GM's hybrid plans, wholesale used car prices, EV charging study

Hey everyone. We’ve got a great CDG podcast on deck today with Nate Mihalovich, CEO of The Lasso. I highly encourage you to check this one out—we discuss his journey from a $300 million exit to transforming the ways dealers acquire inventory, plus how dealers can out-compete Carmax and Carvana, and much more.

Now, let’s get into today’s news.

— CDG

1. GM is bringing plug-in hybrids back by 2027

Top line: General Motors' big bet on an electric vehicle future continues to change course due to shifts in consumer demand and updates to Environmental Protection Agency (EPA) rules.

Driving the news: Now, the automaker plans to bring back plug-in hybrid vehicles to its lineup by 2027, according to an interview CEO Mary Barra gave to The Detroit News.

Compliance: 2027 may feel far off. But, Barra explained the timing is partly due to recent updates to federal emissions rules by the EPA. 

• These new standards require significant reductions in tailpipe emissions, aiming for a 50% cut by 2055. 

• They will impact cars and trucks starting with models from 2027 through 2032.

• The Biden Administration also aims to reduce vehicle fuel consumption by nearly half by 2035.

• The proposed CAFE standards would require automakers to achieve an estimated average fuel economy of 58 miles per gallon (mpg) by model year 2032.

EV demand is the other factor at play as EV sales growth slows.

• According to Kelley Blue Book counts, Americans bought 268,909 new electric vehicles, for a 7.3% share of total new-vehicle sales. 

• While annual EV sales continue to grow, they have slowed down meaningfully. Sales in Q1 rose 2.6% year over year, but fell 15.2% compared to Q4 2023.

• Let’s compare this to previous quarters:

  • In Q1 2023, EV sales volumes were up 46.4% year-over-year and 15.5% quarter over quarter.

  • In the same quarter of 2022, EV sales were even higher, with an 81.2% year-over-year increase and a 20.4% rise compared to the previous quarter.

For years, General Motors has been a vocal advocate for an all-electric future, even as competitors like Toyota and Ford focused on hybrids.

Key quote: But regulations have changed — "and plug-in hybrids are an important part of meeting the regulatory space and giving consumers more options. As the regulatory space evolved, it made sense for us to assess our strategy,” Barra said.

Of note: GM's last plug-in hybrid, the Chevy Volt, was discontinued in 2019.

GM is still committed to its EV future. The automaker recently introduced the Chevrolet Equinox EV, an affordable all-electric SUV with a 319-mile range. The retail version of the Chevrolet Silverado EV is now available at dealer lots.

In the second half of the year, GM plans to offer more affordable trims for the Equinox, Blazer, and Silverado EV. Cadillac is also joining the EV lineup with the Escalade IQ and Optiq SUVs. 

Looking ahead: Overall, GM aims to produce and wholesale between 200,000 and 300,000 Ultium-based EVs in North America in 2024.

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2. Wholesale used car prices show little movement so far in May

At a glance: In the first 15 days of May, wholesale used vehicle prices were mostly flat from April, increasing by 0.3%. 

Data dive: The mid-month Manheim Used Vehicle, which tracks prices that car dealerships pay for used cars at auctions, was down 11.3% from the full month of May in 2023.

• For the first two weeks of May, prices in the Three-Year-Old Index fell by 0.9%. This drop was slightly above the usual decline at this time of year.

• The average daily sales conversion rate was 59.3% in the first half of the month, nearly identical to 2019 levels.

• The conversion rate has risen half a point from last month. This suggests demand from buyers at auctions is stronger.

Manheim Market Report (MMR) Retention, which measures how closely average auction transaction prices align with MMR values, averaged 98.7%. This indicates that valuation models are slightly lagging behind actual market prices.

• During steady markets, MMR Retention is typically around 100%. This means that auction sale prices closely match MMR values.

• However, during seasonal market swings (such as the spring or fall markets), MMR Retention may increase or decrease by 1-2% for a few weeks.

Key quote: “Although we saw stronger declines in April against what is normal, declines in vehicle values have decelerated in early May,” said Jeremy Robb, senior director of Economic and Insights at Cox Automotive. “Over the last two weeks, we’ve seen slightly higher sales conversion at Manheim, which has helped to slow the declines in wholesale value trends at the start of the month.”

By segment: Compared to the industry’s year-over-year decline of 11.3%, the pickup and luxury segment outperformed the index overall.

• Pickup prices are down 10.6% and luxury vehicles fell by 10.8% against 2023. 

• Performing worse than the industry average, SUVs were down 12.4%, midsize cars fell by 15.7%, and compacts declined by 16.3% year-over-year. 

• From April, pickup prices rose by 1%. SUV prices were down slightly, falling by just 0.1%. Luxury vehicle prices also fell by 0.7%. Compact car prices declined by 0.9%, and midsize car prices fell by 1.2%. 

• Wholesale EV prices were down 15.2% against values for May 2023, while the non-EV segment declined by 10.8% over the same period.

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3. State of play: elevating the EV charging experience

Big picture: EV ownership goes beyond just the car. These days, it's all about the charging experience, and drivers are prioritizing convenience and safety when they plug in. 

The intrigue: Results from a study by the Transportation Energy Institute show that EV owners are pretty discerning when choosing an EV charger to use.

The survey of 500 EV drivers across the U.S. revealed they want public charging stations to be:

• Placed in high visibility areas (68%)

• Have visible security cameras (65%)

• Bright lights (56%)

• 24/7 operation (52%)

• Multiple charging spots (46%)

Yet, not all stations provide these features. While about half of the stations provide multiple charging ports, 24/7 service, and bright lighting, two-thirds offer high visibility and security cameras.

• A two-alarm fire broke out at Tesla’s Fremont, California vehicle assembly plant late Monday afternoon.

• The number of U.S. customers shopping for auto insurance in the first quarter was 6% higher than a year earlier, according to TransUnion.

• Mercedes-Benz High-Power Charging just opened more DC fast chargers at Buc-ee’s stores in the Dallas-Forth Worth area.

• The Alabama Institute for Deaf and Blind is adding an automotive manufacturing program.

• Nissan will expand the number of EVs produced at its Mississippi factory.

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.

• NVP Warranty is seeking two territory managers — one in Houston, TX and one in Atlanta, GA.

• Have a background in digital marketing? Foundation Direct is hiring several remote roles, including an Account Executive and Regional Performance Manager.

• Feel at home in the service drive? Tom Whiteside Chrysler Dodge Jeep Ram, near Columbus, OH, is hiring an FCA Technician.

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

Thanks for reading everyone. See you right back here tomorrow.

— CDG