OEM Tariff Plans, Toyota Eyes EVs, Gen Z Ditches Credit Cards

Paul J Daly  0:01  
Paul, we are back at it, folks. It is Monday, April 7. This is the automotive State of the Union. I'm Paul J Daly, and today, that's not Kyle. I have Michael Cirillo, who, just by the way, had been laughing and feeling uncomfortable all at the same time with a story. He told me it's not really Monday morning show appropriate, but this story is going to come out at some point, I promise you, maybe, maybe the main stage editor would come, I think, with visual aids and sound effects. Oh yeah. Nathan's behind the stage. Is covering his face. He's like, this is what happens when Michael's on on a Monday. We haven't. We haven't put our full professional inhibitions on yet. So yeah, best if we're not listen. We have we're screaming into a soda cod. Now is the fun time of year when we see everyone realize, like, Oh, I better buy the ticket now, because we're just 38 days away. So we have a little tracker, and we watch the tickets come in. If we haven't gotten your ticket yet, it's time to buy it. Let's just be honest. This is where the best conversations in the automotive are going to happen. Converge, innovate, disrupt, repeat. Is the new theme for ASOTU CON. It's always been the theme for ASOTU CON, but now we've kind of like, that's the official theme for ASOTU CON. Converge, innovate, disrupt, repeat. It's exactly what happens. Go to ASOTU CON com, get your tickets, book your hotel and book your plane ticket, right? So sometimes, so the plane tickets aren't crazy. Um, it's actually pretty easy to get there. You can get to Baltimore pretty inexpensively from a lot of major cities, direct and if not, there are two other airports in DC that I guarantee you can get to easily and just short drive to the venue. So I can't believe we're here. Like, it feels like tomorrow.

Michael Cirillo  1:43  
It's right around the corner. I

Paul J Daly  1:45  
know, I know I'm trying to process all the things that I have to do, like, in this moment, all of the, all of the like, all of the last minute. Now it feels like last minute, because when you're ordering stuff and swag and supplies, right? Like, once you're in 30 days, it's like you're gonna have to beg bar and steal to get anything done that quickly. So I think, did you

Michael Cirillo  2:07  
ever get around to booking the venue? Just kidding.

Paul J Daly  2:10  
You knew I forgot something. We

Michael Cirillo  2:12  
got the sewing scoops. We got

Paul J Daly  2:15  
the food, though. We got the food. Want to thank our friends at Reynolds and Reynolds and goober goo for being presenting sponsor this year and making sure that we could get this thing rip roaring from the very beginning, because this year we announced it. Last year we're gonna do that again. Oh, by the way, just circle the week after Mother's Day. I've had a couple people who, like, had a little bit of surprise when it was even though we told them before. From now on, listen, just go into your calendar, set a recurring reminder that the week after Mother's Day is when ASOTU CON is going to be and we're going to expand the offering next year too. So we might have it actually be a little bit longer, but block the week off now at least put a little marker out there. Listen, we have a lot to talk about this morning. We're going to try to summarize the best we can. Look everybody knows the tariff world is going insane. Apparently, over the weekend, there were a lot of meetings and calls that happened from countries around the world to the White House. I saw one report said over 50 countries have reached out to have conversations and engage the current administration. So definitely, things are going to be shifting more markets going crazy, buying behaviors going crazy. The 25% tariff on imported vehicles is uh forcing swift and varied responses from all auto makers, with some pulling back and others ramping up. US operations. The early shake up shows just how disruptive this new trade landscape could become. Stellantis, here's a little bit list. Salantis paused production at Canadian and Mexican plants and laid off 101,000 US workers, infinity, halted us bound production for the QX 50 and QX 55 until further notice. VW stopped rail shipments from Mexico. Audi is holding vehicles at US ports, post tariff. Jaguar Land Rover is temporarily pausing us shipments. Here's and here's kind of like the flip side. Nissan stopped its plan to pause production in the US. So they were going to pause production, slow things down, lay some people off in Tennessee. Instead, they're leaning in, especially to build the rogue. GM is boosting its pickup production in Indiana, and Mercedes may shift another model to its Alabama plant. Ferrari and INEOS raised their prices by 11% no one's going to notice that the Ferrari one anyway, while Ford and stellantis launched deep discounts to keep buyers interested, here's a quote from s, p, globals, Stephanie Brinley says consumers will feel the financial pain faster than they will see new jobs created, as far as the chicken and the egg conversation. So it's, it's, it's sporty, quite sporty out there. We have a lot to talk about it. Asotuck,

Michael Cirillo  4:44  
you know, it's gonna be okay. Guys,

Paul J Daly  4:51  
yeah, you seen the cycle go a couple times, not with tariffs, but yeah,

Michael Cirillo  4:55  
it's gonna be okay. It's gonna be okay. You know? It's one of those things. And I mean, we get this, we're in the media business, but it's one of those things where you have to finally balance the headline that is designed to get viewers so that they can sell more advertising versus what might be happening behind the scenes. I mean, you, like you said, Wouldn't it be interesting to be a fly on the wall to hear how these conversations from all of these different countries, my goodness, please don't abandon us. Yeah, I think

Paul J Daly  5:28  
in the end this, this is one of the complex thing about just all the changes that are happening. The strategy behind it is that the terrorists will bring some level of reciprocity and will create American jobs and make Americans products and exports stronger and just bolster the economy. Thing is, though, the tariffs are an immediate feel the jobs and the economy, it really obviously the stock market reacts. But I will say the stock market always reacts to uncertainty. So what exactly is it reacting to? It's reacting to uncertainty, not any initial causes, effects, any of that stuff. And you know, we'll see what happens this week. But without a doubt, I think auto dealers are focusing on the things that they need to focus. Autonouce said that the SAR, because of the push forward in buying power, actually boosted the highest it's been in four years as a result of driving demand for the product. So obviously people flooding showrooms, coming in, wanting to understand. I've seen a lot of messages from dealers out there. Liza Borches was one of them who made a public statement about tariffs to their consumers, because people have the questions, and I think the dealers have the perfect opportunity right now to be the guide that consumers want them to be, yeah,

Michael Cirillo  6:41  
isn't that an interesting silver lining, right? Like you, you have the opportunity now to control the narrative, oh,

Paul J Daly  6:48  
and be the person that gives answers, right, instead of the person that gives uncertainty. Dealers now have the opportunity to provide certainty for consumers that don't know what's going on. And I can't think of a better position to be in. You can't buy that position. And if people are asking you questions, use that and steward that. Well, yeah, all right, speaking of stewarding, well, started once criticized for lagging in the EV race. Toyota is now charting a path with more in house models in global production, but with tempered expectations. The automaker still prioritizing flexibility as it balances EV growth with its new hybrid heavy portfolio. The Japanese manufacturer aims to launch 15 internally developed EVs by 2027 that's 15 in the next year and a half, including several Lexus models. New production sites in the US, Thailand and Argentina are planned to hedge tariff risks and improve delivery timelines. The target 1 million EVs a year by 2027 this is down from their earlier projections of 1.5 million by 2026 but in 2024 Toyota sold just under 140,000 EVs. So they're going from 140,000 to 1 million in 24 to 27 in three years. And if anyone can do it, I believe in Toyota,

Michael Cirillo  8:10  
yeah. I mean, it's a smart approach, right? Being able to just kind of sit back and see how things pan out, get a true lay of the land, and then, you know, plan and strategize during that whole observation period, and then roll out a plan that seems a little bit more sustainable. I I think it's smart.

Paul J Daly  8:27  
So you're an EV owner, I'm an EV owner. I don't know if you've had this experience. So I have an f1 50 lightning. It's a pickup truck. Our other car, my is my wife's car. I drive the truck, and I will say the other car is, like, cushier and nicer and fancier. And yesterday, she had to drive one of my girls to a practice. She's like, Can I take your car? Because driving an EV is so much

Michael Cirillo  8:50  
fun. It's a fun experience. It's a fun but, you know, it's, it's funny though, how quickly you turn right. So, like, there's a measure of skepticism leading up to an EV purchase, and then you buy it, and you're the the whatever you were driving before, or your second vehicle, which used to be your first vehicle, now gets referred to as the other car, other

Paul J Daly  9:13  
car. It's really, it's been, it's been an interesting adventure, because I'd driven a bunch of EVs. My never, my wife had never driven one until I bought this. And it's she was like, it's so much easier to drive. It's actually hard to go back to an Ice Vehicle like even the braking, the control, the acceleration. It's just a superior driving experience. So regardless, I think the infrastructure will catch up significantly in the next three years. I think we're going to get a lot more charging, and people are going to feel more comfortable with the idea. So even though all of the hype and the mandates have been dropped around the EV ecosystem, I think we're in for a steady increase. I mean, specifically because it's, in my opinion, a superior product

Michael Cirillo  9:54  
look. I mean, and isn't this an interesting full circle moment? Back to the previous. Story. Because you remember when EVs first really started coming out and and the narrative was what it was back then, and now it couldn't be further from that. And it's just a, you know, we have our new talking points about EVs. Imagine that with all of the headlines that are happening today, there's a measure of it never ends up exactly where you thought it did in the moment, you know? I

Paul J Daly  10:22  
mean, I think that's, that's the issue. It never ends up there.

Michael Cirillo  10:26  
It never ends up there. There's still people hopeful that web two will be everything it promised it would be in 1997 you're like, couldn't have ended up I

Paul J Daly  10:37  
mean, it's uncle Rico from Napoleon Dynamite for states. I know I'd be, I'd be, I would have won the Super Bowl, right? If I just put navigator,

Michael Cirillo  10:47  
you know, isn't that interesting?

Paul J Daly  10:50  
Yeah, it definitely is. All right, let's talk about Gen Z. Shall we Okay, so

Michael Cirillo  10:54  
what do we have here? A new survey reveals Gen Z's growing distrust of credit cards, with many opting for debit, cash and peer to peer options instead, that's interesting. Higher aprs, confusing terms and debt fears are driving a generational payment shift that could reshape future retail habits. 68% of Gen Z say credit card bills cause stress. 51% say cards give them the right Gen Z so debit, 68% in cash, 67% top Gen Z's preferred payment methods, and only 35% use credit cards. 82% of respondents overall saying credit cards are, quote, financially dangerous. Oh, interesting. They're all listening to the Dave I was like, they think that Dave Ramsey has had this generation. Yeah, 57% of Gen Z admit they don't fully understand card terms, and 53% have been surprised by interest charges. Now this is interesting to me, Paul, because at the end of the day, I don't even think I understand the terms of credit cards half the time, but I still use them. Here's an interesting quote from Ted Rossman. He's bank rates Senior Analyst. He said, it doesn't make sense to pay 20% 25% or 30% in interest just to earn a few percentage points in cash back. Well, I do

Paul J Daly  12:23  
think, I think legitimately, Dave Ramsey has made an impact on Gen Z, because if you just look at the way his company and influence has grown, by the way he does have, I don't know if it's still the number one, but it was the number one pod. I mean, number one podcast, number one radio show, nationally syndicated for on, many, many, many years, I

Michael Cirillo  12:43  
think it's still the younger people, right? He's brought in some commentators that are younger. He's

Paul J Daly  12:47  
brought in commentators younger, but he has a whole curriculum for students. And you know, my my kids grew up in this part because, number one, they don't really teach basic financial literacy in public school or most private schools to boot. So we put them through financial literacy classes, one of those, and just because they had a great curriculum, was the Dave Ramsey financial piece. Now, I don't agree with all his principles on debt and how you should have zero debt, right? And I think if you have a business mind, that's a very unrealistic way or a slow way to look at the world, if you if you know, I think it's more important to teach how to leverage debt, but when it comes to personal debt, for personal things, I think kids have grown up with a different level of paying attention. And yeah, I'm just thinking about how miles, you know, debit card does have a credit card, but, you know, here's the thing, if you don't ever, if you don't not pay off your bill, then you never pay any interest or ever any fees, but that comes with some personal discipline, etc. But I think this is a big shift in general. We'll see. I wonder how this pans out in the F and I office, right? Like if Gen Z, as they're thinking about debt and taking on debt and interest rates, credit cards have this ick factor to them, but I have a feeling that, like a car loan doesn't, because it's a little bit more I don't know. It's a little more conventional. However, I do think they probably pay more attention than usual to that total amount you would have paid by the end of this loan number that is also always like, way more than you paid for the car. And so I wonder if they're getting more scrutiny there in the F and I office.

Michael Cirillo  14:19  
I think that's interesting. I also think, I wonder if there's any correspondence to a declining number of this generation who even wants to drive to begin with, like, you see, they're taking their I'm running into teenagers who are just holding off that car driving test. They're they're not as anxious as I feel like I was to get it when I was 16. You know, you've got a lot of 1819, year olds. And if you're in an Italian family, some 42 year olds living in the basement. Downstairs. We don't have a mean to ever get a

Paul J Daly  14:51  
driver's license. Oh, that's hilarious. You know, miles, my 18 year old was definitely slow to get his permanent license. However, my daughter's about to turn six. 16, and she's a social butterfly. So, you know, just this weekend, she's like, can I just drive in this parking lot? Like, she's like, the date it happens she will be outside in line, because, you know, the vehicle is her key to more social connections. So she thinks fun,

Michael Cirillo  15:16  
useless side fact that we will never have to use ever in our lives for anything. I have three drivers licenses now. I have one in Canada. I have a driver's license in America, and I have one in the Philippines. It's still valid, no, but I like to think that really, at the end of the day, I don't even know why I got it, because driving rules over there are more like suggestions,

Paul J Daly  15:44  
same thing in New York City. Well, Michael, thank you for stepping in as co host on a Monday morning. Listen. You're out there. You're dealing with all these questions. It's the perfect time for you to provide some peace and calm in the midst of all these tariffs. Go and serve some people. You

Transcribed by https://otter.ai

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