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Sept. 29, 2025 | Market resilience about to be tested; JLR restarts some production

Automotive News Daily Drive Sep 29, 2025 23 min

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About this episode

Resilience in the US auto market is under scrutiny as Jaguar Land Rover restarts production post-cyber attack and First Brands files for bankruptcy. Experts discuss the impact of expiring EV tax credits on sales, with expectations of a surge in EV purchases before the deadline. The panel highlights consumer psychology shifting towards urgency in buying, driven by fears of rising prices and tariffs. Despite challenges, analysts remain optimistic about overall market strength, though a softer fourth quarter is anticipated as incentives fade.

Topics: market resilience EV sales cyber attack recovery bankruptcy consumer psychology tariffs impact production challenges tax credit expiration

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This podcast is brought to you by Proton dealership IT experts in dealership cybersecurity and IT management. Interested in a free cybersecurity compliance or IT consultation? Visit ProtonTex.com. That's PRO-T-O-N-T-E-C-H-S.com. Welcome to Daily Drive for Monday, September 29th, 2025. I'm Kellyn Walker in Las Vegas, today on the show.

The production back up after its cyber attack. The parent of a couple of major auto suppliers, files for bankruptcy, and EVs are expected to bully third quarter sales results. Plus, we'll hear from a panel of experts about how resilient the US auto market has been so far in 2025. I've been saying all year long it sucks to be a manufacturer, and it's also this year's sucks to be an economist. Let's run through all the news. You need to know to keep up.

In the auto industry. Jaguar Land Rover says it will restart some of its manufacturing operations in the coming days. That's as the automaker begins a phased recovery following a cyber attack earlier this month.

The announcement comes after the UK government agreed to back JLR with a $2 billion loan guarantee to help support its supply chain in the wake of the production shutdown after the attack.

On top of that, JLR is also trying to raise a $2.7 billion loan from global banks. The move is expected to show JLR has liquidity to tide over revenue losses.

US supplier First Brands has filed for Chapter 11 bankruptcy protection. The parent of auto suppliers TriCo and Fram is burdened by heavy debt from a flurry of acquisitions and stressed finances.

First Brands said in a statement that it has obtained $1.1 billion in debtor in possession financing from its first lean lenders to support ongoing operations.

General Motors plans to reopen the engineering center at its Warren Technical Campus near Detroit. That's after a full remediation of water systems in the building where the bacteria that causes Legionnaires' disease was recently discovered.

The automaker said employees can return to the coal engineering center on October 1st. And those are today's headlines. You can find more details on all those stories at autonews.com.

In a minute, we'll hear from experts about how resilient the US auto market has been so far this year. Our own Lindsey Van Hully moderated that panel at Automotive News Congress in Detroit.

And has a story today about what we expect to see from third quarter sales results this week. She joins me now to talk about it. Lindsey, welcome back to Daily Drive.

Hi, Kel, happy to be here.

So Lindsey, you wrote that EV sales are probably going to buoy third quarter US sales. I assume that's because of this rush to buy EVs before the federal tax credit goes away after tomorrow.

That's a big part of it. Talking with analysts ahead of the third quarter sales results this week, that's one thing they all pointed to really a surge of interest in EVs before the end of the tax credit on September 30th.

You know, that $7,500 federal credit has helped support purchases and leases of new EVs. And a lot of analysts are expecting that is going to result in record market share for EVs in third quarter.

And how do those results help set the stage for what we're about to hear from your automotive news congress panel about what experts have been seen?

You know, when we were on stage at automotive news congress this month, the first question really I wanted to ask was just where is the market right now? You know, how is demand holding up and what's it looking like? And really the consensus was it's been a pretty resilient consumer.

There's been a lot of momentum in the market, a lot of consumers are still looking to buy. There was a point made about, you know, for a lot of the time there was this thought that, you know, prices were going to go up, you know, that, you know, maybe maybe they'd be lower in the future.

And now there's this sense that, you know, prices are going to go up. And so now might be the time to buy. I think people are concerned about, you know, the impact of tariff pricing and costs that are going to be eventually passed down.

You know, analysts and economists on stage talked about, you know, we haven't really seen that yet. I think to the degree that many people had predicted earlier this year.

But the question is, you know, does that ultimately happen and when and sort of that sort of led to consumers thinking, you know, if prices go up, now might be the time to buy. And that might be one reason why we've seen a pretty resilient market so far this year.

And what are experts expecting for the rest of the year?

You know, it's looking like the fourth quarter is going to be a little softer, especially when it comes to EVs. I think there's really no question among anyone out there that if the text credit goes away, there's going to be an impact on fourth quarter EV sales in particular.

I don't think anybody knows the degree to that yet. There's been a lot of discussion about, you know, we're going to see what natural EV demand settles out once that incentive is gone.

We don't know necessarily, you know, what other automaker incentives might come in to offset that or to mitigate that. But it seems pretty likely to analysts that we're going to see a softer fourth quarter.

Overall, though, they're still expecting a pretty solid year. I think even if the fourth quarter is down a little that the first three were pretty strong.

So, you know, I think that's what everyone's going to be watching really is what happens with EV demand once that credit goes away.

Perfect. Lindsey, thank you so much for joining me.

Thanks, Kyle.

Coming up, Lindsey speaks with experts about how tariffs the end of EV tax credits and other factors have tested the US automarkage resilience so far this year.

That's next on Daily Drive.

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Welcome back to Daily Drive. I'm Kellen Walker.

Economists say the US light vehicle market has been resilient this year, but they expect tariffs, expiring EV tax credits, and other factors to hamper affordability in the coming months.

Our own Lindsey Van Hully spoke with experts about all of it during a panel at Automotive News Congress in Detroit this month.

Jessica Caldwell is Associate Vice President and Head of Insights at Edmonds. Emily Kalinsky-Morris is Chief Economist at Ford and Jonathan Smoke is Chief Economist at Cox Automotive.

Here's a piece of their conversation.

To start, I would love to just sort of set the scene. And, you know, how is the new vehicle market looking right now?

You know, through the first half of the year, now that the third quarter is coming to a close, Jonathan, we've recently gotten some August sales numbers.

What does the summer look like from a demand perspective?

The summer has been strong, really, defying a lot of odds and expectations that we would be seeing slowing this year.

And I think it's a reflection of multiple things. One, I think what David was saying earlier, the manufacturers have not been quick to make snap judgments about raising prices, changing production and deliveries.

So, the market has been relatively consistent, rather than declining from a supply perspective. And pricing has not turned negative.

And I think what's underlying in this strength is really a substantial amount of pent-up demand from vehicles that were not sold, new or used over the last four years.

And you combine that with the psychology of the buyer, be it a consumer or a fleet customer, we've been living in a world for four years that the expectation was a vehicle will be cheaper in the future.

Because we've gone through the inflation and the supply chain crisis, we were in a world where everybody was convinced interest rates would be much lower in the future than what we were dealing with.

And I think this year with tariffs, the psychology has flipped to a perspective of no, prices will be higher in the future, and we can no longer bet on interest rates being better.

So this summer, if you think about people buying vehicles, the deals that consumers and fleet buyers have been seeing this summer, probably represent what they believe is the best deal they're going to see for some time.

And I think it explains some of the urgency and strength that we're seeing in the market. And in our data that we follow weekly, we have yet to see a shift in that pace.

August continued to be very strong until the very end, and September is starting well as well.

Of course, we've got the little EV piece that's part of that excitement too, which I know we'll get into.

But it's certainly a scenario where the vehicle market is holding up, and really is a really important part of the macro discussion too, because we wouldn't be seeing the economy drive off a cliff if the vehicle market is staying as strong as it is.

So it makes me more optimistic rather than pessimistic.

It was just the fact that there was such a harsh reality in March, because all of the expectations, and you probably remember all the headlines, they're probably not in mode of news.

That prices were going to be up, remember 515, I think someone said 20, hope you're not in this room.

But a ridiculous amount of money, $20,000, and so people, understandably, I would imagine would be quite concerned.

So maybe the reality that they're facing now, that that didn't happen, and you were seeing kind of a regular cycle, is giving them the indication that perhaps it is an okay time to buy, because what the worst could happen in terms of buying a car, didn't necessarily happen.

And prices aren't have skyrocketed at $10,000, $15,000, so it's almost a relieving factor, I think, for the consumer.

I think what's interesting though, is when you look at consumer sentiment, either in aggregate or specifically around vehicle buying sentiment, for example, in the University of Michigan survey, you would not expect to see the saw running where it has been the past several months.

So there's still this disconnect sort of between how consumers are feeling and what they're doing.

So they may be rushing out to get what they think are the last of the deals.

They don't seem to be particularly happy about it.

With that demand that we're seeing right now, and the strength that the market is holding up, how then is inventory?

When they're there, when they're looking for the vehicle, that they want to take advantage of now, because of what the market might look like in the future, what are they finding on the lot right now?

I think that situation has definitely improved. So there was a period during 2021, 2022, when we had to sort of shift from forecasting demand for casting supply essentially.

I think we're moving out of that era. Certainly there are still pockets. I'm sure everybody's not finding exactly the perfectly equipped model that they're looking for when they go out in the dealer lots, but at least in our view of the data, it looks like things are.

Let's call it a new normal, but looking pretty normal.

The strength in sales combined with some modest declines in production, we monitor what is actually showing up on dealer lots from a delivery's perspective, and we are seeing that down about 3% year to date now compared to where we were a year ago.

So you're seeing inventory deliveries slow down, but yet sales are stronger, so we are seeing supply tighten a bit.

It's nothing like it was back in 2021 or 2022, but it's created what I'll call this summer, particularly a love roller coaster, because when you have strength in sales, because interest rates come down or incentives are strong in one month like July,

as tighter in August and incentives dial down, and it has an impact on the market and the pace of activity that we see.

But I think it's proof that there is a lot of pent up demand, but the consumer is very selective and is really wanting to be convinced that this is a good time for me to purchase.

And so I think you see ebbs and flows week to week, month to month, as a result of that, and I believe we're going to be locked into that environment because this industry historically until the pandemic was consistently oversupplied, and very cyclical with too much capacity.

And we're in a world where the facts point us to a likely supply constrained environment for the foreseeable future in both new and used.

It should get a little bit better going forward, but it's not going to be a crazy changes overall. And generally, that's probably much better for dealers in particular because that environment creates more of an ability to defend the margins on the vehicles.

Just anything to add on that?

Well, I was just going to say to that, I mean, you know, in terms of the consumer kind of coming to market at this point, they are.

I wouldn't say they're necessarily super picky. I mean, of course, I think they're all looking for buying signals, which is really important.

But in terms of like when we see consumer behavior through our site, for instance, they're sometimes easily changeable in terms of what they're looking for.

Not necessarily like so many use of like filters, like I need to have this specific spec.

It seems like people are more willing to kind of ebb and flow, especially after the past few years we had when supply was so incredibly tight.

So it seems like there is definitely a willingness to kind of go and kind of seek out the best deal. It may not be your number one top choice.

That's what you want, of course, but it does seem like consumers are perhaps a bit flexible, which is good.

I think for this environment that we're seeing right now.

From what you can tell, how is the US in any way different from what you're seeing in other markets globally?

We generally look at the US, but I mean, I think I've told you guys already I had a sabbatical so I was off for eight weeks this summer.

So I went to a lot of different countries.

And this is probably the first time in so long that you go to other places and you don't recognize a lot of the vehicles.

They just look a lot different and you would think that in some countries, BYD is the most popular vehicle brand on Earth because they're everywhere.

So I think what you're seeing here is it definitely feels like a departure from the rest of the world, which I imagine is a hard thing for automakers to deal with at this point in time of this market being different.

But it definitely does.

I think at the macro level, we're seeing some of the same trends, certainly the behavioral factors that Jonathan described in terms of consumers being sort of conditions to say this might be the best deal.

That sort of behavior does seem to be in place.

And I would say in Europe, for example, there is a bit of a similar trend where sales are doing better than you would think if you looked at all the macro indicators sort of in isolation.

Just making up to the audience that we do have our Slido screen, please feel free.

Any questions you have about the market for our panelists today, please feel free to submit them there.

And we can definitely get to them throughout the conversation.

So I want to turn to tariffs.

It is unquestionably just a major change for the industry this year.

Automakers have talked about absorbing billions of dollars in tariff costs.

Some brands have mentioned dropping vehicles for the US market.

Others have offered incentives and playing pricing deals, really to kind of encourage consumers to consider buying in this point.

There's a lot, I think, to the points that you made earlier, a lot of discussion about where prices were going to go.

What availability was going to look like.

Have we really begun to see an impact on that yet here in the US?

Jonathan?

I think we're starting to see small glimpses of the impact, but it's been slow going so far.

And part of that has been, look, while the tariffs were implemented at the beginning of April, we really had inventory that was unaffected.

And so a lot of the data points like average transaction prices and what we've been seeing were reflective of.

It was really going to come with the model year shift.

And now we're at about a quarter of what dealers have on their lots being model year 26.

So we are seeing more of an acceleration in the increase in MSRP and invoice and average transaction price.

But it's still well within what is normal for inflation as a new model year comes out because we're only around 3% in that increase.

And again, it sort of goes back to the consumer.

I would argue that if you had perfect data, you would see that consumers were expecting 5% or more price increases when reality were only seeing 2 or 3.

And it relates to that psychology that I was mentioning before.

But don't get me wrong, we are all looking for these changes to come.

The number one rule of economics that I was taught in very first economics classes, there ain't no such thing as a free lunch.

And if the government is collecting 100 billion in revenue give or take from autos and parts, then that is going to impact prices and or the performance of the stakeholders in the business.

So inevitably that leads us to believe that there will be a cap on how large the market can be contributing to what was already an affordability problem in the industry in terms of getting back to a 17 million or more kind of market being pushed well into the future.

But the decisions that manufacturers are making, I mean I've been saying all year long it sucks to be a manufacturer.

And it's also this year sucks to be an economist so Emily needs to get all of the drinks from everybody this evening.

Because I'm working on this analogy but to me it's like a multi level chess game where you can't actually see the board and all of the chess boards are tilted.

In terms of the decisions that you need to make in the pieces if you're trying to play this game.

So it's slow going and as a result I think it's making it a little bit easier for the consumer and for other stakeholders to navigate.

We're not seeing crazy changes and at the end of the day the US is a really important market.

I think it's absolutely telling that with the exception of some EV decisions we're really not seeing major announcements of that's it I'm out of the market or that's it I'm out of this segment.

And I think that's a testament to the likelihood that this is going to hold up.

And I thought you're going to say the trend is your friend. That's the one that that comes to my mind because of what you just described.

I think we don't entirely understand the mechanisms that are going to get us there at this point because there is so much uncertainty and I'm sure we'll come back to that on multiple other topics today.

But there is a tendency for us to sort of find that middle.

But we found our way back to the you know the upper 16 million unit range.

I don't think a lot of people thought we would be there at the beginning of the year but these other adjustment factors you know the margin absorption or whatever is keeping those tariff costs from passing through some of it is the fact that we don't know what the tariffs are going to be yet as you alluded to in the final reckoning.

I think generally speaking a forecast that's not at either end of the extremes is probably the best chance of being right even if you don't know maybe why it's going to be right.

Emily Kalinsky Morris is chief economist at Ford Johnson smoke is chief economist of Cox automotive and Jessica called well is associate vice president and head of insights at Edmonds.

They spoke with our own Lindsey Van Hully at automotive news congress this month in Detroit that's daily dry for today I'm Kelly Walker thanks to automotive news executive producer Jake near as well as our own Michael Martinez for his reporting for today's podcast.

We also have reporting from Kurt Nagel of our sibling publication Prince Detroit business you can get the latest news on us sales results supply chains and everything happening in the auto industry at auto news dot com.

Come back tomorrow for a conversation with Mike Murphy of the EV politics project about the state of EV demand as federal tax credits get set to expire this week.

If we do have a sales collapse in new EVs which again I'm not sure we will but if we do those plants are going to be running at low capacity and we know in the auto business if you got a plant running at low capacity shut down the plant.

We'd love to hear from you let us know what you think of the show on the topics we covered today.

Send us an email at daily drive at auto news dot com or leave us a voicemail at 313 or 444 2774.

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