EV ranges drop in heat, Honda sales surge, car loan roundup

Hey everyone. I recently caught up with Tony Wanderon, CEO of APCO Holdings/EasyCare, on my latest podcast. We take a deep dive into the auto-financing landscape and how dealership F&I teams are tackling topics like EVs and vehicle service contracts. Check the episode out here.

— CDG

1. Hot weather not a big concern for most EV drivers

Top line: Summer can have a negative impact on electric vehicle driving ranges, just like winter. Unlike cold weather, however, new data suggests most consumers won’t notice the impact.

Battery-focused insights platform Recurrent examined readings from 20,000 EVs during the hottest day of 2023 (July 4) to gauge the impact of heat on driving range. Here’s what they found:

Key takeaways:

• Most buyers aren’t impacted: Considering the average temperature that day was roughly 88F, most EV owners lost 5% or less of their maximum driving distance. For a car with 300 miles of range, that’s less than 15 miles, a negligible amount for most consumers considering the average daily commute is around 42 miles.

• The ones that are impacted are at a clear disadvantage: However, the higher the temperature, the faster EVs lose range. Drivers in the hottest climates, such as those living in Arizona or Texas, can lose almost a third of their range, forcing them to charge more frequently and plan their trips with more care (although Recurrent warns that data from EVs in 100F weather is still scarce).

• Intense heat is almost as bad as the cold: At its most intense, the impact of heat on driving range is comparable to that of cold weather. Recurrent’s previous study on the effects of climate on EVs found that they also lose around 30% of their range in freezing temperatures.

Bottom line: Should EV buyers worry about range loss this summer? Thankfully, for most regions it seems the answer is no. But for those who live in areas where temperatures in the high 90s are normal it may be worthwhile talking with your dealer about how well your preferred model performs in the heat.

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2. Honda maintains ICE sales momentum but stumbles on EVs

Top line: With sales up 6.4% year-over-year in May, Honda continues to be a top performer in the U.S.

Here’s a snapshot of how American Honda did last month:

• Combined U.S. sales of 127,129 units, up 6.4% from 2023 and the second-highest monthly total for 2024.

• Excluding Acura, Honda brand sales accelerated 8.2% over the same period last year, hitting 114,388 units. Trucks were the primary driver of demand, jumping 10% to reach 76,607 units.

• Similar to months before, Acura struggled to maintain momentum in May, shedding 7% of its year-over-year volume thanks to a near-40% decline in car sales. Strong demand for trucks (up 10.5%) helped prevent a steeper drop.

• The CR-V was easily last month’s best-selling model, selling 37,224 units, followed by the Civic at 23,987 units.

• At 2,173 units, the Acura TLX took the biggest hit last month, falling behind last year’s total by 76.5%. Similarly, Honda’s Ridgeline sold only 1,712 units, down 66.6% year-over-year.

What about EVs: Interestingly, Honda’s EV volume dropped sharply from May 2023, even though hybrid versions accounted for more than 50% of sales for best-selling models like the CR-V. The automaker sold 26,995 electrified units during the month across the Honda and Acura brands, down about 16% from last year’s 32,087 units.

Year-to-date: Combining the last five months of sales, Honda is ahead of last year’s total by 11.1%, surpassing half a million units in May. While demand hasn’t been consistent between its models, this puts the brand in an excellent position to tackle the summer months. 

Bottom line: If Honda can continue playing toward its strengths there’s no reason the brand couldn’t easily beat last year’s sales total of 1.3 million units.

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3. Monthly car payments and loan balances vary between states

Top line: The average monthly payment for new and used cars continues to trend above pre-pandemic averages, hitting $735 and $523, respectively, in May.

Loan balances: The average car loan balance in the U.S. stands at $5,470, according to the Federal Reserve. However, that number ranges heavily from state to state, with the Southern U.S. facing the biggest balances..

• Texans face the highest loan balances out of all states, with an average unpaid amount of $7,610.

• Louisiana residents come at a distant second, with $6,710 in unpaid loans.

• Floridians and Georgians face similar balances, at $6,370 and $6,360.

Monthly payments: But bigger balances don’t necessarily translate to bigger monthly bills.

• Montana faces some of the highest monthly car payments, with an estimated average bill of $801.91.

• Alaska follows close behind, with $774.96.

Delinquencies: Delinquency rates also vary from state to state, seeming to ignore loan balances and monthly payments.

• Mississippi reports the highest number of car loan delinquencies at a rate of 6.1%.

• Alabama comes in second at 5.58%, followed by Louisiana at 5.44%.

Bottom line: Given inflation and affordability trends, it’s likely that monthly payments will start to normalize on their own in the coming months. Until then, however, dealers can stand out from the competition by leveraging financial incentives such as low rate offers to drive traffic to their stores.

• FTC updates regulations to take lighter toll on dealers, consumers.

• Toyota faces new round of probes after troubling details emerge.

• NHTSA investigates Nissan over air bag problems.

• General Motors taps two ex-Apple execs to lead software development.

• UAW publishes salaries for top leaders.

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Thanks for reading everyone.

— CDG