March 12, 2026 | Diesel price spike squeezes North American suppliers; Honda cancels 3 EVs

Welcome to Daily Drive for Thursday, March 12th, 2026.

I'm Kellan Walker in Las Vegas.

Today on the show, Honda cancels three EVs as losses mount.

ICE tries to cancel an order for thousands of branded vehicles, and diesel price spikes

squeeze supplier margins across North America.

Plus, our own Paige Hotter talks about the new Texas DMV rules that are causing pain

for dealers.

The dealers I spoke to are losing sales, or just like experiencing higher rates of

customer confusion and frustration.

Let's run through all the news you need to know to keep up in the auto industry.

Honda is cancelling three electric vehicles planned for U.S. production, the Xero Series

SUV, Xero Series Saloon, and the Acura RSX.

The automaker expects to book between $5.2 billion and $15.8 billion in losses.

The decision stems from declining EV demand following the repeal of federal tax credits,

U.S. tariffs, and weak performance in China.

Honda had been retooling U.S. plants to build these models, targeting launches as early

as this year.

CEO Toshihiro Mibe called it an agonizing decision and says he will take a 30% pay cut

for three months.

Honda is pivoting to hybrids instead, developing a new hybrid powertrain for commercialization

after 2027.

U.S. immigration and customs enforcement is reportedly trying to cancel the remaining

portion of an order for 2,500 SUVs and pickups.

ICE says it has no use for the vehicles.

Many were already delivered and were supposed to be wrapped with ICE's logo and new slogan,

defend the homeland, but the agency has never used marked vehicles.

One source told the Washington Examiner the vehicles are, quote, hiding in a parking garage

somewhere.

The order was placed last August.

This included high performance models like the Ford F-150 Raptor and GMC Yukon AT4.

And a sudden 20% spike in diesel prices is squeezing auto supplier margins across North

America.

The gem follows disruptions to oil shipments through the Strait of Hormuz after U.S. strikes

on Iran.

Trucking companies are passing fuel subcharges directly to suppliers, who often can't avoid

the costs because most auto parts move by truck on just-in-time schedules.

Smaller suppliers are getting hit hardest.

According to Flavio Volpe of the Automotive Parts Manufacturers Association, transportation

typically accounts for 5-6% of operating cost.

A 20% fuel increase adds roughly 1% to total cost, and in a business with 6-7% margins,

that's significant.

Joining me now to talk more about this is Greg Laysen, Automotive News Canada Digital

and Mobile Editor and host of the Automotive News Canada Podcast.

Greg, welcome back to Daily Drive.

Good to be here.

So Greg, what are suppliers doing to try to plan around this considering how volatile

the fuel cost situation is right now?

There is not much they can do other than hope and pray because the way the system works

is you're locked into your contract, your transportation contract at a agreed-upon rate

of fuel.

So in Canada, for example, $1.65 a liter, let's say, and then if gas spikes by 35 cents

or 21% as it has, you've got to pay that.

There's no escaping that.

This is an industry that works on just-in-time delivery, so you can't stockpile parts and

ship them at a later date when fuel goes down.

You can't turn to rail cars because they don't have access to the factories you need to get

to.

And remember, some of these parts cross the border upwards of seven times each before

they're used in final assembly.

So there is no escaping this sudden impact that has been caused by the war in Iran.

Fuel prices spike, auto suppliers have to pay it, and as Flavio Volpe told me, no automaker

is going to give their supplier a, quote, gas voucher to help them out.

Wow.

Greg, this actually sounds like those EV semi-trucks would have come in handy right now.

Now, what are you hearing from suppliers about how long they can sustain these kinds of margin

pressures before something breaks?

So the interesting thing is the bigger the supplier, the longer they can sustain these

gas hikes because they just have better contracts, they operate in large volumes, they have more

revenue, they can sort of sustain this for a longer period of time.

The big concern in Canada, and I would assume in the United States too, where by the way,

diesel is up 24% over the same amount of time, the smaller suppliers are the ones that are

going to struggle, the tier two and tier three, because they might only have one customer

or low volume or not many shipments.

And so one of the experts I talked to likened it to an independent brochure dealing with

a huge chain.

So picture maybe an independent brochure and a Walmart or a Target getting their stuff.

Who can sustain financial impacts longer?

The ones with the bigger bank accounts, the ones who have large trucking contracts, those

are the ones that will be, I want to say okay in all of this, but if you're a smaller supplier,

this hits your bottom line almost immediately because some of these trucking contracts are

renewed in terms of the fuel surcharge weekly, monthly or quarterly.

And that can add up really fast for the smaller suppliers.

Oof, interesting stuff.

Greg Lason, always thank you so much.

Anytime.

Coming up, New Texas DMV rules are creating friction at dealerships and threatening auto

loan defaults down the line.

Our own Jake Neer talks with Retail Reporter Paige Hodder about how the regulations are

affecting dealers and their customers.

That's next on Daily Drive.

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Welcome back to Daily Drive.

I'm Kellan Walker.

Texas dealerships are losing sales and frustrating customers thanks to new DMV rules that tighten

identification requirements for vehicle registration.

The rules went into effect March 5th.

But dealers say the impact started back in November when county tax offices began following

similar guidelines.

Our own Jake Neer recently spoke with Automotive News Retail Reporter Paige Hodder about how

the new rules are affecting business and why auto lenders are worried about loan defaults

when registration renewal requirements kick in next year.

Paige Hodder, always great to have you here on Daily Drive.

Thanks for joining us.

Thanks for having me.

All right, so it's not every day that we talk about a specific state's DMV rules, but this

is a big market and it's also got dealers up in arms in Texas.

What are these new rules?

Why are dealers so upset about them?

Yeah, so like you said, part of the reason we're paying attention to this is because

Texas is such a big market.

It's a big state.

You've got to drive long distances to get places.

People need cars and there's a lot of people that live there and a lot of like high volume,

really profitable dealerships there.

So these recent rule changes have to do with specifically the IDs, the photo identification

you can use to register your car.

So prove you are the person who you say you are when you're either registering your new

car that you purchased in Texas or renewing your registration for the car that you own

and use in Texas.

And previously Texas had rules very similar to most other states, which were ultimately

just not very specific, something like a driver's license, a passport, but in the fall last

year there was some concern that from various different parties raised that those rules

would allow illegal immigrants or people who were not like lawfully residing in Texas

to purchase vehicles, which technically was true.

You know, however you feel about that issue, that was a fact.

And so essentially they made the rules a lot stricter and added a lot of some new requirements

about what types of documents you can use.

But previously they had a normal Texas driver's license, even one that was expired like a

month ago, you could have used that to register your car.

Now it needs to be a real ID.

If it's not a real ID, you would have to bring in your birth certificate.

So it's that citizenship part or that like legal residence part.

So here's a photo ID that says who I am.

And here's a document that says I am allowed to be here.

And it's that parent of documents.

I won't get into the whole list because it's pretty complicated.

There's a lot of documents that people use to prove identity and residence, you know,

and you don't have to be a citizen.

You can use a foreign passport as long as it says that you're allowed to be here and

some other different documents.

But basically it just made rules that were pretty broad and had been in place for kind

of a while, much more specific and much more detailed and oriented at identifying who

and who is not allowed to reside in Texas.

And those people who are not, they don't want those people to be able to buy cars.

So is the issue for dealers just that they think that this is going to essentially

have people back out of deals or, you know, just get along in the process to buy a car.

And then they realize this is just too much of a hassle.

I think it's a lot of different factors.

You know, one of them is previously they could have sold the car to someone who maybe was

not legally residing in Texas, but that wasn't their business and their business was selling

cars. And so they're going to lose some sales to those people.

Texas has a lot of undocumented immigrants living in the state, especially because of

the border. And but also, you know, dealers like to use the word friction.

They're always trying to avoid friction.

This is just a new piece of friction.

Imagine you're someone who's been living in Texas your whole life.

You've owned and operated many vehicles and you know how the process goes.

You're pretty on it.

And then all of a sudden you're getting through the paperwork and they're like,

actually, did you bring your birth certificate today?

That's something that you wouldn't think to do.

And so it's that piece of friction that might make someone go home that might make them

think about, do I want to do that, you know, deal or whatever.

And just that enough to interrupt the process that could prevent them from selling cars

to people who have the proper paperwork, but just didn't know that they needed to bring it.

Do we have a sense of how this is affecting sales so far?

So technically, the new vehicle registration rules went to affect March 5th.

But this has kind of been in the air since November.

So the DMV actually advised the Texas tax offices who processed the vehicle

registrations to follow a similar version of these rules way back in November.

And then they kind of decided, OK, if we're going to do this, we need to make

an official rule change.

So then they proposed a set of more specific rules that went through a period

of public comment and then it was approved and now it's gone into effect.

But many of the Texas tax offices have been following a version of these rules

since November.

So the dealers have seen impacts.

And I think it really depends on where you are and who your customer base is.

But the dealers I spoke to are losing sales or just like experiencing

higher rates of customer confusion and frustration.

So, Paige, you mentioned in your piece that April and Cira's dealership group

is losing anywhere from four to 10 deals per month at some stores.

That's interesting because she said, quote, the impact isn't overwhelming,

but it's enough to notice.

How are dealers like and Cira trying to adapt to this?

What does it mean for their customer base long term?

What are you hearing from folks like her?

Yeah, so talking to her, she said, this isn't going to kill their business.

You know, they're not going to go out of business because of this, but 10

deals a month, that hurts.

And, you know, that can also cut into, you know, salespeople's commission.

And it has an impact.

And, you know, she, when we talked, it was actually quite like recently

after the rules had been officially approved, but not gone into effect yet.

And, you know, one of the big themes that came up while reporting the story

was confusion.

You know, it's pretty technical.

It's, you know, I just speak to lawyers to be like, can you help me make sure

I'm understanding this all correctly?

So she was like, we're honestly still catching up, you know, in the process

of the proposal to the official rules, like changes happened as often does

and legal spaces.

And so she's like, we're still trying to get our minds around what is the

official rules and starting to think about, okay, how can we get ahead of this?

And, you know, some of her ideas were if we have someone who reaches out

about a car online, you know, that's someone texting or emailing, we can send

them a little blurb to be like, if you want to close the deal today, make sure

you have paperwork like this, these are the new rules.

But if someone comes in off the street, it's harder to do that.

And you also have to train your staff to maybe bring that earlier up in the

conversation than they might have, because it's so new, but you don't want

to get so far in the deal and then have someone be really frustrated that they

thought they were going to get to drive their car home today and said they have

to go dig up their birth certificate or their passport, which they did not bring.

You also mentioned that auto lenders are also worried about this.

You quoted concerns about borrowers not being able to renew their registration

and potentially defaulting on their loans.

How big of a domino effect could that create?

So that's the second part of this.

The new vehicle registration rule went to effect last week, but the renewals

won't go into effect until January 1st, 2027.

And part of that is because renewals is complicated.

That's something you might do through the mail or like they're still having to

maybe try and adopt online systems to match that.

But the auto lenders are really concerned that they lent to people before

March 5th, who do not qualify to renew their vehicles anymore.

You know, someone who might be an undocumented immigrant or someone who

might be just not have the correct papers, you know, a poor person who might

not have their birth certificate anymore, who might have changed their name

and don't have a password or to pass for it.

Lots of reasons why you might not have the paperwork, even if you are technically

allowed to be here, or maybe you aren't, but you still bought a car because under

that rules, like that was something that happened.

And so they're concerned that those people, when it comes time to renew their

registration will not be able to.

And so then they also won't be able to keep up to date with insurance.

And so then they'll stop driving their car and maybe stop paying their loans.

And there's a lot of people, you know, if you can't use your car, you might not

be able to get to work, you might not even be able to pay your loan.

And so it is that big domino effect of, you know, there's a lot of people

who bought cars under these previous rules.

And, you know, loans don't go decades and decades long, but you could think,

you know, someone who just bought a car before the rules went into effect,

maybe in January, might have like a six year loan that they're on the hook for.

But they don't, you know, qualify to renew that registration next year

when the new rules go into effect.

And some of the lenders who spoke in like the public hearings about this

asked for the DMV, the Texas DMV, to grandfather in people who had

already, you know, registered their car, allow those people to finish out their,

you know, continue to register that car if they already own it.

And then if you get a new one, maybe you'd have to follow the new rules.

They declined to do that.

So, you know, we've got some time to see how that's going to play out

and for the lenders to make plans, but it's something they're going to have

to reckon with.

All right, Paige.

So all that in mind, what is Texas saying in response to this backlash?

You know, the Texas DMV was pretty firm.

You know, there's a lot of concerns raised, but they, you know,

stood firm on if you are not legally allowed to be in the state, you should

not be allowed to register a car with the state, which means you're not

allowed to buy a car in the state.

And that is a big deal.

And so, you know, there was, I read through pages and pages and pages of

these written comments that people said.

And the DMV again and again, we understand this concern, but if these

people are not legally allowed to be here, they should not be buying a car.

And that was the official stands over and over.

Well, it sounds like Paige, there's a lot of follow up to do in the coming

months and so forth as this all plays out, but really appreciate your reporting.

Paige Hotter is a retail reporter here at Automotive News.

Paige, thanks so much for joining us on Daily Drive.

Thanks for having me.

That's Daily Drive for today.

I'm Kellan Walker.

Thanks to Automotive News journalists, Hans Grimel, Nato Acomora and Nick

Bunkley for their reporting for today's podcast.

We also have reporting from Greg Lason of our sibling publication, Automotive

News Canada.

You can get the latest news on Texas dealership regulations, Honda's EV

strategy shift, and everything happening in the auto industry at AutoNews.com.

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March 12, 2026 | Diesel price spike squeezes North American suppliers; Honda cancels 3 EVs

About this episode

Honda Xero Series Saloon

Honda Xero Series SUV

Acura Rsx

federal tax credits

U.S. tariffs

hybrid powertrain

GMC Yukon

Ford F150

diesel prices

just-in-time schedules

transportation contract

fuel price spike

just-in-time delivery

EV semi-trucks

friction

vehicle registration

auto lenders

vehicle insurance

DMV

grandfathering

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