You know what the single biggest gripe I have about automakers is? Well, if you regularly read The Morning Dump you can probably list out about 20 things I view as my single biggest gripe, but the one I want to complain about today is the lack of local knowledge and expertise that foreign automakers apply to markets where they’re historically successful. Yes, I’m talking about foreign automakers who are initially crushing it abroad, but who then have their lunch eaten because they don’t seem to know what’s going on locally.
And by foreign, I mean any automaker in a market not its home market, which includes American automakers in some markets, German ones in others, and one particular Japanese automaker in a market it historically has dominated. That automaker has learned the hard way that no one in the foreign market really wants a cheap car that feels cheap. Hopefully, Smart learns this same lesson with the return of the two-seat Smart, though that car may end up being not quite as cheap as I’d like.
The new Smart brand is half Geely and half Mercedes, and Mercedes would really, really like the United States to not nuke it from space because of those ties. At the same time, it sounds like new tariffs are coming to Canada, due in no small part to what the current administration sees as discriminatory automotive tariffs.
Why Do Carmakers Keep Forgetting This?
India’s Maruti Suzuki–owned by Japanese automaker Suzuki–has long been a dominant force in India and remains the largest automaker. For now. The company is losing market share quickly (it once commanded up to 80% of the market) as it makes the same mistake automakers keep making, at least according to a big feature from Reuters on the company’s fate.
Specifically, it saw the market as only wanting cheap cars that lacked nice features, while, per the article, the people on the ground who actually knew the market explained that the growing incomes of many Indian consumers mean they now want something nicer. Here’s a good example:
Maruti Suzuki managers first floated the idea of adding sunroofs about a decade ago, the people said. But Japanese bosses considered the feature – which has become a symbol of upward mobility in India – impractical given India’s extreme heat and dusty roads. They worried that adding a more powerful air conditioning unit and strengthening the cabin to accommodate the panel would increase costs and distract from Suzuki’s mission of providing affordable transport.
The carmaker didn’t introduce sunroofs until 2022. By then, fast-growing domestic rivals Tata Motors and Mahindra & Mahindra — which both currently have a market share of around 14% — had sunroofs as standard features on between a quarter and a third of their cars sold in India, according to data from auto research firm JATO Dynamics.
What’s extra crazy about this is that the failure of the Tata Nano should have been a sign that, in India, there’s less interest in bargain-basement cars than previously thought. Sure, a sunroof might not be practical, but people do not buy cars for purely practical reasons.
Japan needs India because India is probably as resistant to the influx of Chinese cars as the United States is, and the market is also gaining more buying power. Obviously, this isn’t just an issue for Japanese automakers in India. This happened with both German and American brands in China, which somehow didn’t see a change in Chinese consumer behavior and got their lunches eaten by upstart, state-backed brands more attuned to the local market.
So what about in the United States? I think most brands here have done a good job of building cars for the market, but not all of them. Taking the South Korean example, both Hyundai and Kia eventually thrived here, whereas Daewoo only lasted a few years and died after guessing poorly what American consumers might want. Suzuki might have done well in India, but it, like Mitsubishi, faltered here. [Ed Note: Am I crazy to consider Volkswagen in the U.S.? In the 1960s and 70s it was crushing it as an affordable brand, and even 12 or so years ago, it felt like VW was on top of the world, with the VW Vortex Forum humming along, and lots of Americans loving their slammed Jettas and GTIs. But in this crossover era, it seems to me that the Tiguan has been the sole winner. I think the Scout brand represents VW figuring it out. -DT]
To clarify, I don’t think you have to have leadership that is solely from that particular country. You just have to have leadership that’s willing to pay attention.
Check Out This Cute Smart #2
Smart has only released concept images of the Smart #2, and Mercedes is already excited about it.
Naming aside, this sounds like a better-featured car than you might get from Maruti, and a lot of testing is being put into making it feels good:
To ensure that cabin comfort aligns with the vehicle’s refined aesthetic, extensive NVH (Noise, Vibration, Harshness) validation across multiple demanding environments was conducted – including wind tunnel, acoustic chamber, temperature-controlled four-post rig, proving grounds and public roads. The testing activities encompassed wind noise, road noise, powertrain NVH, thermal NVH, squeak and rattle, as well as sound quality optimisation.
I like the car in the camo. Maybe they should sell the camo as an option?
Mercedes Would Very Much Like To Not Be Banned In The United States
Volvo managed to avoid being banned from selling cars in the United States over its relationship to China, even as Polestar got the boot. Mercedes (owned in part by the same Geely that owns Polestar and Volvo) would very much like to not be next, and is lobbying to avoid Polestar’s fate.
Mercedes is seeking to raise the threshold for permitted Chinese ownership to 25%, among other potential changes, said the people, who asked to not be identified because the discussions are private. That would equal the ownership cutoff that the bill would impose on other companies such as suppliers of connected parts or software.
Lawmakers are also discussing exchanging a numerical threshold for a more qualitative test that weighs potential national security risks, some of the people said. If adopted, that would likely be more favorable to the German automaker than the current proposal, those people said.
Mercedes declined to specifically address the legislation. The company said in a statement that no single shareholder owns more than 10% of its stock, and that no stockholder has direct representation on its board or authority over its operational decisions.
It’s expected that this bipartisan bill will eventually make it to the President’s desk where anything can happen.
Hockey Sticks Get A 50% Tariff Due To… Cars?
All I know about hockey I know from movies and television, though I’m going to assume that Canada makes good hockey sticks. Those sticks, among other Canadian goods, are subject to new tariffs as The Hill reports:
President Trump slapped an additional 50 percent tariff on certain Canadian goods in response to what the administration said were “discriminatory” trade measures from Canada on Monday.
A senior administration official told reporters on a Monday press call that the impacted products range from “wine to hockey sticks to cement.”
The tariffs fall under Section 338 of the Tariff Act of 1930 and will go into effect 30 days after signing, an administration official told reporters.
And what are some of the issues the President has? According to the President’s proclamation, cars a part of it:
Since April 9, 2025, Canada has maintained a 25 percent tariff rate on imports of U.S. motor vehicles that do not qualify for preferential, duty-free treatment under the United States-Mexico-Canada Agreement (USMCA). For U.S. motor vehicles that do qualify for preferential, duty-free treatment under the USMCA, Canada applies a 25 percent tariff rate on the value of all goods that do not originate in Canada or Mexico used in the production of the vehicle, up to 85 percent of the total value of the vehicle. In addition, Canada maintains a tariff-rate quota (TRQ) on U.S. motor vehicles that qualify for preferential, duty-free treatment under the USMCA. The TRQ for each automaker limits duty-free access for the covered motor vehicles from that automaker up to certain annual quantities (in-quota quantities) and applies the tariffs described above on products that exceed the in-quota quantities. The TRQs are granted to induce companies to invest in production in Canada, and Canada has announced that it reduced the TRQs for U.S. companies that moved manufacturing from Canada to the United States.
Pot. Color. Color of the pots. Et cetera.
What I’m Listening To While Writing TMD
Would you believe that 23 years ago today the world was first treated to Dizzee Rascal’s debut album Boy in Da Corner? I was in college, and thanks to the preponderance of file-sharing services, blasting “Fix Up Look Sharp” meant you know what was up.
The Big Question
What’s the best example of an automaker completely whiffing in a market that’s not its home market?
Top photo: Suzuki
Tavares era Stellantis. I know they are at least partially a US company but at the time they took a very Euro-centric view and either neglected the North American products or made moves that most any American could tell you were going to go poorly. They didn’t listen to the Americans which led to several high profile exits from the company folled by the products that were released performing poorly. They seem to be righting the ship but are still starved for compelling products for many of the brands due to leadership that didn’t understand the North American market.
Most recent complete whiffs would have to be the Dodge Charger EV and removal of hemi V8’s from Dodge cars and Ram trucks
Obviously, post-Beetle VW in the US. They just can’t figure it out, even with occasional glimmers of hope. The cheaped-out for the US Jetta and Passat were fairly successful, but that’s really about it. Those of us who WANT German VWs are are willing to pay for them seem to just get ignored, and the cheap stuff can’t really compete with Toyota.
Ultimately, as I keep saying here endlessly, cheap cars in the US are a non-starter. There is no point to buying a new hairshirt when you can just buy a 2-3yo CPO example of something better for the same price or less when cars last a REALLY long time with minimal fuss. No farts in the seats is not worth the premium anymore at the bottom of the market. It was very different when a car was a used up heap at 7-8yrs old and 100K.
The people who can afford even a “cheap” new car, can generally also easily afford something better, and everyone else can’t even begin to afford what the realistic bottom of the market is today. And the reality is that once you make a car that can pass all of the safety and emissions and sheer expectations requirements, “cheap” is basically $25K and up. And more realistically, $30K. And as is shown by the fact that the average new car in the US is over $50K these days, many can afford a lot more.
Porsche nailed it decades ago “the entry level car is a used car”. The Internet chattering classes need to get over themselves.
But I do think there are some categories that have jumped the shark – pickup trucks in particular have just gone completely plaid in price. Though I suppose there is plenty of cash on the hood of plenty of them again.
This. For $25k, I can either get a Slate with hand crank windows, or a very nice used car.
Honestly, after having done the new car dance a couple times and recently combining a lease return with a pre-owned purchase of a different vehicle, I’m not sure I’d go new car again. Shopping carefully for something between 2-4 years old is going to return tremendous value. The depreciation on a lot of new cars is breathtaking, and there are still people who take care of their cars. Finding one in very good condition is easily possible.
And that’s all on top of new cars being just plain *stupid* in so many ways now.
And then if you REALLY want value – go older and nicer. My 128i, even at the absolute tippy-top of the market dealer price I paid for it at 9yrs old, was absolutely stunning value compared to a new 2-series six years ago, and even more of a value compared to a new 2-series today. Which has gone stupid right alone with the rest of BMW’s lineup. And just like a new car, it didn’t need a penny spent on it other than scheduled maintenance for the first five full years I owned it.
If people actually wanted cheap cars, the remaining offerings (and those that went away in the past few years) would be bases-loaded home-run sellers. And they are/were emphatically NOT, even at prices that ensure that none of them were making a bit of profit for thier makers. I don’t think any of them broke 50K a year in the US, and that just isn’t enough to bother with in this market.
As the pundits keep saying, it’s a K-shaped economy where the upper half is doing just fine, and the lower half can barely afford to eat, never mind buy even the cheapest new cars.
I don’t envy the job of trying to figure out market demand alongside global pandemics, global trade interruptions and changes tastes and tariffs. I would say MOST car manufacturers these days are swinging and missing. You have recalls, infotainment that is glitchy, screens that people are realizing are *not* fancy, prices that are too high, size and weight that also match that price bloat, regulations that require size and complexity that is not necessarily useful, colors that look like a shade of greyscale that went through a nasty divorce, the list can go on for a long time.
And not many of them can easily lap a track with the top open while carrying a grandfather clock. So disappointing. Also, I’m still super bummed that I was away during that only chance to meet my heros at Lime Rock. More advanced notice please!
TBQ: Gente! Ford’s 12 billion dollar loss and subsequent exit from Brazil. Lots of reasons, but not making the pivot to SUVs certainly played a role.
I would say the Badge Engineered Hornet. It was a big whiff because the italian quality perception, or lack of it, along with premium prices from a Meh vehicle really did it in before it even got to start. The Dodge Dart was similar, but I think the massive number of manual cheapo versions hurt them as well. though I will say I would take a 2.4 tigershark with the DPT 6 speed manual in GT form. though I will also admit the italian connection to both of those driveline pieces scares me a little.
The Hornet is just aggressively expensive and not the right fit for the market in terms of size and utility. Outclassed before it even launched.
It can be hilariously unruly with its powertrain modes, if you want.
Nice little car but so.much.money.
For a Dodge.
I mean, I hate to say this, but they really need something like the Caliber again. Cheap, high volume, high value, not “premium,” leave the performance dickhead stuff at the curb. Where’s the Dodge competitor to the Corolla Cross?
Daewoo didn’t so much fail in the US than it was snuffed out before it could either fail or succeed. GM neutralized it by buying it. Not to say the product was stellar or that the sales and marketing tactics were super effective, but they weren’t so much an upstart as they were a new entrant to the market that could be a formidable threat joining the already-ascendant Hyundai/Kia at that time. And the small car capability and global expansion probably didn’t hurt GM as much as it helped.
Mercedes with the Smart car, then again with the Smart car 2.0, if that’s really a thing.
Only Mercedes the person would be excited about Mercedes the Smart car.
(Nothing against Mercedes the person, but she’s literally the only person I’ve ever seen so excited about Smart cars)