Prices Hikes Are HERE | Volkswagen RINGS THE ALARM BELL | Episode 928

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It's noon here in Ventner City, New Jersey

and our nation's capital, Washington DC

and this is Car Edge Live for Friday, September 19th

with your hosts, me, Ray, in Ventner City

and Zach, even though it looks like he's somewhere

in the Vantner, Red Rocks Park, I believe.

He's really in Washington DC, ladies and gentlemen,

how are you today?

Handsome.

I'm doing fantastic.

Happy Friday, everyone.

Friday, September 19th, my sister's birthday five days away

so you can't wait to celebrate.

That'll be her first one with her newborns

so that'll be really exciting.

Cannot wait for Dower's birthday, but folks,

before we talk about birthdays

and quite frankly price hikes for new cars,

we gotta talk about the edge for your car.

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Dad, the big story I wanted to cover first and foremost here

is the Volkswagen.

Dad, they are ringing the alarm bell.

We've got price hikes up to 6.5%

on some of their 2026 models.

We're going to start here.

We also know many automakers

are increasing their destination charges.

That is being factored into the MSRP of vehicles

so they're not increasing the price of the vehicle.

They're just jacking up the destination fee

but here we got it, Dad.

Volkswagen increasing prices 6.5%.

That is not normal year over year price increases.

No, and they increased the prices

of many of their vehicles earlier this year

on 25 model year vehicles

because of the advent of the tariffs.

So we saw a price increase on 25 model year.

We're going to see a significant price increase

on many of the 26 model year vehicles

and the price increases range from 2.9% to 6.5%.

And that seems steep to me,

almost as steep as those mountains behind you.

Yeah, Dad.

Well, it means new vehicle affordability

is going to be a challenge.

That being said, Cox Automotive does say

that new vehicle affordability is stable

even though we have higher prices.

So we are going to continue to see car prices go up.

That is the big theme here from Volkswagen,

ringing that alarm bell.

Hey, we jacked up prices of our 2025s and Dad, get ready.

We're jacking up the prices of the 2026s.

We know other automakers are doing the same

some to lesser degrees and some to more

but ultimately that is not having that big of an impact

on vehicle affordability somehow some way.

I think it's directly connected, excuse me,

to interest rates that at least they're lower

than they were a year ago

and the expectation is they will continue to go lower.

Okay, so the affordability issue

doesn't seem to be that much of an issue

for perhaps the 13% of the population

that feels as if they can actually afford to buy a new car.

For the other 85 to 87% of the population,

I don't think that holds true.

Now, having said that, apparently you as a manufacturer

can sell enough cars to maintain your profitability

to only 13% of the population and that's what they're doing.

Yeah, interest rates are down a bit.

Let's look at the VW price increase for a second.

And let's also do it through the lens

of like what's happened to their sales

because we know Volkswagen's in a lot of trouble right now

but yeah, let's start with VWs.

Here's the deal.

The low end of the price increases 2.9%.

The Fed lowered the Fed rate by 25 basis points.

That is a quarter of 1%.

And as we established yesterday when we looked at it,

that with the average amount financed on a new car today

and doing it on a 60-month loan,

a 1.25% drop in the annual percentage rate

equated to a $5 drop in the payment from what was it, $792 to $787.

And you can't increase your prices by 2.9%

and hope that a quarter of 1% drop in the APR

in the Fed rate is enough to offset that 2.9% price.

It is not.

It is nowhere near.

So yes, things might be stable for the 13% or 14%

of the population that feels as if they can afford to buy a new car.

But it still seems entirely out of reach

to the vast majority of the people out there.

And I'm pretty sure that 85 to 87% is a vast majority

compared to that 13% or 14% that feels like they can do it.

And if that doesn't scare the industry to a degree,

I don't know what will.

And I had a conversation the other day with our dear friend,

Chris, AKA Chip, and he couldn't get over how the comeback of leasing

and it's strictly because it's payment driven.

For sure.

Pups, can I share a little bit more data here?

Sorry to cut you off on your role.

I want to share.

I think that was pretty much done.

What you've got that is Volkswagen sales are actually down 29%

in the second quarter of this year and 13%

through the first half of this year.

So think about that.

Sales volume is down significantly over at Volkswagen,

they're having to increase their prices even more.

Last time I checked, keep me honest here,

you sold cars for 40 plus years.

The higher the prices go, the less cars are going to sell.

This is a bit of a recipe for disaster for this brand, I think.

Well, yeah, typically, the higher the price of the vehicle

typically indicates that it is designed for fewer people

and it becomes a coveted item as opposed to an everyday item,

which is why we have luxury brands.

When I say luxury brands, where you can buy overly priced stuff,

it's not just an automotive, it is in all things retail,

especially in fashion.

And so, yes, typically, as the price goes up,

you are looking at a smaller group of people

who can actually afford to buy it.

But the reason those people buy it is because it signals

to everybody else, I'm rich.

Okay, and so the dilemma with automobile manufacturers

is every one of them would like to believe

they're in the luxury automobile space and they are not.

Let's review a few of the vehicles, Dad,

that are seeing their prices go up

significantly just in on our team compiled this list back in May.

So let's come down here and let's look at some of these vehicles.

We've got, for example, Honda Passport,

and a 5.1% price increase.

Kia Sportage, 4.3% price increase.

Genesis GV70 and the Electrified version,

3.6 and 3.3 Calac increasing prices.

We've got a great list here of year over year,

the base MSRP changes, and at the low end,

at the top end.

So Justin's done a great job here compiling the data,

and a lot of these vehicles are seeing their price increases.

Top line of the Honda Passport, for example,

now a $54,000 vehicle.

And to your point, it just makes it more and more exclusive.

And if I'm not mistaken, Dad, Subaru,

Subaru increased their prices by 750 to $2,055.

And that was back in May.

Yeah, so what happens when you do that to the 25s?

And then, yeah, we talk about in 26,

now prices are going to go up even more.

It's a little bit of, I think, ringing an alarm bell of like,

okay, this is, the ringing of the alarm bell

is the combination of plummeting sales

and having to increase prices.

That's the ringing of the alarm bell.

The Tude cannot coexist.

Well, it's unsustainable for the Tude to coexist.

Well, they can coexist if you can figure out a way

to maintain profit margins by selling fewer and fewer vehicles.

And one of the things that we have discovered

and found over the past five, six months

is that many of the manufacturers

have tried to absorb as much of the tariff increase costs

as they possibly can.

Well, every one of them that has done that

has seen their profit margins drop from,

and most of the manufacturers

had been somewhere around 10% to 12% profit margins.

And those profit margins are now somewhere

between 5% and 6%.

So can you do it temporarily?

Yes, I think you can.

They're proving that they can.

Can they sustain this long-term

when their investors and stockholders

are used to seeing profit margins of 10% to 12%?

My guess is that at some point

the stockholders and the investors

are going to want to see a return to 10% to 12% profit margins

so that they can get their return on their investments.

Now, if they do that,

how many fewer cars are they going to sell?

Because that 13% to 14% of the population,

it feels like they can,

will suddenly drop to, I don't know, 10% or 11%.

You sound like a broken record, Dad.

I listen to you every day.

It sounds like you're saying the same thing.

I think maybe you mean it.

From Justice here, from 2019 to 2024,

Volkswagen raised their MSRP by 38%,

while the average for the rest of the auto industry was 30%.

During the same time, Igor is over at the dealer auction today,

and he's just trying to say cars are not selling

and dealers are dumping them.

We're talking about Volkswagen, Audi, et cetera.

We know we can look at the slowest selling cars list

as well, and we've got Volkswagen's and Audi's

all over that list.

Dad, let's switch gears.

Let's talk about something else.

You and I are broken record about these price hikes.

Hyundai Toyota issued US recalls

for more than 1.1 million vehicles combined.

What is going on here?

Well, in some of the Hyundai's,

if you sit in the back seat,

you go to fasten your seatbelt, it will not fasten.

The clicker doesn't want to click.

It doesn't click in.

You know, there could be an issue.

I think they've recalled what was it,

560,000 vehicles.

And it's like, how could that happen

that you never tested the damn seat belts

to make sure that they were in compliance

so that, I don't know, when you inserted the tab

into the clicker, it actually held in place.

So there's that for Hyundai.

Hyundai Toyota has an issue with,

what is it, the display, the dashboard displays

on what, 590,000 vehicles?

That's a, I guess, the only thing I can think of

is that both Hyundai and Toyota said to themselves,

we just can't let Ford run away with this recall thing

for the whole year.

We need to step up to the plate

and bless them.

They did so that we have two different manufacturers

to talk about with recall issues

than our really good friends at Ford.

Any guess what number of recalls Ford's up to

for the year, now that you mentioned them?

Well, I haven't looked.

I know last week we were at 110,

you know, and they'd been obviously adding

more than one a week.

So I'm going to guess they're like 113.

They're really, really solid.

Guess, Dad, they're at, drum roll please.

Yes.

112.

Only two this week.

Only two recalls this week.

Wow. Wow, that's pretty crazy.

And what manufacturer is it, 20 something?

The manufacturer that is at 20 BW.

Oh, look at that.

Yeah, these are, Chrysler's at 33.

Ford's at 112.

Let that sink in the gap there.

Forest River for recreational vehicles.

VW Group with 20 recalls.

GM with 18 recalls.

Mercedes-Benz with 16.

And Honda with 16 recalls so far this year.

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Dad, the issue that Toyota's running into

actually impacts 2.8 million vehicles globally,

which is like a tremendous number.

The bigger issue to be clear though between

an infotainment screen

or an instrument panel failure, excuse me,

and faulty seat belt buckles

is certainly the Hyundai issue

with the faulty seat belt buckles.

Yeah, I, you know,

one really is safety-related.

You know, we have proven over time

that seat belts when used work

might not necessarily work in an airplane

when it crashes,

but they do typically work in cars,

okay, and trucks.

A display screen,

a dashboard screen that is malfunctioning

to some degree,

I don't think presents the same safety issue

as a seat belt that doesn't work,

although it is a safety issue.

I mean, you'd like to know

that what's being displayed is accurate

and you can count on it.

I suppose that technology

is a wonderful thing.

Screens are a wonderful thing.

You know, I was last,

a week ago Tuesday.

Storytime.

When I arrived in Washington, D.C.

at Union Station,

and I ordered a lift

so I could get to my hotel.

And the driver and I were just discussing

how when you look at everybody

walking down the street,

that nobody is looking up,

everybody is looking down,

and they are looking down at their phones.

They are looking down at their screens.

It is as if the world as we know it,

if it isn't displayed on a screen,

isn't really the world as we know it.

And so, yes, technology is a wonderful thing.

Screens are a wonderful thing.

But they are destroying our lives

in the sense that we can't just take in

what is around us

and see the wonders of the world

through our eyes as opposed...

I'm sorry, but it's...

I'm just laughing because this shows

all that auto industry and cars

and how to buy cars.

And now you're getting all, you know.

But look what they've done to cars.

They used to be analog dashboards.

They're now digitized, okay?

And why?

Because it's a prettier screen.

You know, one of the selling features

at Mini is, well, it's a 1080p OLED screen.

Well, look at the window, dammit, okay?

Dad, you don't want this.

You don't want that.

Come on, man.

You don't want that.

Oh, you do.

And so, screens have overtaken

our sense of wonder.

I mean, the background behind you,

to only look at that in the form

of on a screen as opposed to in reality

is crazy because what's behind you

is absolutely staggeringly beautiful.

But you would never know it

if you're just looking at it on a screen.

Whether it be the screen on your dashboard.

What about that one, Dad?

You like this one?

What about that one?

I mean, why not just go to the planetarium, okay?

I mean, what?

You know, I don't know how I got off on this rant.

I don't know how you did it either.

I'm trying to bring it back

but I'm just gonna enable it.

The reason you can't is

because I think screens are harmful to human beings

and I think phones and social media

are the most anti-social things

that human beings have ever created.

I just did a quick Google search

Dad of cars with the most infotainment screens

and it's definitely that Mercedes Benz one.

I mean, this is literally like you're just,

there's screens everywhere.

So, okay, we're gonna keep Ray away

from the screens.

Good thing he got a Mazda CX-30,

not too many screens for him there.

We're gonna switch gears first.

We're gonna thank Matthew today's show.

It was a rant on the screen.

Didn't see that coming.

Thank you, Matthew, for the kind contribution.

Ford should change the recalls to blink it,

recall by model.

They should recall.

They could recall every model

and have far fewer recalls.

Where's my $2 million efficiency boat?

That's a really good point.

You know, instead of having 112 recalls,

you could just, you know,

instead of going down to the trim level.

Yeah.

Recall all of them.

Play it safe that way.

That's pretty funny.

All right, Dad, let's talk about the Subaru news today.

I thought this was pretty interesting.

Subaru sales have actually not been growing.

And 36-year-long production run,

they're stopping the production of the Subaru Legacy

in Indiana.

I thought this was interesting.

Yes.

It's the last one to ever be built

to come off that assembly line.

I think came off the assembly line September 12th.

Yep.

Incent to a dealer.

What was that?

It's being sent to a dealer.

Yes.

And the funny thing about it

is the last one they ever built was in a trim

that is the least popular trim level.

It's in their limited trim level.

Yep.

And most people don't opt for their limited trim levels.

But 36 years ago,

when Subaru and a Zuzu

and many folks won't even remember a Zuzu,

but a Zuzu is a manufacturer of vehicles

and they had a joint manufacturing facility,

Subaru and a Zuzu in Indiana.

And the Subaru that they built was the Legacy sedan.

I think it's gone through six or seven generations since then.

Yep.

And it is kind of sad that as, you know,

sedans have kind of lost their way with the American public,

that after 36 years,

they've built the last one that they're going to build, you know.

It is probably one of the roomiest sedans

you could ever consider purchasing

at an extremely, at least it always had been

an extremely attractive price point

for everything that you got.

I mean, it's huge.

It is the chassis that the outback is built on.

Yeah.

And so when you folded down the seats

in one of those Legacy sedans,

the amount of cargo room you had was unbelievable.

And it's just kind of sort of sad.

It's another death nail to the sedan in the United States.

Let's pull it up.

I have it here on the car edge.

Car surge.

Let's just take a quick peek at what's going on

in the Subaru Legacy market.

Just for a perspective here, we're in Kensington, Maryland,

where there is a 113 days supply of inventory.

New car is selling for almost $60,000.

So look at the Subaru Legacy as an option, limited.

Like you said, not selling particularly well,

but $37,000 price point.

The premium $31,000 price point.

I'm going to click into one of these in a moment.

Let's do, all right, let's do the legacy

that doesn't sell particularly well.

Open that in a new tab and let's look at,

excuse me, let me open up a legacy.

So I'll come back up here, this one.

Dad, you can see here $37,833 MSRP on the Legacy.

$35,387 dealer invoice price.

And look at the target discount that car edge is suggesting.

$4,000 plus dollars off.

That's over a 10% discount because 116,

whoops, 116 days supply.

It's not selling particularly well.

And I'm just curious what the incentives are on this view.

You know, they only sold 19,000 of them last year.

And you've got subvented financing,

3.9% for 36 months.

That's good.

Okay, so, you know, what does that mean?

For most people, that would put their payment

well in excess of $1,000 a month.

For sure, Dad, for sure.

But still, I hear where you're coming from,

but it's still a subvented interest rate,

and it's a good interest rate.

3.9%, the average new car finance rate is over 9%.

Here's the premium, the even cheaper option we can see here

in our neck, though, it's 181 days supply.

So, yeah, it's not selling, which is congruent

with what we know about sedans in the United States.

But it's an affordable price point.

It's roomy, like you mentioned before,

and there's fairly strong incentives against it.

I mean, I know you're saying you wouldn't finance

for 36 months with that comment,

is at least what I'm hearing you say,

but 3.9% financing and you're also getting,

I don't know, 10% dealer discount

on a $30,000 vehicle, that's awesome.

That doesn't exist in today's market.

No, and it's a lovely vehicle,

and it's just not a popular vehicle,

and it's kind of sad.

It is sad, because it's another example

of a fairly reasonably priced vehicle

that could get people from point A to point B

that's going by the wayside in favor of

more profitable and more expensive vehicles.

It's another example of that.

Yes, another of the ongoing

and growing list of samples, examples of that.

You know, as we see the Mitsubishi Mirage bite the dust.

We see, I think, the Nissan Versus biting the dust.

The Altima, I believe, is biting the dust.

So we are just not a sedan-driven market anymore.

And maybe perhaps to some degree we should be,

and we should learn to do with,

I know people hate when I see this,

but we should learn to do with smaller vehicles.

I mean, most people don't need the big-ass SUVs

and big-ass trucks that they drive.

Certainly create more parking spaces

for people if everybody drove little cars.

All right, now we're going to do a live experiment, y'all.

All right, so let's come over here.

Give me a second.

Subaru Legacy interior screens.

Wait for it.

You know, not bad, Dad. Not bad.

No, they've been using that style of screen for years.

Not bad.

Yeah, it is unlike what you find in most cars today.

Not bad, not bad.

Thought it might be worse.

That reminds me to a degree of when you had that Volvo S90.

Yeah.

A similar type of screen.

Definitely.

Also, it's super interesting, kind of like peanut buttery interior.

Also, I just want to pull up from space here.

I would get a 2025 Camry SE Hybrid for $30,000

before tax time on license.

Instead, I think space is on to something here.

That being said, limited options when it comes to,

in this case, you know, sedans.

It is definitely a smaller market, much smaller market,

but with value.

I would say actually legitimate value today.

Okay, that's all I had for today, Pops.

That's all I had.

Okay, then be that way.

Do you want to talk about screens for four more minutes?

We'll see if all of your ship goes up or down.

No, I think my rant was just about long enough.

And I want to thank you and I want to thank our audience

for allowing me to get a lot of my feelings out there

so that I can express them.

So I don't get frustrated and just carry them deep inside of me.

We're here for you in that way, Pops.

And trust me, nobody appreciates it more than I do.

I am ever so thankful that people will allow me

the opportunity to share what I feel in many cases.

There you go, Dad.

Well, folks, if we can help you out with anything,

again, check it out, caredge.com.

And again, we've got a little flash sale running this weekend.

So do not buy our car buying service

or negotiation expert today.

Instead, wait till 8 a.m. tomorrow morning

or just reach out to our team and we'll give you that.

May I say something about that?

It takes a lot of courage

as someone who operates a business

to say to the public out there,

don't do it today because I'll feel bad

if you do it today at full price

when I know in my heart of hearts

that tomorrow you could do it and save 25%.

I would prefer that you wait until tomorrow.

That takes courage.

That, I think, is a lovely indication

as to the type of person that you are

in that you're not doing this

in order to take advantage of people.

You are trying to do this in a manner

that doesn't take advantage of people.

And so as the CEO of a multimillion-dollar business,

well, it is.

It is.

It is. I'm sorry, but it is.

Thankfully, you don't have any public stockholders

because they might get mad at you,

but it speaks volumes to the type of person that you are

in order to do what you just did.

Thanks, Pops. Appreciate you.

Thanks for putting this spotlight on me.

All right, folks, we'll be back on Monday.

I'll have a new background on Monday as well.

Dad, enjoy the upcoming weekend.

It's going to get up to 90 degrees here in Washington, D.C.

Today I'm going to go play some tennis tonight.

I think I'm going to be sweating my butt off.

It is going to be so hot,

but hold on for the weekend,

which I'm really excited about.

Enjoy the weekend, Dad.

Well, the good news is you could get on a train.

You could come here,

and it's only going to top out at 80 degrees.

And with those sea breezes,

it'll seem even cooler than that when you're playing tennis

or as many people do at the shore.

Pickleball.

Yeah, not a pickleball or more of a tennis player.

All right, Dad, I love you.

Enjoy the afternoon.

I love you too.

I shall talk to you later.

Thank you, everybody, for being here,

and we'll see you back here on Monday.

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Prices Hikes Are HERE | Volkswagen RINGS THE ALARM BELL | Episode 928

Honda Passport

Kia Sportage

Genesis GV70

Mazda Cx30

Tesla By Model

Mitsubishi Mirage

Nissan Altima

Volvo S90

Toyota Camry

About this episode

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