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Editor's Note: This week, Peter once again tackles the affordability issue, hammering home the fact that the current pricing strategy is simply not sustainable. In On The Table, we take a close look at the new BMW X5, which will offer multiple powertrain choices. Our video this week features the "11 Best V10 F1 Runs" at the Goodwood Festival of Speed. It makes you realize how muted and uninspired the current F1 cars are. Our AE Song of the Week is "Dance The Night" by Dua Lipa. In Fumes, Peter brings us the next chapter in his new series, "The Racing Machines." And finally, in The Line we have F1 results from the British Grand Prix and INDYCAR from Mid-Ohio. Onward! -WG

By Peter M. DeLorenzo

Detroit. Now that the average price of a new car is hovering at around $52,000, I have to ask the obvious question to the auto manufacturers and their dealers: What the hell is everyone thinking?

Do you actually think this is sustainable going forward? I know the manufacturers and their dealers discovered the proverbial pot ‘o gold at the end of the rainbow during the pandemic era through to the present day. Meaning, they figured out they could completely walk away from the old – and costly – floor-planning model supporting huge parking lots of inventory in favor of switching the consumer mindset from “walk around the lot and see what you like” to “you better give us a deposit now, or there’s somebody right behind you on the list.” In other words, take it or leave it. That’s not really the case anymore, of course, as inventories are back in full for the most part, but the fact that dealers have pretty much given up on coddling prospective buyers in favor of servicing the instant, cash-flush buyers is telling.

This seems to be driven by the fact that there’s an ongoing assumption by dealers that the well-heeled buyers will keep everything going forward at a feverish clip, and that those less financially able will just have to figure things out at the low end of the market, or the used car market, or not at all.

Talk about a target-rich environment. Price dickering has largely become minimized, as consumers who are able to pay for premium offerings do so willingly. And the dealers are certainly taking advantage of the situation. (Oh, of course, incentives are still an essential part of the game, depending on the brand.) As for the sketchy “first-on-the-block” types who lust after the latest and greatest BelchFire8 and are game to pay huge amounts of ca$h-ola over sticker for the immediacy of instant gratification, well, that phenomenon will always be part of the market. This situation is now exacerbated by what’s going on at Bring-a-Trailer, where brand-new Porsche 911s are regularly listed for buyers who just can’t wait, usually at a hefty premium.

An encounter at any dealer showroom today will probably play out like this:

Consumer: “I’m interested in a BelchFire8 SuperSUV. What can you tell me about it? I don’t see any on your lot except for that really loaded one on your showroom floor.”

Salesperson: “Yes, you have excellent taste. It’s a very desirable and popular vehicle. We have a few coming in, so we can put you on the list. We don’t really know when they’ll arrive and we have many people already on the list.”

C: “You don’t know when one will arrive?”

S: “We get a few in every week and our allocation is constantly in flux, but since there are seventeen people ahead of you on the list, I really I can’t say when you can expect one to get here. Maybe in a couple of months. We know the colors and equipment of the ones coming in, so, if you would like to give us a $2500 deposit today, we can get you on the list...”

C: “What about the one on the showroom floor?”

S: “Well, yes, that’s a beautiful one. It’s completely loaded and stickers for $78,000.”

C: “Well, it’s the color I want, so...”

S: “I need to tell you that we add a ‘market adjustment’ to the sticker price.”

C: “Really? How much additional is the ‘market adjustment’?”

S: “It’s $7500.”

C: “You’re joking, right?”

S: “No, I’m not. Would you like to take that one?”

C: “Uh, no, definitely not. And now I’m not interested in getting on one of your lists, either.”

But this is only one dimension to the current pricing environment in the automobile business. The other is the pure and simple fact that cars and trucks are just getting too damn expensive for a large swath of the consumer buying public. It’s a subject I’ve hammered on for years now, but it doesn’t seem to get any better, which is why the Korean automakers – Hyundai/Kia – are delivering record numbers seemingly each and every month.

The average car payment has gone from around $500/month just a few years ago to around $750/month today. And, as I’m sure you’ve seen the articles in mainstream publications, $1,000/month payments have now become far too common.

Ding, ding, ding! Again, I have to ask, what part of “this isn’t sustainable” do the players in this business not understand? Do they think consumers will keep showing up in showrooms cheerfully muttering, “Thank you sir, may have another?”

I’ll answer that one for you: How about no?

I praised the Ford Motor Company for the initial pricing and product strategy of the Maverick pickup truck in many past issues of AE. Forget about the F-150 Lightning and the Mach-E because the Maverick is, in my estimation, the most desirable – and significant – of all of Ford’s offerings, and I said it repeatedly upon its introduction to the market. In case you’re wondering, the base price on the current 2026 Maverick XL is $28,145. I priced a top-line Maverick Lariat SuperCrew with the hybrid powertrain as I was writing this column, and I came up with a price – with options – of $42,405.

To me, that’s an acceptable price point, and now that Ford understands the staying power of the Maverick in the market, they’ve finally got religion as to what it has with its smaller hybrid pickup. Ford operatives were slow on the uptake while trying to figure things out, but now that they get it, they’re reaping the rewards.

That doesn’t mean that Ford’s double-secret, “$30,000” EV pickup that’s coming will be an autonatic success, however, because there are just too many variables that come into play. Is the price being talked about a hard number? Or will it slide upward before it’s even introduced? Will Ford be able to launch the vehicle properly? Because the company’s track record in that regard has proven to be piss-poor at best. And what will the market environment be in late 2027 when this new EV is allegedly going to see the light of day? Ford operative are making a lot of promises about their upcoming "greatest thing since sliced bread" EV pickup, which in this case is not a promising strategy, given the company’s track record. In fact, it’s a giant “we’ll see” as we like to say around here.

Needless to say, that’s a lot on Ford’s plate, especially with the constant thrum of new EVs/Hybrids being introduced from other, ultra-competitive manufacturers. I’ve been reminding our AE readers for a while now that EVs are not going away by any stretch. They are going to be an essential part of our nation’s fleet going forward, along with the burgeoning popularity of Hybrids. And, of course, ICE vehicles will continue to hold a prominent place in the American market as well.

But regardless of the propulsion, fundamental affordability must be addressed. The idea of “affordable” from the U.S.-based manufacturers’ perspective and the reality for consumers have too often been vastly different concepts. A sure sign that consumers are feeling the heat? Twenty-four percent of borrowers chose 84-month terms or longer in the second quarter, according to Edmunds. It's no secret that these longer-term loans are disastrous for consumers, with many ending up heavily "upside down" and deeper in financial debt half-way through the term of the loans. The callous, "What, Us Worry" attitude from the manufacturers on display with these longer-term loans always comes back to bite them hard.

Any manufacturer that creates a well-equipped and desirable EV with at least 350-miles of range – with the emphasis on well-equipped and desirable inside and out – for around $35,000 or less, all-in, and I’ll show you a winning combination in the marketplace. The rest of the chatter is just so much noise. (The current Chevrolet Bolt RS EV is a real buy in the market at $32,995, but it will only be available for a year, to be replaced by something much better, allegedly.) As for the Slate and TELO EV trucks? I applaud both efforts, but as I said last week, it's still a giant "we'll see" as to how these vehicles come to market and whether or not they become actual sustainable enterprises, or not.

But without desirable products at that less-than-$35,000 price point this industry is headed down the wrong road, and EV adoption by consumers will lag as well. But it’s not just EVs that will continue to stagnate in the market; all cars and trucks are going to suffer. I don’t care what the demographics/wealth statistics say, people are going to stop showing up in showrooms en masse, and one day the manufacturers are going to wake up and say, “What happened?”

Let me correct that, it will be more like “Waaaahhh happened?”

And the sound of moaning, groaning, hand-wringing and "woe is me!" whining will be deafening.

And that’s the High-Octane Truth for this week.

Editor's Note: Click on "Next 1 Entries" at the bottom of this page to see previous issues. - WG