Tariffs are taxes governments place on imported goods. In auto, tariffs on vehicles and parts can raise costs for automakers, which often leads to higher prices, reduced margins, or changes in where cars are built.
The Mercedes-Benz GLC is a popular Mercedes SUV. Mercedes is building more of them in the U.S. so they can avoid extra costs from tariffs on imported cars and parts.
The Hyundai Santa Fe is a midsize SUV, and the segment credits it with gains that helped drive Hyundai’s hybrid delivery record. It’s grouped with the Sonata and Elantra to show hybrid strength across multiple vehicle types.
The Hyundai Elantra is a compact car. In this segment, it’s one of the models helping Hyundai sell more hybrid vehicles.
Car
Kia hybrid models
The show is talking about Kia’s hybrid cars—cars that use both a gasoline engine and an electric system. Kia says hybrids are growing much faster than the rest of its lineup.
Direct-to-consumer sales means the company sells cars straight to you instead of through dealerships. The lawsuit is about whether that approach is allowed under California rules.
Volkswagen is mentioned alongside Scout Motors in the California New Car Dealers Association lawsuit. The inclusion suggests the case may involve how multiple automakers structure sales channels and comply with state franchise/dealer laws.
Auto shows are big events where car companies show new cars to the public and press. Volkswagen timed the Atlas reveal to coincide with one of those events.
The Volkswagen Tiguan is a smaller SUV in the Volkswagen lineup. The speaker uses it as a reference point for what the Atlas interior feels like after its redesign.
Creature comforts are the nice, comfortable features that make everyday driving more pleasant. In this case, the speaker says the Atlas focuses more on comfort and convenience.
A “first redesign” means the model is receiving its initial major update since its original launch. The segment frames the 2027 Atlas as the first time it’s been significantly refreshed, which helps explain why the interior and tech changes are so prominent.
USB ports are the charging/data connections in the car for phones and other devices. More ports means more people can charge at the same time, especially in the back seats.
The “sweet spot” is the ideal balance of being big enough for families but not so big or expensive that it turns off buyers. It’s about fitting what most people want.
Reshoring is when companies bring production closer to where they sell cars. The goal is fewer delays and less risk when global shipping or suppliers get disrupted.
Oil isn’t just gasoline. It’s also used to make many materials like plastics, so when oil prices rise, it can still affect car production even if you’re not buying more fuel.
Reshoring means moving production closer to where the cars are sold or where the company is based. It can help with delays, but it doesn’t fully solve supply problems because many parts still come from around the world.
This is an industry conference where people in the auto world talk about what’s happening in the market. The transcript uses it to show the discussion is based on economics and consumer trends.
NADA is a group that represents car dealers. When their economist talks, it’s about how dealer sales and customer demand might change when gas prices and costs move.
This metric estimates how much of a typical car’s monthly “cost of ownership” is driven by fuel expenses. Tracking it helps explain when consumers feel cost pressure strongly enough to change purchasing behavior.
It means a car company could run into serious financial trouble and not be able to keep operating the way it does now. That kind of failure can ripple through the whole industry.
It means European car makers are under a lot of pressure right now. The concern is that problems in Europe can also affect what happens in the US.
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Welcome to Daily Drive for Wednesday, April 1st, 2026. I'm Kellan Walker in New York City.
Today on the show, Mercedes invests $4 billion into an Alabama plant to relieve tariff pressures.
Hyundai and Kia post-record U.S. sales in the first quarter,
and a federal judge rules that a California lawsuit against scout motors direct sales
may proceed. Plus, Molly Boygon, automotive news tech and innovation reporter,
joins us to talk about the six years of crises the auto industry has faced and how automakers are
responding. There's only so many things that the auto industry can absorb before it has to
pass some of that pressure on to consumers. Let's run through all the news you need to know to
keep up in the auto industry. Mercedes-Benz plans to invest $4 billion into its Alabama
factory by 2030. The bulk of the spending will be to localize production of the GLC crossover,
a high volume U.S. nameplate. Mercedes sold about 72,000 GLCs in the U.S. last year.
That's about a quarter of the brand's U.S. volume excluding vans. Many automakers have shifted
towards U.S. production as a result of the Trump administration's tariffs on imported vehicles
and parts. Mercedes currently faces a 15% tariff on every GLC it ships to the U.S.
Hyundai and Kia posted record first quarter sales despite a week march. The brands posted
lower U.S. sales on mixed electric vehicle and crossover volume, but first quarter sales rose
1% at Hyundai and over 4% at Kia. Hyundai said it set a march record for hybrid deliveries
driven by gains for the Sonata, Elantra, and Santa Fe. Kia said first quarter sales of hybrid models
rose 73% and sales of overall models increased 30%. This is the sixth consecutive quarter that U.S.
sales at Kia have grown. And a judge ruled that the California New Car Dealers Association's lawsuit
against scout motors and Volkswagen will continue. The lawsuit alleges that scouts direct to consumer
sales model violates a state law. The judge denied Volkswagen's motions to dismiss, asserting that
the California New Car Dealers Association properly alleged that scout is Volkswagen's affiliate.
If courts consider scout to be Volkswagen's affiliate, it is subject to a California law that
states affiliated brands must use franchise dealers to sell and service vehicles. And those are
today's headlines. You can find more details on all those stories at AutoNews.com. Yesterday,
Volkswagen debuted the 2027 Atlas ahead of the New York Auto Show. The redesigned Atlas gains a
premium feel with sharper styling. I'm here with Jack Wallsworth, who was at the reveal yesterday.
Jack, welcome back to Daily Drive. Good to be here. So Jack, what's changed about the Atlas in the
redesign? Yeah, I think the biggest thing is the interior. It's a lot more nicer looking to put it
simply. You know, if you've seen the inside of a redesigned Tiguan, those launched last year,
it looks very familiar. The dash design is a big piece of flowing wood that goes across. The higher
trims have like these really cool details on the side panels with back lids. So you can see lights
on the door, which is nice. All but the base trim get a 15 inch infotainment screen. So basically
think of like a laptop at the center of the dashboard, which is a lot snappier, quicker to
respond. You know, one common complaint with previous infotainments on Volkswagen's is that
they're kind of laggy and buggy. This should alleviate that. You know, it still looks like an
Atlas. You know, I've heard a couple people say it, you know, or some dealers say it looks more
like a refresh than a redesign. But you know, I think two Volkswagen's credit that design,
you know, has definitely worked. But also to be fair, it is all new sheet and all that stuff.
It's only about an inch longer. So dimensionally, it looks the same. But you know, it definitely
seems like Volkswagen really emphasized the creature comforts. You can get available massage
seats if you want. And this is, you know, not just the Volkswagen, but it's not like it's an Audi
or Bentley or something like that. So it definitely seems like Volkswagen is making a lot more,
you know, nicer options available to customers that want those. But you know, generally speaking,
it definitely kind of stays true to the Atlas formula. It's the first redesign for the model.
And you know, the Atlas was was really intended for the US market back when it launched in 2017.
So, you know, I think Volkswagen didn't want to rock the boat too much with the redesign.
Now, speaking of the US market, how is the Atlas specifically targeting US shoppers?
So it's big, you know, it's three rows, even the third row is decent space yesterday. I ventured
to the back and while I wouldn't want to be there all the time, I did fit a lot of room for luggage,
gear, it's got seven USB ports, and it's really emphasized on the interior experience. And,
you know, us Americans love our big crossovers, you know, gotta have three rows. So it definitely
aims for that. The cabin is is pretty spacious. And if you pull the seats down, you could haul a
ton of stuff. And, you know, in the presentation yesterday, Volkswagen executives really emphasized,
you know, this is for families, we want people to be able to take their kids somewhere, pick up
their kids friends, if they got it, they're gonna go camping and haul a bunch of stuff,
they can do that too. So, you know, that was Volkswagen's thing before the Atlas, they had
the Touareg, which, you know, people might remember was a more premium crossover really
than fit the brand that well, and it was big for Volkswagen standards, but not necessarily what
American consumers were looking for. So again, you know, the Atlas came out in 2017 and really
bridged a gap in the lineup and is given dealers something to compete with the Toyota Hounders,
you know, and now the tell your eyes of the world. So, yeah, you know, it's definitely,
it's not huge, but it is big. And, you know, again, kind of fits that sweet spot of the
crossover segment. Perfect. Jack, thank you so much for joining me.
Anytime. Coming up next, Molly Boygon, automotive news tech and innovation reporter,
talks about the auto industry's last six years and the crises it's faced,
and how the industry is getting worn down. That's next on Daily Drive.
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Welcome back to Daily Drive. I'm Kellan Walker. The auto industry has been battered by six years
of crisis from the pandemic to chip shortages to cyber attacks to tariffs. And now oil prices
surging past $100 a barrel are threatening to compound an already exhausted industry.
Our own Molly Boygon, automotive news tech and innovation reporter has been tracking how these
compounding crises are wearing down automakers and suppliers. She joined me here in New York City
at the JD Power Forum. Molly Boygon, welcome back to Daily Drive. Thanks for having me, Kell.
All right, Molly. So interesting article we have online at auto news.com. After six straight years
of disruption, how close is the auto industry to a true breaking point? Or has it already adapted
to operate in what one expert called a stabilized crisis?
The auto industry has made a lot of significant adaptations, reshoring supply chains, diversifying
supply chains, and also just kind of on a personnel level, people have become so much more resilient.
You know, what would have laid out flat employees at auto industry companies five years ago is now
just sort of a daily vitamin, if you will. So I think that the auto industry has adapted.
In terms of the breaking point, I think you start to get into the confluence of so many
factors that are putting price pressure on the industry, you know, additional tariffs,
losses from electric vehicles, the rising price of fuel. And I do think that there's only so many
things that the auto industry can absorb before it has to pass some of that pressure onto consumers.
And then there are so many sort of cascading effects from those rising prices. And that's,
I think, where you start to get into, is this a serious threat to profitability for the automakers?
Well, you bring up oil and gas and how significant is the latest oil shot compared to previous
disruptions, like the chip shortages or tariffs? And where do you expect the biggest impact to show
first? So it's a really interesting question because consumers are able to basically pay
for additional fuel costs. I read that it starts to affect their purchasing decisions when fuel
becomes around 5% of their income. So we're not there yet. It's around 2%, 3%. However, oil is
the bedrock of basically every manufacturing sector in the entire world. So even though the U.S.
produces its own oil, there are other parts of the country that rely on oil to produce
everything from chemicals to plastics to everything. I mean, it is the literal fuel that funds the
global economy. So it's not as acutely targeted for the auto industry as something like a
semiconductor shortage or a chip shortage. But it touches so many parts of the sector
that I think it's sort of like a breadth versus depth issue. I mean, I think the question that
everyone's asking is how much longer is this going to go on? Right. Now, automakers have
diversified supply chains and reshored some production, as you said. But this article suggests
there's still only so much companies can prepare for. Now, what are the biggest remaining vulnerabilities?
Companies can only prepare for so much in part because the development timelines for the auto
industry are so long. And this has been a sort of challenge for the industry through all of
these different crises, through COVID, through the tariffs, through different parts shortages.
So I think that that's probably the next frontier and something that the auto industry
is already talking about in other areas, for example, to compete with China. We have these
development timelines that are so long that they sort of hamstring the industry's ability to adapt.
And if developers and other people that work at auto industry companies, designers,
product people are able to accelerate the development timelines, then it will allow
continued adaptation for all of these shocks. I still don't think that the industry is ever going
to be like a consumer electronics segment where the reaction time is so fast. But that's something
that someone that actually Richard Truett spoke to for the story he contributed reporting
said, Kia, for example, is not looking at what are we going to change five years from now based
on the current tariff burden. They're looking at assuming that the current tariff burden continues,
what can we do six months a year from now? So just kind of trying to balance that timing and
consistency and adaptability, I think, is the real challenge. Now, with gas prices rising and
EV incentives disappearing. Now, how do these competing forces reshape the industry's long
term strategy around electrification? This is the million dollar question. It is.
It is. Actually, this came up on stage at the JD Power Auto Forum in New York City.
Somebody asked Patrick Manzi, who's the chief economist for NADA, isn't it ironic that just
as all the automakers are pulling back on their EV plans, gas prices are spiking,
oil is above $100 barrel for only the fourth time ever in history. And he said, yes, of course,
it's ironic. So I think, again, it's a question of longevity. How much longer does the war go on?
How much longer is the supply of oil constrained? And really, at what point do consumers feel the
cost pressure so acutely that it changes their buying decisions? This was something else that
came up at the Auto Forum. So in March of 2022, fuel as a percent of the overall cost of a car
payment was 31%. Right now, it's at 23%, which is a slight increase from last month, which was
17%. But we're still nowhere near that sort of March 2022 relative high, which again,
oil and gas prices have remained relatively low over the last few years. So that was a spike
tied to the Ukraine conflict. So anyway, we still have a little bit to go, I think, before
consumers start to really make new decisions and reconsider purchases because of the cost of fuel.
Now, here's the part and the question that consumers want to know. At what point do cumulative
cost pressures from oil tariffs and materials start to meaningfully hit consumers and demand?
I think that this is an interesting one because the auto industry is so segmented. None of the
automakers are going to really stick their neck out and make significant changes to prices if
they're looking around at the rest of the segment and their peers are not doing the same thing.
So I really wonder who's going to be basically the first to blink. It's kind of like a staring
contest between all the different manufacturers. And then once that happens, I think it'll be
a flood of changes. Right now, the costs have remained relatively steady for consumers,
and once one automaker folds, I think the rest are soon to follow.
Molly Boygon, always insightful. Thank you so much for joining me on Daily Drive.
Thanks for having me, Kell.
That's Daily Drive for today. I'm Kellan Walker. Thanks to Automotive News executive producer
Jake Neer, as well as our own Riley Hotter, Molly Boygon, Jack Wallsworth, Irvash Kakaria,
and David Phillips for their reporting for today's podcast. You can get the latest news on
first quarter outcomes, US production investments, scout motors, direct sales, and everything
happening in the auto industry at AutoNews.com. Come back tomorrow for an interview with Doug
Bolduck, managing editor of Automotive News Europe on what the European auto crisis might mean for
the US. You hear mostly about the German companies simply because they have such a dominant role
and they made a lot of very big moves and big bets as we started to see the world through very
electrification driven eyes. We'd love to hear from you. Let us know what you think of the show
and the topics we cover today. Send us an email at dailydrive at autonews.com
or leave us a voicemail at 313-444-2774. And if you enjoy the podcast, remember to like,
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About this episode
Mercedes commits $4 billion to its Alabama plant through 2030, aiming to localize production of the high-volume GLC to blunt tariff pressure. Hyundai and Kia both post record U.S. first-quarter sales, with hybrids driving gains despite mixed EV and crossover demand. A federal judge lets a California lawsuit over Scout Motors’ direct-to-consumer model proceed, potentially tying Scout to Volkswagen’s franchise obligations. Volkswagen also reveals the 2027 Atlas, focusing heavily on a refreshed, more premium interior and faster infotainment. Tech reporter Molly Boygon frames the broader story: six years of pandemic, shortages, cyberattacks, tariffs, and now oil shocks are pushing automakers toward consumer price pass-through.
Mercedes-Benz invests $4 billion into its Alabama plant. Molly Boigon talks about how crises have battered the auto industry. Plus, a federal judge rules that a California lawsuit against Scout Motors’ direct sales may proceed.
