, why would you ever want your supply to ever exceed your demand again?

    1. The answer is that automakers have fixed costs – labor costs, tooling costs, facility costs, and design costs which they must pay regardless of how many cars they build – 1 or 1 million. It’s not until those costs are paid off that there is any profit. However once those ARE paid off, the profit margin for the manufacturer is excellent.

      So, the incentive is there to sell as many cars as possible.

      As for anticipating demand… that’s a very black art. Almost no manufacturer builds a car for which the company believes there is little or no demand. That would be stupid. Now, there are a few exceptions – “halo cars” whose function is advertising for the brand and ideally bringing customers into a showroom where they will ultimately buy something else – Cadillac often has these – but these are built in limited numbers to keep losses to a minimum. So, in general if a car isn’t anticipated to sell enough to break even it will never even see the showroom.

      1. Also you have economics to consider. Building and selling the same amount of vehicles every year equals zero growth and probably lower stock prices. Workers want raises every year well zero growth is zero money for raises. Also you may not have OT but you are going to build the cars you can with what you got.

    2. That’s my pet peeve, what we’re experiencing now is artificial scarcity. Companies have learned they can make more money by producing less with fewer options. Look at poultry processors like Tyson, their workforce is smaller, they produce less, but are making profits like gangbusters. There are supply chain issues but it’s not like it was before. Less workers, no pay increases, less production, and higher prices lead to higher profits. I don’t know if we’ll ever get back to normal.

    3. Old habits are hard to break.

      Having been around the domestic dealership and manufacturing scene for a while, I don’t think manufacturers are going to move away from wanting market share. Eventually when supply catches up, manufacturers will go back to pushing inventory off their books and onto the dealerships books. Dealers also will probably want to go back to having more inventory since right now, though they are making more on each sale, fewer sales will translate to fewer service visits. To be clear, dealers survive on sales, but make more on service.

    4. Because competition. Ask the big three how well sitting on big profits and crap products worked out when Honda, Toyota, Mazda and Datsun started offering better products at better prices.

      It would take all manufacturers colluding to try and keep that from happening now. Which is illegal in the US. Someone will break ranks to sell more volume and make more money, even if per unit profit is lower.

    5. Consumers are currently 1) patiently waiting months for the car they want (color, trim, etc.) or 2) satisficing. They have no choice as the entire industry is supply constrained.
      As soon as one manufacturer can build stock consumers can have exactly what they want and get it right now (in stock) that is where they will buy. They don’t want to wait, and they want the options they want, no more no less. So, whoever can build inventory will increase volume and increase total profit (even if per unit profit suffers). Whoever is the first to get there will have a huge advantage. So it’s now a race to get there for all manufacturers.

      1. This is one reason I went with Mazda over Merc, Skoda or Toyota for my next car. Mazda said six months but they showed me the delivery times for the last few months and it was consistently six months. A while to wait but I was fairly confident it would be six months. Merc wouldn’t do factory orders, it was just “tell us what you want and we’ll snag the closest on the inventory system when it arrives”, Toyota was six months but with a very strong caveat that it might be longer and VW was just a shrug.

  3. “Hollis said dealer inventories are likely to remain tight for the foreseeable future, but said he doubted that any automaker would return to inventory practices that were commonplace prior to the pandemic.

    “They just won’t,” Hollis declared, adding that the advent of widespread digital retailing tools have given consumers a level of comfort with ordering or buying vehicles that are still in transit or waiting to be assembled.”

    Logic would back Hollis up on this. However, I don’t think it’ll last. All it takes is for one manufacturer to become dissatisfied with the Mexican Standoff/Gentleman’s Agreement and desire more share of the market and then all bets are off. My uneducated guess is that the first to blink will be GM or Stellantis. Go ahead and bookmark this and check back in a year or two. We’ll see if I was wrong or not.

    1. Inventory levels are already pretty healthy (at least up in Canada) on both DS and DT Ram 1500’s (classic vs new body) – about 15k units combined showing on Auto Trader, which works out to about 60 days inventory (based on a typical 90k unit year). 100% it’ll be Stellantis who inadvertently brings the rest of the market back to normal.

      1. what about the 70,000 Silverados sitting waiting for chips. they will probably hit the market as one big lump. Ford has been feast or famine too lately. but they cannot get them out of the railyards, or keep them from being stolen it seems.

  4. There is a night each year at the Milwaukee auto show where they partner with local restaurants and breweries. There are beer and food booths spread out around the whole show offering samples of their delicious products. Sip a porter while checking out the new Jaguars then have an IPA while you’re trying to decide if the C8 Corvette looks cool or weird. That kinda thing. I love it. It’s not a big or exotic show, but it’s fun.

  5. The auto show memory that immediately springs to mind is seeing the Mustang Indy 500 pace car at the 1979 Chicago Auto Show. I was six, and that car was just about the coolest thing I had ever seen. Silver and black, with orange stripes and silhouettes of galloping horses down the side. And those iconic split-three-spoke wheels. And T-tops. And the announcer said it was turbocharged, which I dnd’t even understand, but it sounded so cool. I was in love.

    https://www.mustangspecs.com/wp-content/uploads/2020/09/18e6b254784650f1f7a36ac1dbfa3f34-e1600381966173-1500×750.jpg

    Luckily, Monogram brought out a Snap-Tite model of it almost immediately, so I was able to have my very own.

  6. When I was younger, I worked at McCormick Place in Chicago and had the opportunity to walk the auto show floor before it opened. I didn’t get any special access to the cars or anything, but just being able to walk around the show before the doors opened to the public was pretty neat.

  7. New York Auto Show when it was at the Coliseum. The Kirk White “Cannonball” Ferrari Daytona outside, and the Modulo and 512S inside.

    Once I moved to Manhattan in 1979, I went every year until I left in 2014. Like monthly car magazines, I’ll miss car shows like these.

  8. Some years ago I was at the Detroit Auto Show. I’m sitting in the drivers seat of a Honda Accord and a friendly lady hopped into the passenger seat. She was having a wonderful time and loved car shows and loved meeting people and so on and so forth. Then she asks me what I think of Hondas in general. I replied that I loved their motorcycles but couldn’t warm up to their cars. Using as friendly a tone as I could I smiled and said that I’m just that one guy that doesn’t love them. I swear, her eyes started welling up and she hissed at me, “My husband and I love Hondas! If he were here he would make you eat those words! Nobody makes a better car in the world!” She got out and slammed the door. I’m sitting there thinking, “Jesus Christ. I’m a monster.”

  9. My first auto show – as a little kid – was the Los Angeles International Auto Show in 1966 (tagline “44th in ’66!”). The styling trends that year were vertically stacked quad sealed beam headlights (most US manufacturers) and “hidden” windshield wipers introduced by Pontiac. So edgy!

    The most expensive car on display was the Rolls Royce Silver Shadow at $19,700, followed by Ferrari’s 330GTC, 275GTB and 275GTS at prices ranging from $14,500 to $15,500.

    AMC had a contest booth: they had wired up faux shifters and the idea was to listen to the soundtrack of an AMC racing stock car accelerating through 4 gears, and shift correctly at the precise time the driver shifted. If you got all shifts timed right, you’d win an AMC Racing Team windbreaker. Since I’d watched my Dad shift for years and had a lot of engine-off “driveway” practice, I ended up getting all but the 3-4 shift, which was better than any of the 3 adults I was competing against. So no windbreaker, but a definite moral victory for the kid.

    Oh, Miss America was there handing out “autographed” postcards – I think at the Oldsmobile booth. She was pleasant but way too old for me.

  10. First Laughlin NV has car shows every week about 6 months a year. No charge but some lovely cars everywhere.

    Second to everyone complaining about dealerships
    Think about it what we are seeing with low inventory, high demand, waiting for your car, and no discount is pretty much what the situation will be without dealerships.

  11. Toyota also needs time to make wheels that stay on their EV’s. Meanwhile they’re making bank on their existing CUV lineup. RAV4’s are everywhere as usual.

    For upcoming EV’s buying them at MSRP sounds fine. Batteries will be supply constrained for a few years yet. Probably by battery grade lithium production needing to scale here in the States. It was cheaper to offshore mining but with China rattling its saber that’s probably not true for long.

  12. Never been to one of the big car shows, but used to go to the Dallas Car Show every year for an eight year period. The cool thing about the Dallas show is that it is on the state fair grounds during the State Fair. Also on the fair grounds is the Cotton Bowl which hosts the Texas-OU game every year during the fair. So my friend and I had a tradition of going to the game, grabbing the latest fried-food “delicacy” and a beer, and wandering around the new cars and concepts. Saw the Prowler concept just before it was put into production.

  13. The autoshows I went to were never really about new car reveals. Denver didn’t get that. But I do remember getting in a Cadillac XLR at a show. At that time, I was exactly the sort of customer Caddy wanted in terms of most of my age were eying BMW and Audi and their reps treated me very, very well. Of course, I couldn’t actually afford an XLR (or any BMW or Audi) but if I could have, I would have. I still love an XLR, but would greatly fear a tail light replacement.

  14. Never been to an auto show, but my Uncle was one the runners for GMC. Used to hear many stories.

    As for Starbucks charging stations. Good idea on paper, but it hard enough to get through the Starbucks lines as it is. Imagine with EVs taking up spots for charging. It should not take 20 minutes to get a friggin cup of coffee. 🙂

  15. I used to go to NAIAS almost every year as a kid. It was massive and always packed to the gills. Didn’t help that it was in the winter so everyone had their big-puffy winter coats on b/c coat check was a royal pain in the ass. This resulted in playing human “bumper cars” trying to walk around. I did happen to go the year (flew back to see fam) the Ford GT debuted and was able to see it up close. I’m not a Ford guy and didn’t think I’d be all that impressed, but man, that is one beautiful design.
    Caddy also used to have a balcony area overlooking the floor where if you showed your key fob, you could go up and grab a seat and free water/pop and snacks (there might have been a bar up there, but it was a tad early in the day, lol). That was a nice touch and a welcome break. 🙂

  16. I spoke to a friend at a local Toyota dealership and he said they’re loving the current situation. He said everything is already sold before it even comes off the truck. Selling at sticker price, they don’t have to deal with the negotiation song and dance, excess inventory or a bloated staff of shyster salesmen. He claims the monthly sales numbers are pretty darn good. Their lot is always empty. Go one town over and there’s a dealer with a mostly full lot with plenty of generous mark-ups and other shenanigans.

  17. My dad isn’t really a car guy, he can wrench and fabricate, a bit of a necessity growing up and working on farms. He’s had some cool cars (a 64 CJ5 with mustang tailights, an 83 CJ5 that I grew up riding around in, and a Datsun 620 King Cab that wasn’t really cool at the time but would be cool now if it hadn’t rusted in have two decades ago).

    I’ve always loved cars and I can remember when I was young my dad sometimes asking me if I wanted to go to a car show out of the blue, so we used to go walk around the Wichita Rod and Custom Show, or even just random night street shows down town. Those are my favorite memories, hanging out with my dad, who didn’t really care about the show but knew that I’d like it so he’d take me.

    My own kids are pretty young but so far they are both into cars and I hope that they’ll enjoy it when I surprise them by taking them to a show some time.

  18. The more common EV charging gets, the better. More places to charge is always good. And people like to spend time in Starbucks, too, so they’ll actually get a decent amount of miles on a charge while they’re there.

    It might not work as well in a Dunkin because people don’t hang around there as long.

    Qatar International Motor Show

  19. Favorite auto show memory? Seeing a red 2005 Lotus Elise 111R at a car show in 2004. It was larger than I thought it would be, but still had a lot of appeal.

    Too bad the Elise is no longer sold in the U.S. If there was a new car I’d want to buy, it would be one of those. I have my gripes with it, but it’s still a light-weight machine built for going fast.

  20. Considering the habit Starbucks has of sticking it hard to their long-suffering barristas, I am extraordinarily unlikely to make use of Volvo’s new charging strategy. Starbucks can eff right off, as far as I’m concerned.

    If what they want to do is make charging more ubiquitous, then they need to figure out what to do with street parking buyers, like city dwellers and Van-Life addicts.

    Come on Volvo, do your civic duty.

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