Bloomberg Audio Studios, Podcasts, radio news. I'm Matt Miller and I'm Hannah Elliott, and this is hot Pursuit.
All right, we are tariff tariff tariff today, right on repeat.
Yeah, I mean sorry, sorry, not sorry, we're talking about tariffs.
Well you have to talk about because it's going to change everything. I mean, it's completely reorganizing a century old system of global trade. So and cars are such a big part of that.
This is this is like the entry of a bullet, where the entry point is smaller and then the destruction or the chaos is as the bullet moves through. And I'm not a ballistic expert, but you know, I think the ramifications of that are going to be massive. Obviously you're smiling, you're are you laughing at my No?
No, I love it. First of all, I do love your comparison. I love fallistics.
But yeah, I think you know the fallout is going to be increasingly massive.
Well, and we've already seen like crazy fallout. My day job is covering the markets over the opening bell every day from nine to eleven on Bloomberg Television or bloomber dot com. And you know we focus in on single stock stories and on on industries, and I'm always kind of fighting with people who want to cover banks, and people want to cover retail, and people who want to cover energy, and people want to cover industrials, you know,
but I care about cars. And the fun thing for me about this tear off chaos, beyond the fact that you know, chaos makes things more interesting, is everybody wants to talk about automakers. Like all of my producers like, yes, now's the time to focus on cars because there's such a huge part of this story.
Yeah, I know, it's it's this. I've actually always known. I will cop to that because cars influence everything, and you know, most people don't think about cars on a day to day daily basis, but they are so woven into the fat fabric of our culture. You know, once you start messing with the car world, it's going to have very wide effects. So I, in a weird way, love to hear that all of your people on your side want to talk.
Cars well, and we have the perfect guest to talk about it today, Eric Aaron Keating from Cox Automotive, which has done in such an incredible job researching and putting out intel on the business side of the industry. Plus she's a car lover herself. She goes and test drives new cars and has opinions on them, just like you and I do. And they own Mannheim, which does the auctions, the wholesale auctions for dealerships.
Yeah, she's one of my favorite people to talk to. And she's just it's funny. She had a planned scheduled vacation this week, so talk about timing for her. She's just I don't think she got much vacation, but I'm so glad she could join us.
All right, let's get straight into it. This is Aaron Keating from Cox Automotive. I just have a couple of personally specific questions. I've seen Cox doing great coverage on a number of different issues. One of them is affordable cars, Like it seems as if these tariffs, especially if there were so called reciprocal tariffs, go back into place in ninety days, there won't be any affordable cars for Americans to buy in this market.
So you know what I want to just emphasize here, and this is and we were just talking about this as a team this morning. The costs that we're seeing at are coming in are costs and cost only So when we're looking at a tariff, we're saying the automaker or the importer of record, which is typically the automaker, is going to get hit with this twenty five twenty seven and a half percent tiara. How that shows up
for the customer completely different story. And honestly, I'm not sure how quickly automakers are going to jump in to
jack up the prices on individual models. In fact, I would bet almost all of them will look across their entire portfolio, and you know, the vehicles that you guys are a lot of the times focused on luxury are going to get the bump because profitability is there to be able to absorb some of that TARA so that they can keep competitive at the entry level models and or just the vehicles that are available for lower price.
So just because a thirty thousand dollars vehicle is going to get hit with twenty five percent, say like a Chevy Tracks, which we know is completely brought in from Korea, I can't imagine, at least in my head, how Chevy says, oh, let's let's make that thirty thousand dollars car bear the hit of that twenty seven and a half percent, right
or twenty five percent. I think they don't have the original MFM, But so I think that that's that's what everyone kind of has to keep in mind, is that the automaker has a lot of different levers to pull to figure out how does this ultimately impact the consumer?
Prices will rise naturally demand and supply, and the and the pull a head buying that we have right now, and the fact that inventory might get impacted because OEMs might pull back on producing as much until they can figure out how they're going to deal with the economic challenge of this. But it's not apples to Apple's tariff price increase.
All right, interesting, and that would that that would be dependent on the automaker too. Like sare to say, some automakers believe that their customers will be tolerant to a slightly and some may think, no, we're not, We're not going to do that.
I think it's going to vary across automakers. I think it's going to vary across segments models, you know, I think maybe even down to regional areas, because again, you're going to get impacted by what the dealer is seeing on the in the market level conditions. Because MSRP is is one way the price changes right. Another way the price changes is list price what gets put out to the consumer.
How much is that also related to the breakdown within each specific vehicle of which percentage of components are sourced or made in the US anywhere else? And I asked I of LA like yesterday and that's obviously an American brand, And they're not really able to answer right now.
They don't put that on the Monroney because yeah, and the Maroney.
What it shows you, Yeah, so the Monroney typically will show you assembly. Remember for Monroney purposes. According to Nitza, US and Canada are combined, even though we know the terror situation is Canada MASA right, well not all of North America, right, because.
Mexico is not.
So it's when it says it's US, it's you'll see US slash Canada. So it throws those two into the bubble together, even though we know tariffs is actually being addressed as Canada Mexico US. So that's a little bit interesting and difficult for people to parse through the data. Second of all, it will matter based on okay, So there's three ways basically at least that we can see
that the tariffs are going to get put onto the vehicles. One, you completely import the assembled vehicle, you pay the full bear of the tariff from any other country outside.
Of North America.
If you import Canada and Mexico, you get hit with the twenty five percent, but they'll give you credit for US content, And we don't yet know how they're going to certify which pieces really consist of US content. And then the third way that they're going to teariff you is if you're US assembled, but any componentry parts, steel, an aluminum, anything else that's coming into the country that's helping you build that vehicle that will have been tariffed on its way into assembly.
Does that make sense, yes, But it's worse than that. According to Bloomberg. For example, an Audi Q five assembled in Mexico gets hit with a twenty five percent tariff for being a car coming in from outside the US YEP also a twenty five percent tariff for being a non USMCA compliant Mexican product coming from Mexico, and a two and a half percent surcharge for not being US
MCA compliant. If that makes sense, So total tariffs for the AUDIQ five coming in from wherever San Luis Bispo is going to be fifty two and a half percent.
Yes, so you're correct the auto tariffs and I haven't looked specifically into that car, but you're correct in the stacking. So when March twenty six came up, Trump indicated, Hey, these auto tariffs are going to be stacked on top of existing tariffs that I've already been put into place, which included the February first IEPA authorization of twenty five percent on Canada, Mexico and the ten percent on China, which the ten percent went to twenty percent, and at
the time they gave the USMCA compliant exemption. So if a car is not USMCA compliant, you're correct they were subjected to that twenty five percent under the IEBA order February first, and that would get stacked on top of the twenty five percent that was then issued on March twenty six.
You're correct on that.
And by the way, is our understanding and do they have to? So I'm driving a BMWM two right now, test driving it, and it's amazing not currently no, but you have that yes, I'm not actually yeah, but so I have it and twind in his hair and yeah, my hair is flying in the wind.
No.
So on the Monroney it says parts content information and then it lists major source of foreign parts Germany twenty seven percent, Mexico fifteen percent assembled in Mexico, and then US Canada parts content six percent.
Yes, you're right, and the Monroney label. So yes, I started to say there and then I and I jump to another fact. The Monroney label does. Yes, it will typically tell you where the engineer transmission is from, what the other percentage of content is, and then what's available in the US, and then where it was assembled. I have seen varying, so admittedly I haven't done too deep into what is the like what does every manufacturer have to put on them, but most of them do have those.
Four or five different outlines exactly just helpful for consumers.
This engine was put together in Austria, the transmission was built in Germany. The whole thing prices out at eighty two five, which is already kind of steep for an M two. If you think about it, like when you were a kid that was that would have been an M three and it would have been like forty five
like Max so sure. And now if if they're not USMCA compliant, this M two is going to sell in the US, assuming BMW doesn't eat the costs for one hundred and like at least one hundred and thirty thousand dollars, that's nuts.
In theory, Well it would cost it would cost them manufacturer that much.
Yes, so correct whether.
They end up you know, fully giving that to the client. And we know BMW has already said, hey, we're gonna we're gonna eat the cost for now, I think through the end of May, is it? And that, you know, likely is an exercise of the automaker to say, what does this.
Look like moving forward? Where do we put the costs?
How do we afford this so that we don't make the end to completely irrelevant?
Or do we get rid of the end too?
Because you know what, no matter which way we slice this, we're not going to be able to make this at an affordable price, and therefore we're gonna.
Get rid of the model. I mean that's certainly possible as well.
I know, Matt, have you had anyone call and ask to buyer in too? Because I'm thinking the idea that dealerships are calling people yeah, can we buy.
Well, this is something else that I wanted to ask about. Cox has been doing awesome coverage of the Mannheim Well, I think you own the Manheim auctions man, Yes, we do. Yeah, but I have heard that we're already seeing like nutsoe prices at these auctions. Have you heard any you know, anecdotal evidence that dealers are paying sure high prices.
Sure?
Yeah, No, we've been seeing increased sales conversion. Jeremy rob one of my colleagues, did his monthly movie call on Monday with some great you know figures around what we're seeing in the used car market. But absolutely, we're starting to see the sales conversion rate go up, We're.
Starting to see the.
Wholesale costs go up, and we're starting to see listing prices go up.
So one hundred percent.
You can tell the dealers are saying, you know, we got to stack up and make sure that we have good supply of new and used.
So I wonderful'll be back in the situation. When I bought my Silverado in twenty twenty two, I went to the Chevy dealer to collect the truck when it was finally delivered from Mexico, where it was assembled, and they had an identical truck on the lot that was used with like ten thousand miles for ten thousand dollars more than I was paying MSRP. Are we going to start seeing that again?
We might. I mean, I think we're going to see a lot of the same.
Things that we thought about as part for.
The course during Cold cod.
The difference is going to be that we're probably going to be in a period of high.
Frenzy, high profit.
But at the end of the day, we have a very different economic situation now for the country as a whole than we did in the pandemic, which I think is going to slowly but surely towards the end of the year tamper demand. We don't have the federal stimulus coming into the economy. We know that consumers are not as financially stable as they were that and we know that that used to be when you know, interest rates were at crazy lows and now they're at crazy highs,
so on and so forth. You know, people aren't moving as much, which usually when someone moves it it spurs on a purchase of a vehicle. So there's so many other things that are happening in the market that lead us to believe that while demand might froth quite a bit right now, it will likely taper off as we get further into the year because of all the other extenuating circumstances.
Are you following it all? This sort of ongoing confusion when it comes to vintage vehicles and cars that are older than twenty five years, you know, it seemed like they were going to get hit and then now there's a carve out, but they're still going to get hit by the parts tariffs. Do you have any clarity on that to share?
There's a great question. And I listened to you guys talking about this the other day, so I love it. Yeah, And I had just read yes, yes. So as much as I have tried to steep my interest here in tariff and myledge grow my knowledge, I have yet to officially become a trade lawyer, but I play one on TV and I can tell you that it is confusing. Low and behold, we're going to have a whole new well not news services industry. But let me tell you,
customs brokers, it's your day. Get out there, go for it, man. But I do think there is some confusion because there did seem to be an exemption.
For vehicles that were over twenty five years.
But then depending on what comes, what specificity there is in the annex one, and what actually hits the federal register, these are all things we never knew we would know anything about. That will tell us a little bit more information about which parts and specific will get hit with tariffs at what level. So would they get hit by the automotive terrafs this is March or twenty sixth if they don't appear in that schedule, didn't they get hit by the ten percent tariff that was put on all
countries and eventually bet the reciprocal tariff. It's anyone's guess at this point. So this is why you see a lot of analysis, you know, paralysis analysis.
It seems impossible because because Hannah, if you if you already don't know the origin of the components of a new Cadillac, try figuring out the origin of the components of a nineteen ninety seven six thirty five CSI like, right, Well, that's.
My question is is this deliberately confusing and chaotic or is it a question of no one actually knows what they're doing? And I mean, is this completely deliberate or is this a case of the people in charge making the rules are sort of learning as they go and figuring out as they go along.
You know, it's a great question and what I would actually say, and I think you guys would agree with this. It is the massive uncovering of why we love automotive, right but why you know, industry specific information is incredibly important when you're thinking about doing blanket moves that might impact multiple sectors, and the global automotive industry literally touches
nearly every sector of the economy. It is incredibly and highly complex, and I don't believe it's as deliberate as some people might think it is, although there could be some deliberate components of it.
I think it truly is.
Even people in automotive who've been in it for thirty five years are going, huh, actually, where does that come from? Or how did that get into our supply chain? So I think by its very nature it's incredibly complex, which is why, you know, the more individuals that are out there that have been doing this for a long time and have that deep, deep knowledge of the supply chain are going to come in real handy.
To trying to dig this apart and figure out Wait a minute.
Because you hit you need a trade layer, you need a customs broker, you need a supply to it expert. You know, you're going to need several people at the table to mince through all of the details because you're likely to cross over a couple of different areas of expertise to make a final declaration of like, aha, yes, this part subject to sixteen point five percent effective terrorfreate right. You know, I think it's gonna it's going to take a lot of people to get there.
Yeah, okay, good.
I did I have I know you got to go, but I have one last question. You don't just do the business end of this. You also love cars. And I know last time we talked to you, you were on a press junket. So I was going to ask, what's your favorite car of the currently assembled in the US vehicles, Like, if you had to pick one that's not assembled outside of this border, what would you choose? And it's not like there's a broad variety to choose from, right, because they're mostly trucks.
Yeah, yeah, exactly fifty percent the chicken tags. That's something we should all consider in looking at this right now. Oh my goodness, you asked a tough one. Because I've been so focused on what's imported. I don't know that I've been paying a ton of attention to exactly what's actually built in the US.
Like, I mean, do you like the Rivan? Do you like the Lucid? So you were going to ev No, no, no, no, I wouldn't choose an EV. I would probably choose an F one fifty also, or yeah, or a Tahoe. I like the Tahoes and suburbans, you know, I.
Mean Honda and Toyota both. Yeah, they both have a ton of vehicles. I mean eighty percent of Toyotas are assembled in the US.
Same thing with Honda.
There's Mustangs and Corvettes, right.
There's Mustangs and corvettes. Yeah, I mean I could list you fifty cars that are not assembled in the US right now. You put me on the spot.
Well, the Mustang is the only one of the only vs. The vights you can get with a stick can be listed on two fingers, right, Mustang GT and Cadillac CT five V black wing. Right, and that'd probably my choice.
Yeah, I'll go with your choice. I'll let you check I'll let you.
Pick it out for me about that, Thanks Aaron, I trust your judgment, really appreciate your time.
Thank you, Aaron. We all know my answer to that. There's only one answer, and that's the Corvette.
You know what, I might agree. I have this internal dilemma or this internal debate all the time if I were going to choose a sports car or like, would I choose a Cadillac CT five V black Wing or would I choose a Corvette? And there you could have also a ZO six or ZL one.
I don't know, thanks American specifically American branded HIC.
I mean, if I had another one hundred and thirty forty fifty grand to buy a sweet car, those two would be way up there my short list, way up there, And I don't know which one I would rather have. You know, they're different. For you can't get a stick with the Corvette. But do I care that much about three pedals? Maybe not?
Oh, I mean, I guess because the.
Cadillac is horrible to look at it. It's very ugly, I know.
But you could fit your kids in the back and.
It has a supercharger. You know, you can't get a new Corvette?
Was the real question is what is more important to you the engine or the transmission setup.
It's a yeah, this is we can have a whole show on the Corvette versus the Cadillac Cet.
Everyone to email us with what you think is more important.
I think, right, yeah, that would be a great email. Our email is hot pursuit at Bloomberg dot net. Isn't that right?
Yeah, hot pursuit at Bloomberg dot net. I honestly would like to hear what is more important to the born and bred automotive file.
I wonder who else has this internal debate? Probably a lot of people, because those are two kind of halo vehicles, right right. One of them is looks really cool and has an amazing and complex interior, maybe not the best sort of reputation. The other one looks awful but is just mind blowing in terms of the powertrain, has a stick shift option and a very elegant, I think interior.
You know, I think about this a lot when it comes to houses in a way, like would you rather live in a house that looks very nondescript on the outside but it's really cool on the inside, or something that looks really beautiful on the outside. But it's not especially charming on the inside.
Definitely the former, Definitely the former. Yeah, you know, when I started when I started doing when I started going a lot to southern Spain, and because my wife is Spanish,
I do that now a lot. I noticed there's this style, especially like in Sevilla Cordoba, Granada, and I think it's from the Moors when they, you know, ruled they ruled Spain for hundreds of years, and they have this thing where on the outside they don't want to show their wealth, so it just looks like, you know, a stucco building, a wall, and then you go in and these gardens are beautiful and the interiors are amazing and there's like water fountains, and yes, I would rather have that for sure.
Yeah, I'm with you on that. I'm really with you on that, because you're when you're inside, that's your space. You're inhabiting that.
I mean, yeah, I need to make a quick correction, speaking of email, before we get flooded with I said nineteen ninety seven six point thirty five CSI and the E twenty four six series. They stopped making it in nineteen eighty nine.
So okay, if anyone would have called you out on that. I would have. I don't know the difference. I would have been very surprised.
I've been talking with some car blogger bros. A lot lately. Yeah, this is one of those things that they in on instantaneously.
You know, I will never Honestly, those guys are the best fact checkers because you get I mean, you get nothing past them. I will. I will never be able to get anything past that type of reader, which is a good thing, you know.
Yeah, for sure, if I ever had written nineteen ninety seven six thirty five CSI on opposite lock, I would have been lambastard, you.
Know, as a fool for such a careless error.
What a great car though the twenty four to six series No.
I was with Cadillac this week for their Celestic.
Ah cool, all right, so.
You should talk about that because Cadillac is on the brain this week.
Let's do it. And you also have driven the Escalade IQ.
Yes, and that review is going live on Monday. It'll be in Business Week magazine and the print issue and it will be online on Monday after this episode goes live. So yeah, we should talk Cadillac and I drove the Celestic yesterday all day all around lap up in the mountains in Hollywood, in downtown.
So wait, is this the like three hundred thousand dollars. What's the story with the Celestic because it has got a polarizing design.
Which I applied polarizing and I might have I might have figured it out. So this is the three hundred and sixty thousand dollars all electric vehicle that it's a two plus two car. The wheelbase is as long as an escalade wheelbase, and it is, but it is as tall as the CT five, so it's the same height as a sedan. But it's wheelbase is as long as an escalade. It has a hatchback rear and Cadillac is not marketing this as a wagon, but I think with
the rear end, the rear end is problematic. It's difficult to digest. And I really think their launch color of bright orange, like a McLaren style orange, has really really hurt that car because it's not flattering to the car at all.
Yeah, it doesn't look good enough.
I did have the opportunity to see the car in multiple different colors this week, and I also started sort of framing the car as a wagon and that helps me to understand the car better. You know, that car in like sort of a smoky brown metallic is actually rather beautiful, and I started imagining it sort of like the Lamborghini Espata from the seventies, or a citron An sm or even a Portion nine twenty eight. And when you start talking about it in those terms, I can
kind of see it. I can see it. And I don't think any of those cars was particularly critically or popularly acclaimed when they debuted, but of course now as vintage models, we really love them. So so yeah, Cadillac is swinging for the fences, as it were, with this one. They have been working on this for really for fifteen years, with a lot of concepts, like if you remember the Eskala, the Cadillac I think it was this, but.
Not always as an electric, right, because that's where you do when you say hybrid.
Yes, so the last five years they committed, you know, they committed to making this an electric vehicle five years ago when it looked like everyone was going to be
electric by twenty twenty five. Obviously that hasn't happened. And I did ask multiple of the engineers yesterday, could you have pivoted two years ago, when you guys, when everyone kind of realized hybrids are important and they might be here to stay for quite a while, you have pivoted to hybrid and they all said, yes, yes, but we wanted to stick with the plan and stay the course and you know, make a very audacious move. So this
is their audacious move. Matt, tell me your thoughts. I can see you looking, I can see you sort of studying this car. I'm dying to know what you think.
So I'm not a fan of French cars, and I think the comparison to Citoya is pretty spot on. Yeah, for sure it. I like it much better when I think of a nine to twenty eight. So I think that's a really interesting way to frame it. I do applaud any car maker that is willing to take such a bold step, and it doesn't matter if I like it or not. For example, I think the Tesla cyber truck is horrendous, but I think it's so cool that they actually made that. That was before you know, Elon
lost his mind. But uh, but for me, like three hundred and sixty thousand dollars, When you say that and then you follow with all electric I'm like tuning out because I don't care anymore. You know, you were talking with Aaron about retailers that go away from technology, right or or your your take. I like on luxury, which is that things have to be real wood, leather, and
I need to smell, you know, the gas. Like I know that an electric powertrain is also real, But there's something to me about the mechanical moving parts of an internal combustion engine and the way it operates, probably because of my you know, my age and my history, but a lot of us have that. So yeah, I can't. I can't think about luxury and electric in the same breath. I could be wrong. I've never driven like the Rolls roy Specter and you have so, and I understand why
that would be perfect for that magic carpet ride. Like effort, this motivation totally, and so my whole thinking on this could be changed when I drive, when I drive one of these things, but I haven't yet.
So I bet you, I bet you will have that opportunity. I think Cadillac has had that car out and about and they're going to have it more out now. I totally agree. You know, Cadillac is going to make twenty five of these in the first year. They've told me they've sold twenty two of that twenty five, so they're you know, they're not mass producing them. I'm sure they're This is a lost leader, and it's about trying to
recapture some of what Cadillac used to mean. And we did talk a lot about how to tap into I mean, Cadillac used to be the standard of the world. As their tagline was, it was this the world's standard for luxury at one time. And I do think it's very fascinating that now we're being forced to consider what does American luxury mean when when we're thinking about tariffs affecting a lot of our other wonderful luxury atoms that are
being imported. To your point about the electric vehicle, I agree, you know, it's I don't think it's wrong that Rolls Royce made an electric powertrain for the Specter that does go at. Rolls Royce had already talked about making electric vehicles one hundred years ago, so that seems very in a way authentic Cadillac. It's a little bit different, I can tell you. I'm I'm undecided. I know it's a really bad time to be selling a really expensive EV
nobody wants them. I don't necessarily think it was wrong they did it. I can't talk more about it because I'm under a bargo, but I.
Don't I'm sure. I'm sure that it drives amazingly well, and I have driven, by the way. I was talking to some listeners recently who who reiterated the idea that I'm antiev which isn't true. I've driven electric vehicles that I found to be rewarding and luxurious. I really enjoy I really enjoy the Audi Etron, for example. I really enjoy the Mercedes EQS and it's super luxurious, right, and I think the electric power train fits. I love the BMW,
the electric BMW seven series, the I seven. That's a very luxurious car, and it's very expensive, and I think it's probably to some extent worth it. But I and I'm and I'm sure that the Cadillac Escalade IQ is going to be my favorite electric vehicle of all time, because you know, I love the pickup trucks, the electric pickup trucks like the Sierra EV, and I love the
GMC Hummer. I feel like I feel like Cadillac IQ is the perfect vehicle for that because it's not as sort of doesn't have the silly image as much of as the Hummer does. And it doesn't I won't feel like I'm overpaying, which I would with like any Tron or else. Yeah, you know, two hundred kilot hour battery does a lot to win my money, but I don't know for me. The I mean, if it's really luxury, like four hundred thousand dollars, then you.
Know, a big, a big selling point to this vehicle. And really what they're leveraging is the fact that each one will be made tailored to the customer specifications. There's no standard entry level Celestic. Each one is a made to order thing that you you will you know, pick the colors. It's not it's not extensive bespoken, but it's
it's pretty good, you know. So if you want, if you already owned a Rolls Royce and a Bentley and an Aston Martin and you thought, oh, it'll be really fun to have an American vehicle that I can have, you can know, I can tell a story with the colors and the trims and all of that. You know, it's it's a bit of a high price point vehicle, but yeah, I mean they don't have to sell that
many of them. I had dinner with Michael Simcoe, who's the head designer, the other night, and he still believes that electric vehicles are the future, even though nobody wants to buy them.
Now, I'm sure he's not wrong.
He really doubled down and said, hey, eventually, this is where we're going, no question about it. So we're staying the course.
It's for sure. It's true as a utility, you know, as a as an appliance, it makes total sense. But that's not what this is supposed to be. Right. In any case, I think a lot of it has to do with my own biases. I'm still confers founded by the effect these tariffs are going to have on the ultimate driving machine, on the nine to eleven on Ducati motorcycles, Like, what's going to happen? I just I look at this. When I saw this, Monroney really really drove it home
for me and for those who don't know. Car makers put out these labels that are I think regulated by by NITZA, and they have to include certain pieces of information like vehicle content. So again the M two it says US Canadian parts content six percent. Major source of foreign parts Germany twenty seven percent, Mexico fifteen percent, Final vehicle assembly San Luis, Potosi, Mexico Engine, Austria Transmission, Germany. This car is not getting sold in the US without
massive tariffs. And I think, you know, BMW obviously produces so much here, and I think I think BMW is one of the biggest exporters in America. They export double digit billions of dollars for their products. But those are all X series, so that it's X three x five x seven, you know, the M two, or that any two series three series, which ironically is what they started producing here in the US and the seventies. But none of that's made here. So what are they gonna do?
And I think of my beloved Ducoatti motorcycles, you know, I mean, they're already pretty pricey. I can put together a multi strata on the configurator and get well into thirty thousand dollars. And if and if it's gonna be tariffed at twenty five percent, which I'm not positive about, I don't know how motorcycles will be handled. But it's, you know, all of a sudden, it's it's gonna cost closer to forty right.
So yeah, I don't it. Do you think that now? I mean, it would seem natural that now a car like a BMW would be even more of a status symbol. I mean it, five years from now, if these tariffs stick and you know, everything continues down this path, five or ten years from now, hypothetically those cars will be considered extremely like signifiers of status.
Yeah, but like the point of the three series is for uh, you know, I know someone who's just made it to middle management, or you know, a young person who's just started on Wall Street, or or someone who saved money and cares about driving, like I imagine that BMW if this kind of thing, if this tariff sticks, I
imagine they'll have to assemble them at Spartanberg again. And for a company like I don't know, Ducati is Italian is in its DNA right, so they'll they'll never be able to make a Panagali here, but I imagine they might at least consider, you know, for the dirt bikes they're making off road vehicles now, to assemble those somewhere in the US.
You know, are you getting a sense just with the people that you're talking about that some of the people who may have voted for Trump because they thought that it would help their bank accounts are now extremely frustrated and disappointed. You know, besides anyone in the headlines, just normal people that they kind of thought, well, maybe I'll vote for him because it's going to do this and this and this for my portfolio or my business.
But now it's like, especially the ladder, especially the ladder, I hear from so many people. We get a ton of small business owners writing in when I do my TV show every morning, saying there's no way for me to move my supply chain around. Basically, you know, I'm
not even for Apple, it'll be impossible. But for these big companies, they can at least pretend to move the supply chain or make you know, multi billion dollar commitments to the Trump administration that will last as long as he does in office, and then you know, keep making everything in China. But these smaller businesses, they can't do those things. So I got an email this week from someone who makes light fixtures in the Southwest. She designs
them herself. She has a brick and mortar store front. You know, she employs Americans, but you know, when they're made, they're put together, they're assembled in Asia. I got a message from a guy who runs a chocolate confectioner in New Jersey and they, you know, they make the product in New Jersey, but the ingredients come from Canada and Mexico, so they can't get around those twenty five percent tariffs.
And you know, these are people who voted for Donald Trump because they agree read that maybe cars should be built in the US, but didn't expect it to hit their own business's bottom lines. And now they can't hire employees, maybe they have to let some go, they can't reinvest. But for the car makers, it's just an absolute nightmare. I mean, if you're GM or Ford, I guess you can move some production, but you're not going to build a new plant that takes like minimum three or four years,
probably five to seven. And by the time you have done that, someone completely different as an office, I mean needs stability and long term to do long term planning completely.
You know, talking with the folks at Cadillac again this week, their big thing is we just want a target that doesn't move whatever it is. We just need something that isn't going to change that we're worried about being kicked down the road a bit or whatever, because then we can plan for it. But at the moment, it's impossible to make any plans because everything is so volatile. So Cadillac is you know, even with regulations, emission standards all that.
I think if they know the target, they will do their best to hit it. They'll make it work. They just need to know that it's going to remain stationary.
Yeah, I think they're probably not going to get a lot of stability in this with this administration, and I'm not that's not a value judgment. I don't think that that's what Trump administration is aiming for. Stability is not the name of the game for them. I also think, like I appreciate products made in the US. I guess we've talked about this before, Like I I will spend extra money to buy something made in America.
But.
If it's at these levels, right at sixty seventy eighty thousand dollars, if you're talking about raising those prices ten or twenty percent, I'm just out of the game. I can't afford to, especially since I have to buy two cars right for my family, and can.
Speaking of can I ask how your motorcycle viewing went last weekend? Do you want to give us another so Harley? You went to look at a Harley?
No, no, I I'm doing that this weekend. I'm going to Danbury on Saturday to ride a road King and a Fat Bob. But this last week I've been riding this Buell Supercruiser and I don't think I've ridden something that's as unique and exciting and cool in the motorcycle space for years. For years.
That's quite a statement.
It's I mean, I don't know if it's people say it's vapor ware, like they don't think it's ever going to really come to market. But this week on my show, this coming week on Wednesday, I'm going to interview the CEO, Bill Melvin, who bought the manufacturer, bought the patents, bought the the name from Eric Buell, and he claims to have taken an over six one thousand pre orders for
this Buele Supercruiser. And that's you know, people put down one thousand dollars a piece for a pre order and that they're going to start making them in the fall, like I'm very likely to put down my own deposit, and I kind of hope that I won't get it until like late in twenty twenty six, when I can afford to buy it. But that's the one thing that concerns me is the price. It's pretty high. Twenty six thousand.
I think it's even twenty six nine nine nine, so twenty seven thousand dollars for a motorcycle that is just a V twin in a tubular frame with a bule swim arm.
Where does that price come from? How do they arrive at that figure?
I don't know. That's a good question. I will ask Bill when I have them on Ask the show on Wednesday.
And speaking of I'm driving this Lotus Electree suv this week and it's interesting. It's an electric suv. The pricing starts at two hundred and thirty thousand dollars and that seems insane. That's a lot, truly insane. And I'm going to ask them as I start writing the review, which I haven't yet, but can you walk me through how you arrive at this price point? And automakers hate to do that because that's, you know, their proprietary business advantage information,
but I don't. I clearly am not I'm not understanding and not seeing where that price comes from in the vehicle, you know what I mean. Yeah, so I'd be curious to hear the Buele folks.
I mean for them, for them, they're starting up, right, So this is a design that Rolling Sands did for them. I'm sure he doesn't come cheap.
And Sands did that.
Yeah, he designed it and they're building it, you know, in house in Detroit, so they're there. They have to put up a factory staff it, you know, get the parts and they're mostly American sourced parts. So I think I can't remember the number now, but it's over sixty percent of the components are going to be American.
They're the most American.
They do claim that the most American made brand. I don't know. I haven't asked Harley Davidson about the claim that. There was an engineer at Buel who told me that Harley Mates gets thirty to forty percent of their parts are American sourced. That sounds low. And by the way, you know Harley's CEO, Yolkin Sites, who has been the source of a lot of problems I would think for the brand, is stepping down. So he's done just that.
Yeah, how I are you surprised?
You think that's actually not at all surprised, because I mean, look at the stock chart. It just goes from the upper left hand corner to the lower right hand corner, down, down, down. I think one of the board members this week actually quit because he wanted SITES to leave immediately, and SITES is staying on until they find its accessor.
So we don't know who's coming next.
We don't know who's coming next. But I think at Harley Davidson they had the same problem as a lot, you know, most motorcycle makers, and also that Buele is going to face, which is that they just don't sell products that are affordable or accessible to the kind of people that start riding bikes. Who rides bikes like you start when you're a teen, right, nobody picks it up
in his forties. So and you can't afford to pay twenty seven thousand dollars for a road glide when you're you know, a seventeen year old or when you're you know, twenty one, you know, working on the factory floor, like you need to buy something that costs multiple thousand dollars and only royal Endfield is really doing that right now, or maybe.
Even copies are expensive and those are you know.
Accessible supposed to be yeah to a.
Younger rider or a smaller rider or a newer rider or any of the above.
Yeah. So I mean, I think the CEO previous to Sites, matt levitych was pushing like a more inexpensive kind of mobility oriented product and Sites came in and was like, no, we're doing like the big expensive stuff or you know, relatively expensive stuff. And also we're gonna do like major DEI and ESG, which doesn't gel with like the Harley Faithful, right, and we're gonna start producing stuff like in India. That's not what the Harley Davidson Forum likes to hear.
So that's too bad. I mean that that does seem to be a fundamental problem that any company would be known for being not diverse.
It's not I don't know if it's about not diverse, but it's about.
I'm putting that in a very polite way. I mean, to me, that's just kind of unforgivable.
I don't think that they're I don't think that that's the case though, because they are I think a very diverse in terms of like ethnicity.
Oh, I'm not talking about reality. I'm talking about the perception, the reputation and the perception. Yes, we all have friends who are people of color who ride Harley's. I can list you off several, but that is not the brand reputation. The brand reputation is like, you know, older white dudes.
True, But I think the problem wasn't that they were aiming for diversity in terms of their customer base. I think the problem was that the probably we shouldn't even talk about this stuff on that.
I mean, I can, I can really dive into this.
Let's not. Let's not, let's not since.
We are not a political podcast.
In fact, let's wrap it up. Sebastian's like, let's wrap it up.
The producers like.
Is there anything you got coming up next week?
Uh?
You know what, Well, the Long Beach Grand Prix is this weekend. So that's that's that's big for car lovers in LA. I actually think I'm going to a British car show on Saturday, which is out sort of toward the valley and it's just old British cars. It's sleepy, it's very cool. It's not about influencers or content it's just a bunch of old Rolls Royce owners.
Uh. Well, I'm glad there is diversity in that because they're foreign.
Right, what about you, I what do you do?
Well? I, like I said, I'm gonna go ride this Harley, these Harley Davidson's with al at the Connecticut the Danbury, Connecticut dealership, and I'm gonna be ringing out this M two on the way up and the way back.
Well, that's such a fun car.
I mean, it's so much fun. It's it's just classic. It is classic, crazy fun. I still think the price is a little high, you know, eighty two and a half grand. That's before tax, so you know, out the door, it's like ninety thousand dollars for an M two. That's to me, that's a little crazy. But I guess this is the cheapest you'll get it, you know. Yeah, right, So yeah, I'm looking forward to talking to you again next week at the same time, the same place.
And you know what, I'm going to be in New York next week.
Oh a different places. Cool.
I will see you live and live and in living color.
Right on, all right, I'll introduce you to Bill Melvin while you're here, as well wonderful.
I'm Matt Miller, I'm Hannah Elliott, and this is Bloomberg