TESLA MOTORS

Sales are down, but a few manufacturers are enjoying success.

June’s auto sales figures came out today and for people taking an extended four-day weekend to celebrate America’s Independence Day, poolside chatter may have silenced the news.

Nevertheless, some of us are on duty — including yours truly — tracking certain auto trends or should I say sales trends, which we’ll amplify here.

To that end, the following are the chief takeaways for the first six months of the year as well as my guess on what the remainder of the year may look like.

2018 Volkswagen Tiguan — New models such as the 2018 Tiguan should help Volkswagen finish strong this year.

1. The sky isn’t falling, but sales are slipping.

US auto sales are down 2.1 percent year-to-date through June 2017, what represents only a modest decline (8,456,896 v. 8,641,718). Still, experts now see yearly sales falling short of the 17 million mark and that concerns some.

One big concern doesn’t have much to do with sales numbers, but how those numbers come about. Specifically, customers are buying in part because of big, costly, profit-eating incentives. Coinciding with June’s sales release story, Automotive News reported that the average new car incentive offered by manufacturers was $3,550 in June, up slightly over the previous month, but 9.7 percent higher than a year earlier.

Price discipline is something automotive executives talk about and insist that they’ll follow as sales begin to slide. But, if the dam breaks, incentives may push ever higher — that’s terrific news for consumers, but not so much for each automaker’s bottom line.

2017 Lincoln Continental — Continental sales continue to power Lincoln’s renaissance.

2. Is Tesla on the brink?

Tesla Motors has long enjoyed out-sized news coverage despite its relatively minuscule sales. Indeed, for a company that recorded just 22,000 units sold in the second quarter, it is receiving a lot of press. As a point of comparison, Ford sells as many F-150s in about 10 days.

But Tesla is the darling of the stock market, environmentalists, and technology fans, so it merits attention. Moreover, CEO Elon Musk dropped a bomb today when he said that the Tesla 3 is ready for production, with the first model slated to roll off an assembly line this Friday according to Reuters. This means the $35,000 sedan has received federal approval and the first 30 people who ordered one will take delivery by the end of the month.

Importantly, this will be the first time Tesla released a model on time. Also of importance, the all-electric automaker anticipates production ramping up fairly quickly, hitting 20,000 units per month by December. Heck, this long-time doubter may soon become a true believer if Tesla pulls this off.

Tesla Model X sales may quickly fall behind Model 3
sales when the compact sedan debuts this month.

3. What’s up with Jeep?

Fiat Chrysler is not having a banner year. Sales are down 6.7 percent with only Ram (up 7.6 percent) showing an increase year to date. This also means Jeep is down and that brand’s 12.7 percent sales drop accounts for more than half of FCA’s first-half pull back.

That Jeep sales are down is a curiosity. Customers are shifting their purchases to SUVs and that’s all that Jeep makes. A new Compass is out, but sales are down by 49 percent. Patriot sales are also down by 49 percent, but that model is being phased out. Cherokee sales are down 19 percent and that represents yet another drag on the brand.

The good news for Jeep is that an all-new Wrangler is due by year-end. That release alone will begin to turn around sales, but it may not be enough to offset the earlier losses.

Two overarching concerns about the brands are as follows: 1), Jeep pricing is high on some models, such as the Cherokee. Customers are price sensitive and will look elsewhere if they find a better deal. 2), Jeep quality routinely trails nearly everyone. Although the quality wasn’t a factor when sales were robust, it may be a larger factor than before.

2016 Jeep Renegade — Renegade sales aren’t enough to offset Jeep’s decline this year.

4. Nissan may overtake Honda.

In most every other market in the world, Nissan outsells Honda. In the US, Honda almost always beats Nissan and in some years, decidedly so.

Nissan has started the year strong before, only to see Honda slip past them once summer ends and sales pick up steam in the fall. That happened last year, but this year things are looking up for Nissan. And we’re not including Mitsubishi sales in that number even though Nissan now has a controlling interest in the junior automaker.

Last year, Nissan had a 5,700-unit lead at the halfway mark. This year, its edge is almost 20,000 units. Rogue sales alone may give Nissan the victory as sales are up a whopping 31.4 percent to 195,689 units. There’s a very good chance Rogue sales will top 400,000 units, even dethroning the Toyota Camry as America’s best-selling “car” in the process.

2017 Nissan Rogue — This compact Rogue is helping Nissan to a greater share of the sales pie.

Moving Forward

My best guess is that sales will fall this year and could take a nasty tumble if the stock market has a major correction. Automakers say they always anticipate a drop, but until it happens, they plan for ever-increasing sales.

Nissan, Jaguar Land Rover, Subaru, and Volkswagen seem like the best bets to gain share this year, along with specific brands such as Ram, Buick, Lincoln, Audi, and Porsche also benefiting.

See Also — US Auto Trends: First Half 2016

…and His Battle to Build the Car of Tomorrow.

Preston Tucker may not be a name familiar to people outside of the auto industry or the business world, unless you happened to watch the 1988 movie, “Tucker: The Man and His Dream.”

I never saw the movie, but have been long familiar with the story. Or at least I thought so.

That is until I read the book, “Preston Tucker and His Battle to Build the Car of Tomorrow,” by Steve Lehto (Chicago Review Press; 272 pages; $27,99; ISBN: 978-1-61374-953-1). In effect, Lehto exposed the entire story, going well beyond the man’s aspirations to show how industry leaders, politicians, and regulators colluded to destroy the company and perhaps the man who ran it.

I must say that the author’s story was infuriating — not for how he illustrated it, but for the hard truths exposed. Tucker himself weathered injustice after injustice as the three largest automakers of that era — General Motors, Ford, and Chrysler — did everything they could to wreck Tucker’s dream.

Unfortunately, the Big Three succeeded.

Attorney and Industry Expert

Preston Tucker and His Battle to Build the Car of Tomorrow To his credit, Lehto brought not just an investigative touch to the story, but his legal expertise. Indeed, he is not only the author of the “Lemon Law Bible,” but he’s a practicing attorney based in Michigan. His website reveals his background in lemon law and consumer protection, areas where the auto industry has made significant changes following years of neglect or willful ignorance.

Preston Tucker was the consummate entrepreneur, born in 1903 just outside of Detroit. That proximity to Motor City meant that he had access to the emerging industry and everything related to it. Early on, he managed a service station near where he grew up with his wife, Vera. While Vera managed the station during the day, Preston worked on a Ford assembly line.

When the service station lease ended, Tucker quit Ford, joined the police force, then moved on to sell Studebakers, then Stutz and Chrysler. Stints at Pierce-Arrow and Dodge should also be counted, before his interest in race car development and military vehicles followed.

WWII: An Opportunity Emerges

During the Second World War, America’s car companies quit producing passenger vehicles and became assembly lines for all sorts of military vehicles and hardware. As the war labored on, pent-up demand for new vehicles surged and by the time the war ended, consumers were looking for new designs.

Unfortunately for the traditional manufacturers, the only “new” cars planned were based on designs used before the war. It would take several more years before the pre-war styles were retired.

A New Automaker: Tucker Corporation

Preston Tucker saw an opportunity and formed the Tucker Corporation even before the war ended. In quick succession, Tucker assembled a group of industry leaders to launch his enterprise, based on a 1946 design of the car. Soon, a “Tin Goose” prototype followed and the company acquired its first manufacturing plant.

But problems and opposition arose early on, including some of Tucker’s own making. Known as a consummate salesman, Tucker easily endeared himself to others and did an outstanding job of promoting the company’s stock. However, he soon found that the Securities and Exchange Commission (SEC) would scrutinize the company, launching a formal investigation.

It is at this point in the story that the Tucker Corporation was racing against time. The company needed to get vehicles produced to convince detractors that production-ready models were possible. At the same time, at least one Michigan politician was hell bent against Tucker, and quite possibly in the pocket of at least one automaker threatened by what the Tucker entity might become.

Tucker 48: The Car of Tomorrow

What became known as the “Tucker 48” was truly a state-of-the-art conveyance. Tucker envisioned a car that wasn’t just modern, but equipped with safety equipment not offered in that day.

A padded dashboard, disc brakes, a pop-out windshield, and a third headlight which swiveled when taking corners, were just a few of the safety features offered. Its rear-wheel, rear-engine design was unusual too — altogether, the Tucker 48 had the potential to not just shake up the industry, but to transform it. It became known as “the car of tomorrow” — a stark contrast to the aged designs offered by Detroit.

I won’t go into all the details about how the Tucker Corporation unraveled — you need to read the book — but I will say that there were enough doubters, backstabbers, and ne’er-do-wells to undermine the company. Sadly, the media was complicit, launching baseless critiques of the car or advancing a disproven narrative, e.g. — the car could not drive in reverse.

That Tucker was able to get 51 cars to the market before the whole thing crumbled is a tribute to the man. That there were only 51 cars built is a crying shame — without much interference, the industry could have transformed much faster, delivering safer cars and saving thousands of lives.

But consider this: safety features are costly and manufacturers long put share values above consumer safety, a problem that isn’t as prevalent today, but it still does exist.

The End of the Road

After several years of wrangling with the opposition, Tucker found himself without a company and with people launching civil suits against the company and himself, including dealers who lost their investment.

Though Tucker prevailed, he was destitute, yet he maintained the dream of launching a new company. At the same time, he was never quite himself and was later diagnosed with lung cancer, passing away at age 53 — just eight years after launching the Tucker 48.

Shades of Musk and Tesla?

There is much that can be gleaned from Letho’s work, which I think has an important place in chronicling Tucker history, even without the foreword by Jay Leno.

Some compare Tucker’s rise and fall to Elon Musk, founder of Tesla Motors. Although Musk is similarly imbued with entrepreneurialism, his personal wealth and the very favorable government backing for his electric vehicle initiative means comparisons between the two stops there. Indeed, although Musk’s long-term success is still in doubt, at least he hasn’t faced the same insurmountable headwinds as Tucker.

And that’s putting it all very mildly.