The Perfect Storm in Automotive: Tariffs, EVs and the Used Car Surge

Zach Fritz: Welcome back to the Automotive Informants where we break down the latest industry news and give you our hot takes. I've got my buddy Chris Martinez with me. Thanks for being here, Chris.

Chris: thanks for having me on Zach. How you doing, man? You did all right.

Zach Fritz: I'm great. I'm feeling pretty sparkly today. It's been a good morning so far and with the latest news, I think we've got even more to talk about. Have you seen Hyundai's or Genesis, sorry, their latest $105,000, let's call it what it is, Hyundai?

Chris: You know, it's interesting because, know, when you got cars. price similar to an S class now and you're looking at you're like, Oh my God, but I had someone comments on, actually posted about that just today or yesterday.

And he said, look, Chris, there's a, that's not even the most expensive one. There's actually one that you can get to one 20. And I was like, man, I remember growing up in the car business. Like when I first started 2003, if anyone mentioned the word Hyundai, everybody kind of went, know, it was, it was weird now.

know, competing up there with the the S class and technology is pretty amazing. And they're doing a lot of cool things technologically. So it's Yeah, I seen personally. I don't know what it looks like.

I don't know what drives like so do know those act that they are doing a driving ⁓ in in China, I believe or in where's it at wherever they're from? What was it Korea or what's what's on? ⁓ Where's Hyundai?

You don't Or they manufacture. Let's see Hyundai. Let's let's let's look Hyundai manufacturing.

Zach Fritz: Really? I'll put me on the spot. I thought Korea for some reason. I may be wrong. but I think that goes further to speak towards how little we pay attention.

Chris: Let's see. Yeah. It's South Korea. That's the other headquartered in, South Korea. So, and they've done a good job though. I mean, it's, ⁓ an impressive car. like the look of, of some of them for sure. ⁓ but how do you change that brand? Like, I guess your, generation or even prior now or earlier now, or they look at that and you're just like, ⁓ my God, it's a nice car. Right.

Zach Fritz: I mean... Yeah. That big grill, think, is what does it for me. Yeah, it's challenging. I I grew up in the generation, right, where Hyundai, like you said, there was this stigma about it, right?

It was kind of the... don't connotate Hyundai with luxury or a nice car or something that's even aspired to. I mean, even Conway, yes, his song, or his song Gold Digger talks about Hyundai and not in a great light.

So that was what we grew up with and that's... still what's stuck in my head. mean, hence we didn't even know where Hyundai was from. So we had to Google that. That's how much we've cared about them in the past, but I think they're kind of now with these six figure cars showing that they might be a brand to be contended with.

Chris: think so. mean, I have you seen some of that Chinese tech that they're doing where, um, like people, they've got the summons, which I know Tesla has, but then they also have where you can like swipe and the door will open or close.

And, and I'm just like, and I know Mercedes has that technology with gestures and stuff where you can kind of go like this. And all of a sudden the sun roof opens just by you, you know, doing the little gesture like that.

Um, and then the same thing where you can kind of swipe to the right and the door will open.

Chris: And so that all that technology, mean, it's, it's cool. I like it, you know, but think, ⁓ you growing up when someone said Hyundai, everybody kind of went like, Hmm, you know, but then started throwing that a hundred thousand mile warranty on there and trying to rebuild the brand.

so they, you know, I think, I think they're doing, doing good at what they're doing. Now they do the standalone Genesis and, That's interesting. so hopefully they're, they're trying to compete with a, Lexus and, you know, infinity Acura, but you know, any more though, infinity and Acura, you don't hear them as much as you would hear Lexus now, right?

Zach Fritz: Yeah, it's interesting. I mean, it is because I remember, like, as somebody who I've owned a lot of Accuras and a lot of Infinities, you just don't hear about it, right? Like, what is Infiniti even doing these days? I can't think of the latest problem.

Chris: You know, the latest was they, were going to go ahead and, they, they reduced their forecast by like 10 % or something and said, Hey, we were only kidding. We're actually going to do this, this amount. Of course they didn't say it like that, but you know, that's, that's kind of what a little hat ticket, but you know,

Zach Fritz: Really. They can increase the forecast if they do something worthwhile. have they done recently? I haven't seen any new Infinity News and then Acura has just kind of been sedan focused lately from what I've seen. There's really nothing crazy going on there.

Chris: Yeah, I haven't I haven't heard of anything seen them anything. It's been kind of one of those just real let's kind of like Volvo, right? Like you don't hear about Volvo as often. remember when they were in the movies with the movie Saint and I remember thinking, man, that's a cool car. Val was in that movie and I thought, man, that's a cool car. But outside of that, I haven't heard about them in a while. So but speaking about, you know, ⁓

Chris: reductions in, in forecast. What'd you think about that, that for bid for aluminum tariff relief that didn't happen where Trump admin up rejecting it.

Zach Fritz: Boom. this could get spicy. So it wasn't just Ford, right? So it's an American manufacturing facility for aluminum that caught fire, right? So they're not due to be back up and running until I think June.

So Ford wants to be, know, the tallest nail usually gets hit first. They want to, you know, cause a ruckus and complain about it. And I understand, you know, asking for relief because we've seen government bailout like GM.

But when it comes to Ford, I mean, I also understand why they're getting rejected. Ford is that brand who wants to come out and say, ⁓ we're not being supported. The American taxpayer is not supporting and helping and relieving our business.

Well, they already got a lot of cuts with national security cuts on the tariffs. So they've already been taken care of at our expense. They're not doing us any favors and they're also the same company who wants to say, well let's manufacture in Mexico, Canada, let's invest in China.

I mean if you want to be the American truck brand in Ford Truck Month yourself into waving the American flag and being this patriotic brand, why don't you turn back around and invest back into American manufacturing before you go and complain that the American taxpayer is not bailing you out.

Chris: Well, I see two sides of that on the other side of that is site one. I can see what you're saying. think, I think what you're saying is pretty valid, but I do think that when you think about all the American people that are working at dealerships that work in the factories, that because of this fire, they, they still need to build cars and they need to feed their families and do all that.

Chris: Now it's going to cost the company even more money by getting aluminum from outside of the U S and so then now the company can't be as profitable and there's a lot of different, you know, people that can affect, well, does that mean, okay, now we've got to reduce staff.

got to, ⁓ the thing they're going to do is how do we cut the, cut expense so that we can afford these aluminum. ⁓ body style or whatever, aluminum for these forks. And the challenge I see there is that now it's gonna cost more for the American consumer, right?

So it's not as easy as that anymore. ⁓ feel like maybe 50 years ago or even 100 years ago, was a lot easier to kind of have those silos and what we're doing. But for the last 20, years or so, 30 years, it's all about globalization, markets, it's been all of that where now it's now trying to say, look, we need to do things in our country versus trying to integrate with everyone else's.

And same thing when I think about technology today. Technology, everybody's got open APIs, open access, and I think that's good. get those legacy companies that have data and are safeguarding it and don't let you integrate as easily or make you pay to play and just costs the dealer even more money, then you know that's to me I look at it the same way now like hey they want you to you know pay tariffs so that you can use their API.

You know I'm saying? It's not any different in my mind as what's in the technology side.

Zach Fritz: Do you remember whenever, this was 20s or 30s, whenever Ford went out, and I can't remember if it was, it was either South America, Australia, or Africa. can't remember which continent it was or country.

And they went out and they created all these different rubber manufacturing plants, right? the globe, but that's what they did to source their raw material. So Ford, why don't they take all the money that they've made and invest into aluminum manufacturing here in the US, create American jobs instead of, again, outsourcing to other places.

you can't call yourself American and then ⁓ you know, follow the manufacturing loopholes where you can stamp the flag on it when it's really not even made here. And that's what they need to get back to.

So that's why I don't have very much sympathy for their situation. Workers, yes.

Chris: where, ⁓ does, where does aluminum come from? And I'm, I'm ignorant this part. Like, is it something that just can be mined here in the United States? Or is it something that's mine somewhere else? Like, what does that look like?

Zach Fritz: mean it's kind of like with anything. mean you've got to... when you're so focused on just trying to get it as cheap a cost as possible that wherever you're gonna go get it from I mean that's also why we've opened up mining and production here in the United States. I mean that's the good thing is we're creating American jobs but at the same time it's not always the most cost-effective. ⁓

Chris: Wait. Well, here's the here's your answer to that. So this is on a basic Google search, right? So yes, aluminum can be mined in the US, Arkansas, Alabama, Georgia. The problem is, they do have small deposits, but they're not economically competitive for producing metallic aluminum, leading the US to focus on recycling and importing. that's

Chris: We, we, we import 99 % of the aluminum and yes, we can manufacture it here and do like, you know, do whatever we need to do with those, at the Ford manufacturer, for example, but it still needs to be, you know, that's of, you know, what happened, right? We, at one we were like the industrial age, we had steel, we were doing, you know, killing it and then. Now we just it was cheaper to do it somewhere else. You know, and that's

Zach Fritz: Ford painted themselves into a corner. So with the aluminum argument, 100%. However, Ford chose to go aluminum because it was cheaper for them to manufacture, they could get it cheaper than American steel, and the consumer feedback on those aluminum bodies? Everyone hates them. They dent like crazy in one hailstorm and will total those trucks. So maybe Ford's move is to go back to American steel.

Chris: more expensive, I think, right? Isn't steel, which which one's going to be more expensive, which one's heavier, gas ⁓ aerodynamic, guess, know, these are ⁓ how can it it's easier to manipulate aluminum than it is steel, I imagine. So yeah, there's a lot of in that. And so

Zach Fritz: Yeah. Well, we lifted all the carb or happy standards.

Chris: it's not as easy as hey do this I mean you could you don't know what the long-term ramifications are and and all of that but ⁓ just look at this point like with aluminum they're already as expensive as they are today I mean you got I mean the King Ranch edition what what's that cost today like the the Mac Daddy Ford

Zach Fritz: They could just start getting on it. six figure drop all day. Yeah.

Chris: Yeah, all day, right? Especially if you got you know, if it's diesel 2500, ⁓ 250. ⁓ what does that do for the use car market? And you know, there was another ⁓ CNBC, I think they were a little late, because I think I shared this one like last month. But they it up again. And they said use car prices rise to the highest point since 2023.

Chris: And, and yeah, what do think about that? Especially, you know, talking about adding steel and all that? What would that do to the use car prices?

Zach Fritz: I mean, I'll hold off on the steel one, but yeah, used cars, I can confirm that. I was on a call with a client this morning and they were talking about, we've had the hottest three months we've ever had.

I mean, way above projections, right? So I think that that's well supported. And I mean, the addition of steel back into it, it's, in my opinion, steel would make for way less of a throwaway vehicle. which is what we've run into, which is why used car prices are so variable, right?

You get more consistency across it, but it's also, I you look at the recycling side too. I mean, a little bit easier to recycle, easier to work with, broader case range with it. I mean, it's tough to say.

Chris: Well, I think, use car prices in general, are pretty high. And, ⁓ know, let me start with by this, a friend of mine said, Hey, look, in March, not March in I praised my car at Carvana. was like 30 grand or I forget exactly what the numbers were, but He said, now looking at him today, that same truck is $38,000.

So it went up in value $8,000. And I was like, I was pretty shocked for him to tell me that. And I was like, man, I knew the prices that had been coming up, but that just seems a little excessive, right?

So on the one hand, And this is like from a strategy point, I'd always, you know, the current inventory, you may need to reprice them and raise those prices up, because you're going to have to go it's it's not as easy to replace that car.

So that way, in the short term, you can actually make some margin of that. ⁓ the other hand, used car prices, if they're steady like that, it's not good for ⁓ the American If you're if you're trying to buy, you know, something that's if you're price conscious, like it's it's not good have these high prices.

And then number two, if you went down the path of everything's got aluminum and all that, it just cost even more like give me an example. There was an article. Yeah, well, an article I read the other day.

Chris: Um, any more collision departments are like basically just totaling cars because like an easy fix that normally would be easy, but most body shops today, instead of like Bondo in a car and doing all that, they're just replacing parts and they're not really, uh, body shops as much as I feel like in my mind, the body shop was So, now it's more, it's getting hard.

So when you think about cars getting totaled today, what would, like, you know, had those kind of things, breaks the price of everything, everything would be totaled. That little fix that should have been a little fix turned into be something even more exorbitant that now the insurance company is writing that off as a total loss.

And you're like, man, this is still a good car. It was just a side swipe. Like, you know?

Zach Fritz: funny whenever I was in the collision side of the industry you know I spent four years doing that even just taking the ASC certifications right and there's an entirely different class of repairs for aluminum components right the way you weld it the way you shape it and the big thing that I learned was aluminum is kind of a one-hit wonder you think of an aluminum can the moment you crush it and then try to pop it back out, you're still going to see those wrinkles and ripples.

It just kind of deforms. Steel, you can rework that, reshape that multiple times and repair it. Aluminum, it's and done for the most part. And think that's what we're seeing supported by that. maybe in their best interest, ⁓ residual value sake, Ford ought to look at switching over to steel again.

Chris: that's it you make make a of things make sense right like I think about my cyber truck. Maybe it's so expensive because it has that steel all the way around. It's not as easy to, you know, manipulate steel and like they had like I scraped the truck because like an idiot.

So this happened, know, like a month or two after I bought the truck. Okay. And this is before I even like, was, I was just backing out of a, out of a parking spot and this really oversized van, was an extended van at this big old.

And so I was talking like, you know, usual and, know, talking to my family and as I'm backing out, I must've mis-gaged how far back I was going. And so then I looked to the back and I was like, wow, I almost hit that van.

thought it was a normal size van, but this thing was like one of those very long vans. So then as I'm turning away the truck or from the van, there's this hook. I don't if it's a hook or not really a hook, but it's like this like.

Chris: You know, when you open those cargo vans, they can extend out a little bit further because they have these on the joints, and not joints, but the hinges. Yeah, right. So those hinges were sticking out like two inches. And I didn't see that. And I got so close to the van because it was such a long van.

Chris: So sure enough, I I'm driving past it and it's sticking out and then scrapes my truck. I'm like, my gosh. I was so mad. should have just let the AI or the Tesla, you know, ⁓ cyber drive itself, usually, you know, the patience for me to like, let the, the Tesla get out of the parking lot. It takes its time and goes a little bit. I'd rather just get on the road and hit start. ⁓

Chris: Yes. Well, going forward, guess who who now only relies on the Tesla trucks are so that that's me this guy just hit start as soon as I get in the truck, I hit start because that's never gonna happen again, sir. And that

Zach Fritz: it's I mean it's... But you can fix that.

Chris: They fixed it, took a couple of weeks and you can even tell nothing really even happened to it because it's wrapped anyway. but you know, ended up costing not as much as I thought it would. ⁓

Zach Fritz: funny like versus steel like this is a quick comparison so I've got a truck it's all steel bodied and The other day I threw a ratchet strap over and it dinged the bedside and I just got behind it with my PDR tools and popped it in and you can't tell at all.

But I've also been in loaner vehicles, know, F-150s that are on aluminum bodies and you do that to those, there's no popping it out. It's gonna be rippled and distorted and you've got to shrink and mess with the metal so much where you mostly get to the point of paint work.

mean, just look at insurance statistics across aluminum body vehicles, And hail storms, especially, know, Colorado, I mean, it's, you know, this is the season where we get giant gorilla hail and it totals out aluminum body vehicles.

Chris: Yeah, I could see that. here in Texas, there's a lot of hell too, but you know, I think we got one and I really wanted, this is the one, the story that I really wanted to talk about because it really, it's near and dear to the heart.

it actually really upsets me more than anything in life. but they're proposing this new vehicle tax model. And they said basically. because EVs have dropped those gas taxes that they've been happily for years, it's eating into their budget ⁓ or their expense, So now they wanna propose this new tax where based on the vehicle's weight, they tax you on that every year, right?

So now we're getting a property tax. Next thing you know, they're going to start taxing you because you're using your iPhone or you're using your TV every year. They're going to weigh your tennis shoes because you're walking too much and you got to get taxed on your tennis shoes every year.

Chris: Well, you pay the sales tax, that's one, but then they want you to keep paying taxes on it for the rest of your life. So what do think?

Zach Fritz: ⁓ I am wholeheartedly upset with this. just my perspective, I do not own an EV because personally for use case, ⁓ I'm not the way there on an EV. It doesn't fit my use case. Yeah, like it's just not where it needs to be for me to say, okay, yeah, that makes sense, right? I do too many just for me it's it's range. I just ⁓

Chris: Not yet. Not yet. What does it need? Where does it need to be?

Zach Fritz: I drive too much and I'll just get a spur of moment, you know, trip from Colorado to Texas. And it's like, Hey, if I didn't plan ahead, well,

Chris: Yeah, that's probably another 10 years out, I think. Because China just came out with a full charge in five minutes.

Zach Fritz: Yeah, that's pretty sick. But, so for me, a 7,000 pound truck, for example, I still pay the taxes and get charged this crazy amount for gas right now, and I pay it because that's the pain that I chose. So I'm going to get taxed just because my truck weighs more, but I'm still like, that's not my issue. It's like EVs weigh more because the batteries and all the electronics and the motors.

Chris: Well, here's the argument there. They're, saying, your, your truck is taking too much space for the road. Like a little car is not taking that much space and you're just hogging up the road, sir.

Zach Fritz: mean, what about a Cybertruck? It's bigger than my truck and heavier. So, I mean, what about you? You're in that boat. I mean, you've got, you're double screwed.

Chris: Hahaha Well, here's the, here's what upsets me. Cause I already hate property taxes anyway. Cause look, you get sold this dream your whole life, pay off your house, you get your house. You finally, I finally pay off my house. I'm excited. And then I still got this big old tax bill every year. And so to me, I'm, know, if, if DeSantis does pass this bill in Florida, I may just move my whole family to Florida because.

Chris: Of course, I still got to convince the family, but I'm going to do everything I can to convince them because I just don't want to pay property taxes anymore. mean, you feel like you, you won and you, Hey man, I finally paid off my house, but now I got to keep paying it. And now, Hey, by the way, you paid off your truck, but I'm still gonna need you to, you know, pay me extra because it's 7,000 pounds.

Zach Fritz: It makes you wonder, is there any advantage in this, know, current situation with taxes in which there's ⁓ advantage to paying something off or owning it outright? Because you're just gonna get taxed on it.

Chris: Well, you know, they've got a site. did this search. another search I did. I how many countries ⁓ and going to do it again, just so you can see exactly what it says. How many countries does the U S support and send money to?

And what do you think it said? How many, how many countries do you think? the number? Well, ⁓ first, how many countries are there in the world? How countries ⁓ are the world? How many are there? There's 195 recognized countries in world.

As of 2026, according to Google. ⁓ So how many do think the United States... ⁓

Zach Fritz: So it least gotta be what, over 40? this was not my subject in school. This is why I do cars. Oh, I said 40, it's gotta be, let's do 100. Over half.

Chris: Over half. That's a, that, would be good. So you're saying if there's 195, so almost a hundred is what your number is. Okay. So this is according to Google. The U S provides foreign assistance to around 175 to 180 countries. So that's why they need to tax your trucks, sir. Cause they need to keep paying for all these other countries.

Zach Fritz: Over and out. Why? Why? What are they doing for us? they helping out at the pump? Are they saying, you know, hey, thanks for helping us and, you know, I don't know what we're doing with that money.

Chris: But then they really, they need those really nice buildings too. You know, they're gonna, they, gotta build a really pretty building that they can all work in and only work in once a month. what is it that they usually work? I mean, those are some beautiful, mean, someone's gotta pay for those beautiful buildings,

Zach Fritz: ⁓ yeah, embassy. Look at the people setting the rate, the Federal Reserve building their new multi-billion dollar buildings and yeah, renovation, that's what it was, and spending billions.

Chris: Renovation? Yeah, let's just do the... Oh yeah, we gotta have beautiful buildings. Let's do that.

Zach Fritz: and they can't cut our rates and just say, hey, it's gonna be easier to buy a house. I mean, anyone who's ever done the math with current interest rates and what you'll actually pay on a house over the 30-year note or now 50-year note that you are paying it off, it's shocking. How little is going to principle?

Zach Fritz: I hate it. I hate it. I mean, every day I think about moving to Wyoming.

Chris: Yeah, it's terrible. Well, I may become a Floridian sir, if that does pass, but then then that's going to drive the price that I think I'm a lot of people would have the same sentiment, right? Like they're gonna be like, yeah, we're going to Florida, you know, so we'll see.

sure he'll figure out a way to get out a way to get taxed some way else, you know, because usually what usually happens with politicians, right? They tell you one thing and they take your wallet as they're telling it to you.

Chris: It's all good. But alright, so we talked about a couple of things. We talked about Hyundai, we talked about aluminum, we talked about used car prices, we talked about taxes.

Chris: What does all of this mean to you as an operator, as a business owner in automotive? What is, what can you take away, like learn from? What can you, how can you apply it, um, in your business today to execute at a higher level?

Zach Fritz: That's a really tough one because this one, this episode really just ran across all of the subjects. mean, ⁓ going through my head right now? Buy a hundred thousand dollar Hyundai, manufacture and mine my own steel and to a country with no taxation. That's really my takeaway. But as an operator, sure. ⁓

Chris: Yeah. Yeah. So we're all moving to Puerto Rico. You know, we're going to get this ⁓ podcast to the millions and we'll be in Puerto Rico soon.

Zach Fritz: think really it's right the industry is at a very delicate albeit really weird place with we so many outside factors that are influencing what's going on you know vehicle prices whether it be the aluminum versus steel issue tariffs ⁓ we're seeing taxes come into place ⁓ I think there's definitely a lot of hotness surrounding EVs right now.

So if I was a dealer owner, I would be stocking up on EVs. And that's also what I've heard. So we're going to see a lot of auction prices rise on those, trade in values rise, including maybe even new MSRP rise on EVs.

Cause I think there's a lot of advantage there, especially with all taxes.

Chris: Well, I'll tell you. Well, for me, I think I think you're you're you're right to understand, hey, the market has shifted use car prices are up. I don't know that I'd go all in on EVs. What I probably would be doing is hybrids for sure. Or economy type gas friendly type vehicles and then

Chris: the only EVs I'd be going all in and continue to go all in on would be Tesla because that's if the used cars were online looked the highest turning used cars that are EVs, it's going to be Tesla.

So yes, there are some cool technology. I mean, you get some pick up some Mercedes pretty inexpensive right now that were EVs but And they've got can be used at the pump at Tesla charging station. So I think, know, there's a couple of options there.

But reality is, you stick to the basics, don't get you know, to it's like in sports, right? I talked to my son when he's trying to get to like fancy with his footwork and soccer. I always tell them, you're getting too fancy, buddy.

You got to stick to the basics. They're going to, I'm going to come in and take that ball from you because you're trying to do these, you know, different steps and this and that when, you just did your basic move, you could get around me quicker.

So don't get too fancy. Keep it simple, stupid, you know, so.

Chris: that works in today's market for sure. think it's good. It's sage advice for any market. specifically right now, you've got a window where, know, until gas prices come down, you make some margin ⁓ in areas until, you hopefully this work be done with ⁓

Zach Fritz: do think that there is a long term play though. There is a long term play that I've kind of been looking at with trucks, with seeing what went on in the world with all of this tightening and lack of oil production and everybody needing oil. I do feel like the US will really ramp up production and there's going to be a massive run on trucks that can support the oil field. That's just my opinion.

Chris: I think it's possible. do think there is an that's a good, a different angle to look at. What I do think is what did I experience when gas prices went up as high as they are going up right now. ⁓ when I was at the store, like people were just dumping their trucks. like, only do that. Like those $500 gas payments for one or two months. And then they're like, I just can't do it anymore. They, they, they're tapping out. They're like, uncle, uncle, let me

Chris: me out of here. Right. And so they're trying to dump their truck and say, I need a Prius or I need a Corolla. Let's let's move forward. You know, so if history, if history is an indicator, that's exactly what will happen. But yeah, that's that I think you just stick to the basics.

Chris: understand the market. got a small window where you can actually make some margin. I for one would raise prices on the inventory that maybe you bought 30 days ago. ⁓ you're always thinking, Hey, I need to lower prices. But if the market is going up that high, raise them up for a week or two, as as there are vehicles that have eyeball that look good. But if it's a duck, you know, it's a duck, get rid it. You know what saying? Like don't Yeah, you know, if you can replace it.

Zach Fritz: You're price anchoring to the market. You can always come back down. But if somebody wants to pay you more,

Chris: 100%. So, all right, cool, man. Well, this was fun. Zach, as always, everyone's subscribing, share the episode if you find any value in it. But until next week, Zach, look forward doing this week. And let's do it again week. All right. Thank you. Talk to you.

The Perfect Storm in Automotive: Tariffs, EVs and the Used Car Surge

Hyundai Genesis

Ford F150S

Tesla Cybertruck

Toyota Prius

Toyota Corolla

Original notes