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Welcome to Daily Drive for Thursday,
September 18th, 2025.
I'm Kellan Walker in Las Vegas.
Today on the show, Nissan drops the ARIA EV in the U.S.
The Fed's rate cut could ripple to auto loans
and VW says its latest contract offer
to UAW workers in Chattanooga is final.
Plus, Asbury Automotive Group CEO, David Holt,
talks about the mergers and acquisitions market
and how tariffs are affecting the public retail group.
I think you'll see a high focus on used vehicles going forward
and really trying to manage our inventory as well
on the new car side to make sure, brand-wise,
our cost of sale is in line with where the market is.
Let's run through all the news you need to know
to keep up in the auto industry.
Nissan is thinning its U.S. electric lineup
in response to slower sales, tariffs
and the looming expiration of the federal EV tax credit.
That's according to a memo to dealers obtained
by Automotive News.
Nissan says it will pause U.S. market production
of its compact ARIA electric crossover
for the 2026 model year.
A person with knowledge of the decision
told Automotive News
that the Trump administration's 15% import tariff
has hurt the Japanese-made EV's profitability in the U.S.
Meanwhile, Nissan's U.S. sales and marketing chief,
Vinay Shahani, is leaving
after less than two years in the job.
Michael Souter, who previously held senior U.S.
and global after sales roles at Nissan,
replaces Shahani effective immediately.
Shahani told us at Automotive News
he has taken a job outside the auto industry
that will allow him to spend more time at home in Dallas.
He declined to disclose his new employer.
And Volkswagen Group of America
has submitted what the automaker says
is its last, best, and final offer to the UAW.
That's as contract negotiations
for the automaker's Chattanooga plant
reach one year without a deal.
The offer would increase wages by 20% over four years,
include a $4,000 ratification bonus,
a cost of living adjustment, and reduced healthcare cost.
If the contract is ratified by October 31st,
BW will add a $1,500 bonus.
Chuck Browning, a veteran negotiator
who was leading talks for the UAW,
said the elected bargaining committee is reviewing the offer.
And those are today's headlines.
You can find more details on all those stories
at AutoNews.com.
On Wednesday, the Federal Reserve
cut its benchmark rate target a quarter point.
It's the first rate cut since last December.
The Fed's rate target now sits at four to 4.25%.
Joining me now to talk about what this could mean
for dealers and car buyers is our own Paige Hotter,
who covers retail for us at Automotive News.
Paige, welcome back to Daily Drive.
Thanks for having me.
So Paige, high interest rates have been a big issue
for dealers who are already dealing
with affordability issues.
How could this affect auto loans?
So for those who don't know,
the federal benchmark rate set by the Federal Reserve
impacts the type of rate you can get
on loans for lots of things,
for your mortgage or for a car loan.
And since there hasn't been any rate cuts this year,
they've been sitting pretty steady and elevated.
And that interest rates is an important part
of the affordability equation when it comes
to buying a car because it really can impact
how high of a monthly payment you have.
And so the fact that the Fed announced this rate cut
comes as a point of relief for a lot of people
in the industry.
At the very least, things aren't staying the same,
which they have been for months on end,
but there's also the counterpoint
that it was only a 0.25 cut,
which probably will not bring auto loan rates
down all that much.
So at this point,
it is probably a little bit of relief,
but considering how high car prices are in general,
it's not going to be the huge dent in a monthly payment
or in your overall cost of buying a car
that would really be a game changer.
And we haven't seen tariffs drive up car prices yet.
Could this help cushion the possible blow
if those costs eventually get passed on to consumers?
Yes, and it's important to note that the Fed also,
at certain meetings throughout the year
when they announce whether or not they're going to cut,
increase or keep the benchmark rate the same,
they also announced projections for the rest of the year,
and that can give industry leaders a sense of,
okay, so we cut rates this month,
are we going to do that again?
And the Fed actually projected that by the end of the year,
the benchmark rate will be even lower
that they had projected in June.
And so we're expecting maybe two more 0.25 cuts this year
or another 0.5 cut.
And there are a lot of factors that go into that.
So that's not a guarantee that that's going to happen.
They are responding to the economy,
but I think at this point,
you can anticipate there will be
at least one more rate cut this year
or at least hope that that will happen.
And that would add even more relief,
if we do start to see tariffs tick up the prices.
But as I said, rate is just one part of it,
car prices are just high in general,
even without tariffs,
people are choosing shorter terms
which can drive up their payment.
And even another 0.25 cut
would not bring the rates down dramatically.
So I think it's probably going to be a bandaid
on a bigger wound.
And that was what a lot of my sources
were communicating yesterday around the cut
and saying like, this is nice,
it's not making the problem worse
and it'll help a little.
But in terms of affordability,
there's just like a lot of other challenges
and the threat of tariffs
is really looming in the background.
And when or how that will impact the industry
is so really unclear.
So we have a long way to go towards true
like ease and affordability in the market.
Perfect, Paige, thank you so much for joining me.
Thanks for having me.
Coming up, Asbury Automotive CEO,
David Holt talks about tariffs and M&A.
That's next on Daily Drive.
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Welcome back to Daily Drive.
I'm Kellan Walker.
Large public retail groups are contending
with all kinds of external economic
and political changes in 2025.
Last week, Asbury Automotive Group's CEO,
David Holt joined our publisher,
Casey Crane, on stage at Automotive News Congress
for a keynote interview.
They talked about the possible impact of tariffs,
the dealership M&A market and more.
Here's a piece of their conversation.
Most of the conversations we're gonna have today
are really with manufacturers.
There's a lot of complex capital
and macroeconomic challenges going on,
but as a retailer, you know,
you really sit in the front row.
You've got the intersection of the consumer
and the OEMs.
In July, you closed on one of the biggest acquisitions ever,
33 stores from Herb Chambers,
like I said, a billion and a half bucks,
all while broader outlook
across our industry feels a little uncertain.
Let's start there.
What gave you the conviction to make such a bold move
and what does it say about
how you see the future of retail?
Well, you know, I would say,
we look at acquisitions in the sense,
not so much of the size of the company,
but the assets and the locations of the assets.
And these groups are all about the dealers
that formed them and the cultures that they built.
So we try to look for an acquisition that we align with,
that we think that we could be a good student
of their business.
In the case with Herb, I've known him for a long time.
And, you know, we've been talking for four years
about putting this deal together.
I know the culture of his group,
I'm from the Boston area.
So it was just a good fit for us.
And from our standpoint,
you know, 50 states, 50 different franchise laws,
you really have to think about where you want to be
and not just acquire something to acquire it,
but you have to be a good steward of what that dealer built.
And that's our main focus when we look at acquisitions.
And then following up on that,
you know, how do you get really intensive
on the integration piece of that?
That is like lots of moving pieces.
Yeah, I use a standard line with our folks,
especially corporate development.
They tell me there's no bad deal,
only bad operators.
You know, it takes time.
It's easy to buy something.
It's much harder to integrate it.
I think everyone has a different philosophy.
For us, the first year,
we don't really make any changes
other than the gap accounting
which you have to do for a public company.
But we really just spend time to build trust
and alignment, figure out how they do business,
where their efficiency opportunities are
and how we can kind of be a good partner for them
to grow their business going forward.
So not much change in the first year
other than the accounting side of it.
And then after that, we collaborate, work together,
figure out how do we get better at what we do.
Yeah, you said before that Asbury's goal
is to grow close to 30 billion in revenue.
The Chamber's acquisition obviously gets you
a little closer.
What's the significance of that goal?
And you know, with Automaker,
with some of the framework agreements
and limits of the number of stores and a market,
what else do you need to add over time?
Or what is the timeframe to reach that goal?
So I'll start by saying 40 years in automotive retail,
you have to be a little bit competitive.
So when I put that number out there,
it was kind of based upon cash flow and working capital
and what we thought we could do over time
and how we could grow.
Didn't predict COVID and some other things
that were gonna happen along the way.
You didn't predict COVID?
I wish I could have.
Although it was a nice benefit for the industry
which is great.
You know, I'm less focused on the 30 billion
and more on the assets that we have
and the business simplistically is
taking care of our team members,
making sure that we're focused on our guests
in a franchise system.
The only differentiator you have
is the level of service you offer.
And then our partners, our partners are manufacturers
and our shareholders.
And a lot of times they're not aligned in what they want.
So I'm more focused on running the business well,
making good investments in the capital,
I mean in the facilities with our capital
and making sure we're good stewards.
I mean I spent a lot of years working in a dealership.
You don't want someone to come in to acquire you
that has a completely different philosophy than you do
because it becomes disruptive.
And me, growing up working for a lot of different dealers
have a lot of respect for the dealer body
and what they've built.
And I really focus on making sure
that we could be a good steward going forward.
Yeah, there's a lot of days when I read automotive news
and I'm glad I'm sitting where I'm sitting.
It feels easier some days to be keeping score
in the trenches like you all.
And this year particularly,
there's just been a lot of kind of macro issues going on.
Tariffs obviously being the biggest.
There's been so many different automaker responses
to the tariffs and you work with every OEM.
You also work with consumers every day.
Which strategies are you seeing working the best
and are there some that are maybe falling short
without naming names and kind of these early innings
of the game?
You know, I think the toughest part
about trying to run a business is
not knowing what the future holds.
And the tariffs have been unsettling.
They've been moving around.
You don't really know how it's gonna lay out.
And we're only now beginning to see what it's gonna feel
like going into the next few months.
I think the manufacturers have done a great job
at managing as best they can
in a very fluid market that's moving.
From a macro standpoint for the consumer,
the cost of sale for a new vehicle for us is over $50,000
compared to where it was in the upper 30s in 2019.
That's a concern.
It's a high number and I think it's outrun
where the income has gone.
So I think we're challenged in that area
and we have to work on that over time.
So managing our inventory as best we can.
It's a unique time too
because we're a little bit depleted with used vehicles
because again, we're cutting in that COVID period
where there aren't a lot of used vehicles in the market
but that gets better in 26 and moving forward.
So I think you'll see a high focus
on used vehicles going forward
and really trying to manage our inventory
as well on the new car side
to make sure brand-wise our cost of sale
is in line with where the market is.
I know it's early but any sort of outlook
on servers and parts as we move through this?
Yeah, so I think you have to be optimistic
to make your living in retail automotive.
I'm really bullish on the next six to 10 years
with parts and service.
The technology and the vehicles get much better.
The skill set of the technician has to be higher.
It bodes well for the franchise dealer
compared to the independent.
Between the mix of EVs, hybrid and combustible engine
and the average age of the car out there,
I think those are all real telling signs.
Parts and service is gonna be a great backbone
for the dealer for a long time.
Our average miles coming through the service drive
is over 70,000 miles for the whole company,
which is great and some stores are over 90,000 miles
and other than saying that we're retaining the customer,
it tells us that the relationship is staying sticky
so hopefully we'll be able to sell them a car
when they're ready.
Yeah, you guys like to talk
about leading the charge in digital retail.
Maybe share with the audience a little bit
about how you're using technology
and partnerships to keep the model competitive.
We read about it every day.
You have to be leading edge these days
to stay competitive.
Do you see a deeper collaboration maybe
between auto companies and tech firms
and is that necessary to meet your customer's needs?
It's a complicated subject
because every manufacturer.
They're all complicated.
This one is really complicated
because every manufacturer is trying
to build their own transactional tool.
We built our own as well.
Picture if there was 30 different Amazons out there
that operated 30 different ways,
how fragmented that would be.
I think we have to have a more unified approach
to how we think about it.
You look at the success of Carbon
and other companies that are transacting online.
The technology is catching up to the space
but it's fragmented in its approach
and still a lot of dealers are using it more
as a lead generator than an actual transactional tool.
And yet all the feedback and the pain points
are still the same as they've been over the years.
I think the dealer body is a very resilient model
and it shows that every time
there's a down economy or something happens
but we shouldn't have to wait
for a tragic event to happen.
Back in the 80s and 90s,
we lost the parts and service business
because we weren't focused on maintenance back then.
Quality cars weren't great then
so we're doing a lot of mechanical independence came
and took a lot of our business away.
I think we really need to embrace this online transaction,
make sure we're priced right online.
You could have the nicest baseball swing in the world
if you don't swing at the right time, it doesn't matter.
So pricing, transparency, visualization,
letting them pick their lender,
offering them FNI products
that are more built to their lifestyle.
I think people love to buy things,
they hate to be sold things.
And I think we have to be more focused
on getting away from the past
and I did FNI for seven years.
I think that process needs to evolve
to really meet the customer where they are today.
Yeah, stay on that for a little bit
and talk about the way that the dealerships
and the manufacturers have to evolve
with co-development or revenue sharing,
how AI is gonna affect your business, their business,
connected vehicle services.
Is there an opportunity to do more together?
There's always an opportunity to do more together.
You know, I think some of it, like I said earlier,
I think simplification really benefits
the consumer and transparency.
And I think a lot of OEMs need to work together
for simplification on some of that.
And I think the dealer body does as well.
I think we'll all benefit from it.
We're all tinkering with AI now.
We're using it in parts and service.
We're using it in sales.
We're using it on the accounting side.
We're developing it
with inside our transactional tool at Click Lane now.
I think that's gonna continue to evolve
and I think that'll get better over time
once it makes it more efficient.
We're actually building it now
to sense the tone of the conversations as well,
not just the words, which makes it really important.
And for us, from our standpoint,
our conversion rates were very focused on it in service.
Four months ago, we started it.
We were booking 5,000 appointments a week
through this AI technology.
We're now 34, 35,000 appointments a week
and it's continuing to grow
and the conversion's getting better
and the technology's getting better.
So I think that's a benefit for a dealership
because at the end of the day,
we have to find a way, in my opinion,
to be a flatter organization, to be more transparent
and really transactionally,
the fewer people involved in the transaction,
the better the experience is gonna be.
I think that transactional time needs to be 15 minutes
and the rest should be around the experience of the vehicle.
Asbury Automotive Group's CEO, David Holt,
spoke with our own Casey Crane
on stage at Automotive News Congress in Detroit.
That's Daily Drive for today.
I'm Kellan Walker.
Thanks to Automotive News executive producer, Jake Neer,
as well as our own Paige Hodder,
Irvash Kakarya and Jack Wallsworth
for their reporting for today's podcast.
You can get the latest news on auto retail,
manufacturing and everything happening in the auto industry
at AutoNews.com.
Come back tomorrow for a conversation with Fran O'Hagan
and Cam O'Hagan of Pied Piper
about how dealerships are doing
when it comes to getting service appointments
scheduled online.
If you look at the rankings of the brands
for their web performance,
the ones at the bottom also tend to be,
let's call it negligent
and not give their customers a way
to easily change or cancel the appointment
without having to call someone.
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 never miss an episode.
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