Auto credit access declines, Biden to raise tariffs on Chinese EVs, Mercedes-Benz reworks strategy

Hey everyone. Quick reminder—if you enjoy my daily roundups of the top automotive industry news, then you have to check out my latest Week-in-Review, where I take you deeper into the stories that resonated with CDG readers the most throughout the week.

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Now, let’s get into today’s daily roundup.

—CDG

1. Access to auto credit tightened in April

Top line: Auto credit availability, a measure of how easy it is for consumers to get loans for car purchases, declined slightly in April. 

Zooming in: Cox Automotive reports that auto credit accessibility decreased by 0.7% year-over-year. Credit tightened for all new vehicle and certified pre-owned channels.

So far this year, auto loan access has risen. But, average approval rates fell in April by 2.4% from last year. Subprime loans saw the biggest decline, from 14.9% to 13.2%.

What’s more: Other factors moved in favor of consumers this month. Yield spreads tightened, which can be an indicator of a decrease in credit risk. Term lengths grew, and down payments decreased month-over-month.

Of note: Credit access varied across different segments.

• Independent dealers experienced a loosening of credit, while certified pre-owned vehicles faced the most tightening. 

• Among lenders, banks were the most restrictive, reflecting the overall trend of credit tightening.

Looking ahead: Although auto credit availability didn’t improve in April, there is a gradual return to affordability in some areas of the market. Despite these conditions, the new car market is on track for another year of consecutive gains.

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2. Biden to announce steeper tariffs on Chinese EVs

Big picture: The Biden Administration is anticipated to announce a steep increase in new tariffs on EVs, semiconductors, solar equipment, and more goods from China. 

Driving the news: Sources told The Wall Street Journal that they expect the new tariffs on Chinese EVs to increase from 25% to about 100%. 

• This move aims to counter any threats to U.S. jobs and national security due to China's manufacturing "overcapacity."

• It also intends to thwart the influx of low-priced Chinese EVs from entering the U.S. market. 

• For example, the BYD Seagull retails for around $10,000 in China—way cheaper than U.S.-made EVs.

• The announcement comes on the heels of an in-depth review of tariffs that were originally set under the Trump administration.

• This includes the $7,500 EV tax credit, which is meant to incentivize automakers to use batteries made in the U.S. or from U.S. trade partners. Materials from "foreign entities of concern" like China don't qualify. Although, some new provisions to this rule were recently added.

• Tesla CEO Elon Musk warned that without such tariffs, Chinese manufacturers could "demolish" U.S. competition.

Between the lines: Despite the massive number of Chinese car exports globally, the U.S. has effectively curbed Chinese EVs from entering its market through existing tariffs.

• In Q1, Volvo-backed Geely was the only Chinese automaker to export to the U.S. with 2,217 cars, according to the China Passenger Car Association.

In response: At a campaign rally in New Jersey over the weekend, Trump criticized Biden's plan.

3. Mercedes-Benz rethinks electrification goals

At a glance: Mercedes-Benz confirmed that it will continue to produce gas-powered vehicles into the next decade.

What’s happening: According to prepared remarks from CEO Ola Källenius at the company’s latest shareholders meeting, the goal of producing only electric vehicles by 2030 is not going as fast as the automaker expected amid a decline in profits.

• The German automaker reported a 30% drop in first-quarter earnings before interest and tax (EBIT) to 3.86 billion euros ($4.13 billion), compared with the 3.87 billion LSEG estimate.

• Mercedes-Benz reported a decline in its EV sales, with a notable 8% drop in deliveries in the first quarter of the year. 

• The company's profit margins have also suffered, dropping to 9% in Q1—the lowest in more than two years.

• Källenius now says Mercedes-Benz will continue to make combustion-engine and hybrid vehicles "If the demand is there, well into the 2030s."

Background: This is the second EV strategy adjustment this year from the automaker. The company had already scaled back its mid-term targets in February, relenting that EVs, including hybrids, would not make up 50% of its sales by 2025 as initially planned.

• Elon Musk says Tesla is going to spend over $500 million on expanding the Supercharger network this year after firing the entire charging team.

• Chinese automaker Zeekr's shares rose almost 35% above their U.S. initial public offering price on Friday.

• Subaru plans to partner with Toyota on three new EV crossovers it has planned through 2026.

• Connected and automated vehicles could change traffic signals forever.

• The number of battery-electric vehicles sold at auction through April is nearly double the amount sold in the first four months of 2023.

We’ve got tons of great jobs hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• Sales more your game? S&P Global is looking for a Sales Executive-retail.

• OPENLANE is looking for tons of new talent—they’re hiring market sales managers across the country. In Pensacola, Chicago, and Las Vegas to name a few.

• SaaS company BizzyCar has put the call out for account executives in Los Angeles and Orlando (remote).

Looking to hire? Add your roles today—it’s 100% free.

Thanks for reading everyone. Hope you have a great Monday.

— CDG