Huge EV investment, new car affordability update, the state of used car sales

Hey everyone. I interviewed a legendary dealer on the CDG podcast today. Rita Case is the president and CEO of the Rick Case Auto Group, a monumental brand she built with her late husband Rick. 

Today, Rita oversees the group’s 12 stores in Florida and Georgia, including the nation's number one Honda dealership for volume—learn how she does it on today’s podcast. 

But first, let’s get into the top three automotive industry headline from today’s daily roundup.

— CDG

1. Number of the day: $65 billion

That's how much Honda plans to invest in electrification and software through the 2030 fiscal year.

Why it matters: Despite all the uncertainty about consumer demand for EVs, automakers still see an electric future ahead — at least in the long run. For the record, EV sales are still outpacing last year, but not by as much as analysts expected. 

• According to a Honda business briefing, the investment aims to strengthen software and research. It will also improve supply chains. These efforts will focus on key markets like the U.S., Canada, and Japan. 

• Honda's goal is to have battery and fuel-cell EVs make up 100% of its global sales by 2040.

Product rollout: Honda also plans to introduce seven new EV models as part of the Honda “0 series” by 2030. They will sell two new models in China later this year. The company is also focusing on a new EV model with a swappable battery for Japan by fiscal 2026.

• Right now, the only pure battery-electric Honda car buyers can get their hands on in the U.S. is the Prologue.

Key background: Critics say Honda was late to the EV party. But, its commitment to making battery and fuel-cell EVs contrasts with Toyota's focus on hybrids. 

• Honda is keeping its hybrid lineup too, and aims to sell 1 million units this year. The automaker is also preparing the path to double capacity to 2 million units annually.

• Last month, Honda announced a $15 billion CAD ($11 billion) investment in Canada. The company will use the money to establish a supply chain and plan to start EV production there in 2028. 

• The company targets a 20% cut in North American battery costs and a 35% reduction in production costs.

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2. Why new cars were less affordable in April

Several new car affordability factors turned against consumers last month, straining wallets in an already high-priced economy. 

What's happening: The average monthly payment for a new car rose to $762 in April, up 1.8% since March. Buyers now need 37.7 weeks of median income to purchase a new car, an increase from last month's 37.1 weeks.

Why it matters: Despite a drop in the auto loan rate to 10.22%, the lowest in nine months, increased vehicle prices and fewer dealer incentives are making new cars less affordable.

• In April, average transaction prices (ATP) rose 2.2.% to $48,510. 

• The average incentive package was 6.3% of the ATP, a drop from March and the first time in six months that incentives declined. 

The big picture: Even with these challenges, affordability has increased by 5.1% from last year. This reflects some easing from the highs reached in December when the average payment was $795.

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3. State of play: used car retail sales

What's happening: Retail sales of used vehicles fell 7% in April compared to March, marking a downturn to 1.45 million units sold, based on vAuto Live Market View data. 

• Despite this monthly drop, sales were up 4.8% compared to the same period last year.

Why it matters: Lower used car prices compared to 2023, are not enough to attract sideline car buyers. With ongoing high interest rates, consumers might not feel like they're getting a massive deal any time soon.

By the numbers: Although sales increased on a yearly basis, April’s sales did not reach the five-year average of 1.56 million. 

• Additionally, the used car days’ supply tightened at the beginning of April, decreasing from March’s revised 46 days.

On CPO sales: The certified pre-owned (CPO) market, known for higher-quality used vehicles, also hit a downturn. 

• Sales in April decreased by 2.5% year over year to 209,265 units. 

• Year to date, CPO sales have increased only 0.2% from 2023 levels.

The big picture: While there are buyers in the market, broader economic factors like interest rates and inventory shortages are driving their car buying decisions.

• A Swedish appeals court upheld on Thursday a dismissal of Tesla's lawsuit against Sweden's Transport Agency in a conflict over licence plates.

• Rivian shared it is integrating YouTube into its infotainment system and adding Google Cast capabilities.

• Ford has issued a “call to action” to suppliers, asking for help reducing costs on electric vehicle production.

• 2024 Kia EV9 leases have a $12,000 discount on select VINs.

• Volkswagen Group’s strategy to go all-in on full-electric vehicles is no more.

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.

• 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.

• Want to take your buy/sell career to the next level? DSMA is seeking an Automotive M&A Associate.

• Are you a big-picture kind of person? AutoNation is looking for a Director of Strategy & Business Development.

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

Thanks for reading everyone. Hope to see you back here tomorrow.

— CDG