Subaru is a car company from Japan known for making cars that can drive well in snow and rough roads. Recently, fewer people have been buying their cars.
Volkswagen is a big car company from Germany that makes many popular cars. They are having some legal fights with dealers about how cars should be sold to customers.
A class action lawsuit is when a lot of people team up to sue someone because they all have the same problem. It can take longer because many people are involved.
A direct consumer network means the car company sells cars straight to people, without using regular car dealers. This can make buying a car simpler and sometimes cheaper.
A battery complex is a big factory where companies make batteries for electric cars. It usually has several buildings and lots of equipment to build batteries in large amounts.
The Toyota Highlander is a popular family SUV that is comfortable and reliable. It can carry several people and is made in different factories including some in the US.
Rail access means the factory is close to train tracks so cars and parts can be moved easily by train. This helps get cars to dealers faster and cheaper.
The Jeep Wrangler is a popular, tough vehicle that people use to drive on rough roads and trails. It's famous for being able to go places regular cars can't, and lots of people want one, which can make it hard to buy sometimes.
The Toyota production system is a way Toyota builds cars very efficiently by reducing waste and making sure everything is done just when it's needed. This helps them make cars faster and with fewer mistakes.
The Hyundai Santa Fe is a medium-sized car that many people use for family trips or everyday driving. It’s comfortable and has lots of helpful features, making it a good choice for many drivers.
The Hyundai Santa Cruz is a small truck that looks like a car but has a little open bed in the back for carrying things. It was made for people who want a truck but don’t need something very big, but it didn’t sell well and was stopped.
The Ford Maverick is a smaller pickup truck made by Ford. It's good for people who want a truck that's easier to drive and uses less gas than big trucks.
A vehicle platform is like the basic building blocks or frame that car companies use to make different cars. It helps them save money and build cars faster.
The Toyota Tacoma is a smaller pickup truck that lots of people like because it is reliable and can handle rough roads. It used to be one of the main small trucks people bought before bigger trucks became more popular.
The Toyota Corolla is a small, popular car that many people drive because it is dependable and doesn't use much gas. Sometimes, companies use it as a starting point to make other types of vehicles.
The Toyota RAV4 is a small SUV that many people like because it can carry a lot and still doesn't use too much gas. It's also used to make other types of cars because of its size.
This means car companies make cars in the places where they will be sold so it costs less to get the cars to buyers and they can make cars that fit what local people want.
The Ford Transit Custom is a type of van that businesses use to carry goods or tools. It’s not too big, so it’s easier to drive in cities but still has plenty of space inside.
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Welcome to Daily Drive for Wednesday, March 4th, 2026.
I'm Jake Neir in Detroit, in for Kellan Walker.
Today on the show, Hyundai invests $6 billion in robotics, AI and hydrogen in South Korea.
Subaru and Mazda post sales declines for the seventh straight month,
and two more VW dealers sue to block scout motors from selling directly to consumers.
Plus, our own Larry Velikwet lays out the clues, pointing to Toyota possibly building a sixth U.S.
assembly plant.
They just don't have that much left in their North American plants that they can utilize if
they want to do a new product.
Let's run through all the news you need to know to keep up in the auto industry.
Hyundai Motor Group is investing $6 billion in a new robotics, AI and hydrogen production
complex in South Korea. The site will produce 30,000 robots annually,
matching the capacity of Hyundai's planned Georgia robotics plant.
This includes commercializing its mobile eccentric droid, a four-wheeled autonomous
logistics wagon. The complex will also feature an AI data center and a solar-powered hydrogen
facility producing 28,000 tons yearly. More February sales results are in since we last spoke.
Subaru saw sales drop more than 8% hurt by winter weather in key markets.
That's the seventh straight month of declines for the automaker, despite the Forester hitting a
February record. And Mazda sales slipped slightly for the seventh consecutive month as well,
though the company says it was still its second-best February ever.
And two more Volkswagen dealers are suing to block scout motors from selling directly to
consumers. Volkswagen of West Islip in New York and current Volkswagen in Connecticut
filed the lawsuit Monday in federal court in Virginia seeking class action status.
The dealers say VW Group of America is breaching franchise agreements through its ownership of
Scout, which began taking reservations in October 2024. Joining me now to talk more about it is our
own Jack Wallsworth, who covers Volkswagen Group and all of its brands and subsidiaries for us at
Automotive News. Jack, welcome back to Daily Drive. Hi, Jack. Good to be here.
All right. So let's start with what the full picture sort of looks like in terms of dealership
lawsuits against Scout at this point and how this development changes anything, if at all.
What would you say? Is this a big development? Potentially, I would say. So the fact that
another lawsuit has landed, that's not necessarily like a surprise. I mean, I think
we were expecting additional lawsuits just given that we are a country of 50 states
or Volkswagen Group dealers all over the country. I think there's always going to be
multiple lawsuits. But this one is a little bit different in that it's seeking class action status.
That's something that can take some time. I talked with one of the lawyers on that lawsuit
yesterday, Len Bolivia. He said it could take up to a year. So if this lawsuit progresses,
if it reaches a point where it is certified as class action, that would be a big development.
But whether that happens or when that happens is to be determined. At the same time, it is
noteworthy that two Volkswagen dealerships, they're both on the East Coast have come out
and there are reps on this lawsuit. So the fact that more dealers are putting their name out there
or going through the legwork of filing a lawsuit is interesting. I mean, not every Volkswagen
dealer in the country is going to file an individual lawsuit, I don't think. But the fact that we're
seeing a couple more is interesting. And that's kind of a development. But again, I think we were
expecting more lawsuits. And to be honest, I would expect more to land going forward. I think
this lawsuit is pretty similar to the other ones that we've seen in other states and similar in
the arguments, I should say, dealers and dealer associations continue to say that Scout is solely
funded by Volkswagen Group. Essentially, the Scout is no different than any other Volkswagen
Group brand. They should be using franchise dealers. I think dealers continue to say,
yes, we have seen some of their brands like Tesla, Rivian, Lucid set up their own direct
consumer network, but they always point out that none of those brands have a legacy automaker behind
them. So this lawsuit has kind of similar arguments, points out that Scout has a lot of
Volkswagen Group or Volkswagen Group of American employees running things. So again,
similar but slightly different on this one for sure. Really interesting detail in your
article about this. You mentioned that VW dealers have been trying to meet directly with executives
about Scout, but they keep getting rebuffed. What are you hearing from dealers about their
strategy? If these legal challenges don't work, are they preparing for Scout to launch anyway,
no matter what? Yeah, I think it seems from my conversations that dealers are kind of preparing
for the worst. I think to be sure that dealers, dealer associations, NADA have been very clear
that they're going to fight this, and they have been fighting it. Basically, essentially,
since Scout announced that they would be going direct consumer back in October of 24,
but I think dealers are also pretty realistic. In my conversations, it kind of seems like
some dealers are accepting the fact that Scout will probably come to market, vehicles will probably
go on sale, just because, again, we're a country of 50 states, it seems plausible that one state
could potentially open the door and Scout gets selling. I don't think dealers want that, obviously,
and I'm guessing most dealers are confident in these lawsuits that have been filed and kind of
to be determined. One dealer I talked with said, I said, Scout will get figured out, it'll get
sorted out somehow. I think it'll be kind of interesting to see how that happens. Back when
Scout was awarded a Colorado dealer license back in December, I talked with the CEO of the Colorado
Auto Dealers Association, Matthew Groves, and he had said, there's basically two things we can do,
we can appeal this through litigation or see if Scout can swim. Dealers in Colorado did file a
lawsuit in January, so they've kind of gone litigation route, but at the same time, I think
his comment about seeing if Scout can swim is probably a mindset that a Volkswagen dealer might
have. Obviously, Volkswagen dealers want these products, but I'm sure they have some questions
on how the products will actually be accepted by consumers to roll out launching a new brand
is not easy, it's not like a quick endeavor. I think there's a little bit of skepticism,
but at the same time, I know every Volkswagen dealer would like to be able to sell these cars
at some point. It's a fascinating story. Jack Wallsworth is on it for us at Automotive News.
Jack, thank you so much for joining us. Really appreciate it. Anytime. Thanks, Jake.
Coming up, our own Larry Veliquette talks about the clues pointing to Toyota potentially building
a sixth U.S. plant. That's next on Daily Drive.
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Welcome back to daily drive. I'm Jake Neer. Toyota is maxed out. The automaker is running its
plants at over 90% efficiency globally with no unused production space anywhere in the world.
But demand keeps growing, especially in the US. Our own Larry Veliquette has found several clues
that point to Toyota potentially building a sixth US assembly plant, and he has a new column about
it on autonews.com. Larry, welcome back to daily drive. Jake, always great to be here.
This is a really great column. And I love that you're playing sort of detective here, Larry.
You lay out several clues that point to Toyota potentially building a sixth US plant.
What are the biggest indicators that made you start kind of connecting those dots?
Knowing this company as we do, they are maxed out globally, right? They don't have any unused
production space anywhere in the world. They are already the world's largest automaker in terms of
volume. And in the US, on the sales call back in January, the executives started repeatedly
talking about how they can't get any more. They've got the plants already running at near peak
efficiency levels. The only place that they were getting extra vehicles to meet local demand was
they're getting basically onesies, twosies, right? From China and Europe where things are slower
because of competition from Chinese automakers. So they were getting some redirected volume.
But that may not last. They have some unmet needs. I mean, I've been covering these guys for
almost eight years now, almost, yeah, going on, working up to a decade, right? I've covering
Toyota and knowing their limitations and hearing these executives talk about, yeah, we're running
super efficiently. We're not putting any incentives on yet. We're still selling
everything. Our dealers are extremely happy because they're turning everything over on their
lots every month. They're living in the promised land and they want to grow and there's room for
them to grow in demand, but not in supply. Well, there's also literal room for them to grow possibly.
Here, you identify that one of their plants that they've recently built in North Carolina,
it's only using about half of the land that they bought. Walk us through why that location
makes sense in your mind and kind of what infrastructure might already be in place there.
Yeah. So when they bought the land for the battery complex, which was their largest
single investment in North America, almost $14 billion. It was 1800 acres and they used about
half of it to build their battery complex, which is seven buildings. And of those seven
buildings, they've only actually now, they're only just starting to make the batteries
and they're only using about half of those, right? So they've got a large untapped asset.
And if you lay out on a map where Toyota has its production facilities, most of them
follow the I-64 corridor, which flows from North Carolina and it goes past near Georgetown,
which is their largest US assembly plant. And then to Princeton, Indiana,
which is where the Grand Highlander for a short time, yet the Highlander and the Lexus TX are
built as well as the Sienna and their other facilities, other assembly plants and their engine
plants, they all kind of flow not too far from I-64. This is right there. It also has the advantages
of having a rail access that they don't currently use, but which would be very helpful when you're,
when you have an assembly plant, you want to move vehicles, rail is the best way to do it.
So the infrastructure is already in place because they own the land. It's basically the cost of
the building. And by the way, having covered the search for industrial sites here where I am in
Michigan and the lack of sites that are available for this sort of thing, I mean, that's a huge deal.
It really is. And I tell you, when they chose that battery site, we did a big story at that time
to talk about how difficult it was. This was about the same time that Ford was doing its
Blue Oval project there along the Kentucky-Tennessee border. And these two projects grabbed some of
the last large land for industrial projects left. They're just not a lot remaining. And so, yeah,
it's a untapped asset or an unfully tapped asset at this point.
Let's talk a little bit more about that capacity issue that you mentioned.
You write that Toyota is running at over 90% plant efficiency. What does that actually mean
for their ability to respond to demand or add new products or things like that?
Well, they're running at 90% efficiency, and they're doing so generally without a lot of overtime.
So they're running their plants at capacity. They're very conscious not to do what say some of the
Detroit 3 do, which is if they have extra demand, they move heaven and earth to capitalize on that.
That means their workers work all kinds of overtime. They add weekends and down
near where I live, the Jeep Wrangler plant, when Wrangler demand was through the roof,
they got that plant up well over 100% capacity simply by running all these extra weekend shifts
and ignoring maintenance issues that they really shouldn't just to grab those extra sales.
Toyota tries not to do that. They're cognizant not to do that very much. So for them, 90% is
pretty darn good. They obviously run the Toyota production system, so they're always working on
efficiency. They're always chisening things to squeeze extra capacity out, but they're running up
against the functional limits of that. And in all of their plants, they just don't have that much
left in their North American plants that they can utilize if they want to do a new product,
like the one we're going to talk about in a second.
You read my mind, Larry. It does really sound like dealers want a compact pickup,
something to compete with the Ford Maverick. I was going to say the Hyundai Santa Cruz, but
RIP to that one. How big a factor is that in potentially driving a decision for a new plant
for Toyota? To understand this, you have to understand that Toyota's vehicles are built on
platforms. And so if you want to build a plant to do a compact pickup, and let's forget for a moment
how Toyota historically used to dominate compact pickups, that's what the Tacoma was
before it grew, and what the original T100, if you go back, what that was. Small pickups
is where they made their bread and butter years ago. And they've kind of seeded that
as the market all moved larger, and everybody gave it up. And then Ford went back and said,
you know what, there's volume here. And as a Maverick driver, I can attest that they are
functionally great vehicles, those size, for if you don't need a full-size pickup, or you would
like something that fits in your garage. So they think that there's a natural audience for this
vehicle for them. They've been studying it now for seven, eight years trying to figure out
what they're going to do. They originally looked at a Corolla-based one that they have
a version of in Brazil, but they decided that that was probably too small for the US market.
Now they're looking at something that would be RAV4-sized, based off the RAV4. So basically,
RAV4 with a bed. And what that does from a production standpoint, because of this platform
strategy, you can build a compact pickup, and you don't have to fill up that whole plant with
that compact pickup. You can also build RAV4s. You could add RAV4 volume or move the RAV4
plug-in hybrid from Japan to the US. The thing about Toyota is that underneath their strategy
has been, now for several decades, build it where they sell it. So if they're selling
2.5 million vehicles in the US, they want to make as many of them here as they possibly can,
because that added efficiency, that's cheaper for everybody involved, if they can build them
locally. They don't have to ship them across the Pacific Ocean. So it's a good strategy.
And if they build a pickup, the dealers that I've talked to also want, in addition to a
compact pickup, they would also like a small delivery van, which they think,
if you are already going to build a pickup, you're just talking about a little bit of sheet metal
to put a cap on it. And now you suddenly have a RAV4 hybrid small delivery van
that you can build very cheaply, which you can really do. And I'm talking about
something the size of, say, the Ford Transit Connect, right? Maybe even a little smaller.
So last mile vehicle, perfect little delivery vehicle in town, they think there's volume there too.
Now, let's talk a little bit about logistics some more. And in this case, finance is, you
know, you mentioned in your piece that Toyota has committed to $10 billion in US investment through
2030, but they've only really spent about 20% of that so far, a new plant costs usually
two to $3 billion. So the money's there. What else needs to fall in place to actually make
this happen? Yeah, a billion here, a billion there, pretty soon it's real money, right?
So they have committed to $10 billion that they did so last year to spending that. Now, generally,
to be fair, automakers constantly commit to these things going forward. And it
looks like a big number, but they're constantly spending, you know, half a billion dollars in
this plant or $800 billion between these three component plants. So there's, you know, some of
these projects are just ongoing and they happen as products, we do product changeovers, these
investments get made to accommodate changes and they come off. Looks good on a press release.
Looks good on a press release, but it's kind of, you know, operationally what they do.
Right. So this would be, you know, if they decide to do this, it could easily fit within their
spending plan. And, you know, I see benefits for a lot of different reasons. And you just,
you know, I said this before, this industry has said this for decades, you're never going to
go broke betting with Toyota or betting on Toyota, right? They just, they don't do very many dumb
things. And so I, you know, I see this as an opportunity. Now you might question, okay, why
not in Mexico because of all the free trade agreements? I think, and this is a, this is
maybe a result of the times, right, of the sensitivity to, to build it, if they're going
to build another plant, it's just as easy to build it in North Carolina. And the costs on
an ongoing basis for vehicles that are going to sell is, you know, the cost difference is pretty
minimal. Even including the labor costs. I know that that labor costs have increased in Mexico
significantly, but is, is that gap so small that it doesn't really make that much of a
difference at this point? So it's not that it doesn't make a difference, right? But you
you have other concerns in Mexico too, right? You have to get vehicles across the border.
You're dealing with, look at, look at the, the unrest down there right now, right? The chances
of, you know, North Carolina having unrest like that while still there, probably not as, probably
not as great, right? Probably not as great. So you, you know, you, you have some fixed costs and
you have a lot of the costs, the upfront capital costs that you've already done, right? And it's
just sitting there in the form of empty land. So the big concern that they are going to have
with that location, and they had it with the battery plant is simply the labor pool. Are they
going to be able, and this is, this is, you know, everywhere now, are they going to be able to find
enough workers within that regional area without driving wages up so much that they, you know,
become a negative impact on the region to be able to fill an assembly plant? Well, what I can tell
you is that if you look at what we've been writing about robots, assembly plants will have far fewer
workers a couple decades from now than they have now. Before I let you go, what have Toyota
executives said to you? I mean, you've, you've pitched me and you've convinced me, Larry,
probably members of our audience, but when you talk to executives from Toyota, what do they,
what do they say about this? So they gave me a very top of the board. I don't want to say
Pablam, right? It was simply, you know, we study this all the time. We have nothing to announce
now, right? Which is exactly what you expect them to say when you ask them a question like,
are you going to build a plant that you haven't announced? But what you didn't hear was, no,
we're not going to do it. The president did not deny blah, blah, blah. Exactly. Exactly. Yes.
All right. Well, this is fascinating, Larry, and we will be keeping our eyes on whether or not
this actually comes to pass. Really appreciate you taking the time and I will see you soon on
our weekend drive edition of the show pretty soon. Thanks for joining me. Yeah, thanks,
Jake. And I want to, I want to add to the end of the column, right? Which is,
if it doesn't happen, forget you heard anything, but if it does happen,
remember you heard it here first. Yes, absolutely. You heard it here first on Daily Drive. Thanks
again, Larry. Thanks, Jake. That's Daily Drive for today. I'm Jake Nier and for Kellan Walker.
Thanks to our own Jack Wallsworth, Hans Grimel and David Phillips for their reporting for
today's podcast. You can get the latest news on Toyota's US manufacturing footprint, lawsuits
against Scout Motors' planned direct-to-consumer retail model, and everything happening in the
auto industry at AutoNews.com. Come back tomorrow for a conversation with Bill Berman, CEO of Pinewood
AI, about the company's big plans in North America after a successful launch at NADA.
We had a huge influx of customers way exceeding, you know, our expectations out there and
everything was incredibly well received. 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 dailydrive at autonews.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'd never miss an episode.
About this episode
Hyundai announces a $6 billion investment in robotics, AI, and hydrogen production in South Korea, while Subaru and Mazda report continued sales declines. Volkswagen dealers escalate legal battles against Scout Motors' direct-to-consumer sales model, with new lawsuits seeking class action status. Dealers remain skeptical but prepare for Scout's market entry. Meanwhile, Toyota faces capacity constraints with plants running near full efficiency and hints at building a sixth U.S. assembly plant, supported by clues like underutilized land at its North Carolina battery complex. Industry experts discuss the implications of these developments on manufacturing and dealership dynamics.
