An agreement between the US, Mexico, and Canada that decides how cars and car parts can be shipped across borders without paying extra taxes. It requires car companies to build most of their vehicles in North America if they want to sell them here cheaply.
An expert who studies car sales data to help the auto industry understand what cars people are buying, how much they are paying, and how many cars dealerships should keep in stock.
A giant global company that was formed when the makers of Chrysler/Jeep merged with the makers of Peugeot, bringing many famous car brands under one roof.
An upcoming electric SUV from Jeep that looks like a futuristic Wrangler, complete with doors you can take off and a roof that folds back for open-air driving.
A group of elected workers in German companies who have a legal right to help make decisions about job cuts, working hours, and how the company is run.
The top boss of the Volkswagen Group who has the difficult job of leading the company's shift to electric cars while dealing with powerful worker unions.
Topic
Texas vs California Auto Market
A comparison of how people buy cars in Texas versus California. Texas is catching up to California in total car sales and actually spends more money overall because Texans buy expensive, high-end pickup trucks.
An acronym for 'Internal Combustion Engine,' which is just a technical way of saying a traditional gas- or diesel-powered engine.
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Welcome to Daily Drive for Tuesday, June 30th, 2026.
I'm Jake Nier in Detroit, in for Kellan Walker.
Today on the show, USMCA review talks are about to get officially underway,
we'll talk about what's at stake.
Jeep is plotting a comeback in Europe,
and it's getting some help from China to pull it off.
And Volkswagen's Works Council says it was left out of the loop on a plan
to cut up to 100,000 jobs in Germany.
Plus, JD Power's Tyson Jomini says the industry
is making more money selling fewer cars,
and argues that chasing the old sales peak would be a costly mistake.
Even though we are very much in this Goldilocks era of the industry,
where we have just enough inventory on the ground,
incentives remain muted, transaction prices are high,
dealer profitability remains high,
that can always be challenged if we add more capacity than we need.
Let's run through all the news you need to know to keep up in the auto industry.
The USMCA review talks officially kick off Wednesday
with a virtual meeting among US, Canadian, and Mexican trade representatives.
More detailed negotiations followed July 20th in Mexico City.
Here's what's at stake.
The Trump administration wants to push US specific vehicle
content requirements up to 50%.
Mark Wakefield at Alex Partners says that's the number that really matters,
because the supply base isn't there to support it.
Higher costs, longer timelines,
and automakers in the UAW can't even agree on what a good deal looks like.
We will be covering this closely as the story progresses.
Jeep is trying to make a comeback in Europe,
and it's getting some help from China to do it.
The Stellantis brand had to gut its European lineup
after stricter EU emissions rules made its gas-powered SUVs
too expensive to keep selling there.
That left Jeep with just two models on the continent.
Now it's plotting a path back to six by 2030.
First up, the electric recon arrives in 2027,
then a plug-in hybrid midsize co-developed with Chinese partner Dongfang.
Jeep says two new small SUVs built in Europe will round out the recovery.
And Volkswagen's Works Council is pushing back on a plan
that could cut up to 100,000 jobs in Germany,
and it says it hasn't even been consulted.
Labor leaders said they had no part in shaping the plan,
first reported by Manager Magazine.
That's a problem for CEO Oliver Bloom.
Labor holds a supervisory board majority,
giving it real power to block deeper cuts.
A critical board meeting is set for July 9th.
And those are today's headlines.
You can find more details on all those stories at AutoNews.com.
Yesterday on the show, we talked about Texas quietly closing in on California
as the country's top auto market.
Tyson Jomany at JD Power put out a report on the shift.
Today, we get a double dose of Jomany.
In a bit, he makes the case for production discipline in the industry.
But first, our own Clara Martinez caught up with him to talk about what it means
that Texas could soon become the largest auto market in the U.S. by volume.
What takeaways did you want people to get from your recent JD Power report
on shifting sales dynamics in those states, and what has the reaction been?
We've heard so much about the shifting demographic changes going on in the United States,
certainly post-COVID.
As a lot of consumers have packed up and moved across the country for various reasons.
But to actually see it in the data is really cool.
And that we can see that Texas is very quickly closing in on California
for sales leadership in the United States.
We go back to California and its role in the auto industry.
I mean, we're talking about a 70-year plus trend here with California
being sort of the epicenter of cars, of car culture, of technology and trying new things.
Whether it's hot rods and rat rods or hybrids and electric vehicles,
California has been leading in that for so long.
And now what we're seeing is that Texas is poised to surpass California.
It may not happen this year, but it does look like, based on trends,
that it will happen here probably in 2027.
What's also cool though is that we found that from a dollar spent perspective,
Texas has already surpassed California, the most dollars being spent by consumers in any state
is in Texas.
And they love their pickups, and that's what they're spending their money on, of course.
Yeah. Have you gotten any feedback from dealers, angry emails or anything like that?
I have not.
I don't know why I would get angry emails from dealers,
but certainly not the ones in Texas where a lot of consumers are going.
But again, California remains pivotal to the auto industry.
And I don't think that that role will change in the short term,
which is that California in many ways still sets the culture for the industry,
and appealing to California consumers is critical.
But we do recognize that who is buying is different in Texas,
and what they're buying is different.
And Texas consumers are slightly richer consumers,
and they are buying fancier trucks at the expense of the premium luxury side of the industry,
and at the expense of the sedan side of the industry.
So California remains sort of the last bastion of sedan sales in this country.
And as it shifts towards Texas, it's really mirroring what we see in the rest of the United
States.
So it's not necessarily any dealers that they should be upset,
but it's just something to react to.
And dealers are very good business people, and they have reacted.
We have thrown a number of challenges in front of dealers here in the past
six years since COVID, and we have seen them respond.
They are very good, adaptive business people.
And if the conditions change, they will be the first ones out there to change with them.
JD Powers, Tyson Jomany, spoke with our own Clara Martinez.
Coming up, more from Jomany, this time about why the industry is making more money today,
selling a million fewer vehicles than it did at its peak, and what could blow it all up.
That's next on Daily Drive.
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Welcome back to Daily Drive.
I'm Jake Neer.
JD Power's Tyson Jammany has a new guest column in Automotive News this week
arguing that the auto industry has stumbled into something remarkable.
It's now more profitable selling 1.2 million fewer vehicles a year
than it was at its sales peak in 2016.
Dealers are making more, incentives are lower, automaker margins are stronger,
and Jammany's warning is simple.
The biggest risk now is forgetting how we got here.
He spoke with our own Francis Clem.
Tyson Jammany, welcome to Daily Drive.
So you wrote a recent guest commentary piece that argues that automakers could generate
more profits with smaller inventories.
What threats do you see to the so-called industry equilibrium that you wrote about
where dealers are profitable, OEM margins are strong, and consumers are successfully
finding the right vehicle?
You wrote that the danger for the industry is assuming the O's conditions will last.
What are the stakes of the moment the industry is in right now?
Well, the real challenge is that industry is so fragile to maintain this level of discipline
and that fragility really comes from.
It's a fixed asset industry, so the temptation is always there to produce another unit
because once you cover your fixed cost, automakers would see a tremendous rise in their per-unit
profitability for each incremental sale.
So the temptation is always there to produce one more unit in the hopes that you would sell
that unit and that it doesn't go into inventory.
And so that's the risk we run into.
We have we have discipline.
We have had discipline before at various points in time in the industry.
It's always proved in the end that we overbuild.
Overbuilding means inventories rise, and when inventories rise, dealer margins fall
and incentives increase, and that leads to worse profitability.
And after COVID, there's this turning point where automakers learn that less can be more
in terms of supply.
What about the pandemic caused that change and what lessons from the pandemic are still
impacting the industry today?
Well, what we know is that it's a global industry that we're in with a global supply
chain. And so when we first ran into something like a global pandemic, it impacted countries
differently at different times with different duration and intensity.
And that led to effects that spilled out across the industry.
So automakers have different exposure levels to different countries through their supply chain.
And as the industry rebounded from COVID, it quickly ran into the supply chain crisis.
What we found there was demand remained very high for new vehicles in the months following
COVID. And with the industry down, an old rule of thumb is you need every part on the vehicle
to build the vehicle.
We were finding that not every part was available, in particular, microchips that are needed
all throughout the vehicle to maintain emissions and engine control, powertrain, etc.
And so as we built fewer vehicles and yet demand remained very high, the industry ran
into some very profitable months and in fact about 18 months of very high profitability levels
driven by the fact that we couldn't build enough vehicles to meet demand.
So we saw both a shift in demand higher and supply lower and that led to those prices.
In many ways, we're still experiencing a number of those dynamics here in the industry in that
we have never recovered back to pre-COVID sales levels.
Right before COVID, we finished off, well, we started 2016 at 17.5 million sales.
That number trended down over time.
But as we ran into COVID, we were right around 17 million sales.
This year, we expect the industry to be back to 16.3 million, which would be equal to last year
and in two of the best years since COVID happened in terms of volume.
So it's been a challenge for anyone to get back to those volume
numbers, but what we found is that profitability has actually
continued to remain very high from these dynamics.
And are there key areas where automakers can tighten their supply?
Well, yeah, it certainly works by automaker, by segment in a lot of cases.
We tend to see a lot of supply for large pickups.
Now, this is a segment where the number of buildable combinations can often reach into the
billions as pickup buyers are looking for very specific combinations of options and features
in their trucks.
So we tend to build a lot of pickup trucks, and there's always a balancing act of
having too much supply, which means we have a lot of choice,
but that oversupply also tends to lead to a lot of incentives.
So it's not uncommon for a full-size pickup to have $6,000 or more dollars on the hood
to move the vehicle, but of course, it's not just pickup trucks.
There are other segments as well.
Some of the highest-selling segments are where we tend to send most of the inventory,
and that tends to be a lot of the SUV segments.
But again, it is to be mentioned by automaker.
You take Toyota right now, which is still launching the all-new RAV4,
and there's very few of those throughout the country.
So even in a segment like Compact SUV, where most automakers tend to have sufficient supply,
there are automakers that have a lot too many vehicles on the ground,
and then there are others that, quite frankly, are still operating under dynamics that we would
have seen four years ago in 2022.
And what do automakers need to do right now to avoid the mistakes of past generations?
We'll certainly not build any more facilities, assembly plants, until we can really see what
demand levels will be in the future.
In a lot of ways, what we had done recently is, in particular with the EVs,
and there's this sort of hidden dynamic that not a lot of people focus on with the EVs,
we spent so much on the R&D for EVs and getting the industry ready to transition to this technology.
But when that didn't materialize, it served as a lid as to what we could build,
because we had dedicated so much of our plant capacity toward building EVs for the future
that we didn't need.
That means that we've been going through a period here for about a year,
where inventory levels have been flat, because the industry is now switching back to ice,
and we don't have that excess capacity on ice today, because we devoted so much of it to EVs.
Now, as the industry starts to switch back, we'll start to see the true capacity levels
for internal combustion engines start to increase again.
And that's where we may see some challenges, but everyone needs to recognize that we are
bringing a lot of capacity back over to produce ice vehicles that we didn't have.
So even though we are very much in this Goldilocks era of the industry,
where we have just enough inventory on the ground, incentives remain muted,
transaction prices are high, dealer profitability remains high,
that can always be challenged if we add more capacity than we need.
And are other factors contributing to automaker profitability, such as rising new vehicle prices
and affordability concerns? And how have the addition of tariffs played a role in affected
incentive spending? Yeah, so profitability is being threatened by a number of factors,
and tariffs are really the big one. Automakers are experiencing worse profitability from tariffs,
because they find that they are unable to pass through those tariff costs to consumers.
The reason that is is the same reason we talked about earlier about the global supply chain.
Automakers have a very asymmetric exposure to the effects of tariffs. Some automakers produce
almost all their vehicles in the U.S., others bring in essentially zero. And so if you're one
of those automakers that have all your facilities overseas, like a lot of the premium automakers do,
they would really want to pass those costs through, but they find that since others don't have that
same requirement, it's quite difficult to pass that through. So the profitability we've been
talking about is related strictly to essentially the front end environment of selling cars.
As automakers fully account for the increase in their cost, they may actually be in a much
worse profitability position today, even as on the front end environment in the auto industry,
we are experiencing much better profitability. JD Power, Senior Vice President Tyson Jomini,
spoke with our own Francis Clem. You can read Jomini's full guest commentary at AutoNews.com.
That's Daily Drive for today. I'm Jake Nier. Thanks to our own Clara Martinez and John Irwin
for their reporting for today's podcast. We also had reporting from Luca Ciaffari of our sibling
publication, Automotive News Europe. You can get the latest news on the USMCA review talks,
the state of the auto market, and everything happening in the auto industry at AutoNews.com.
We'd love to hear from you. Let us know what you think of the show and the topics we covered today.
Send us an email at dailydriveatautonews.com or leave us a voicemail at 313-444-2774.
And if you enjoy the podcast, remember to like, leave a review, and subscribe so you never miss an episode.
About this episode
JD Power’s Tyson Jominy joins the show to discuss why chasing peak sales volume is a costly mistake for automakers. He explains how the industry has found a highly profitable "Goldilocks" zone by maintaining production discipline and selling fewer vehicles than in 2016. Jominy also breaks down how Texas is poised to overtake California as the nation's largest auto market, driven by big-spending pickup truck buyers. Additionally, the show covers the upcoming USMCA trade review, Jeep's Chinese-partnered comeback strategy in Europe, and Volkswagen's massive looming job cuts in Germany.
JD Power’s Tyson Jominy makes the case that the auto industry is more profitable today selling fewer vehicles than it was at its peak and why the biggest threat is the temptation to forget that lesson. USMCA review talks officially get underway Wednesday. Plus, Jeep maps out a China-assisted comeback in Europe.
