Bloomberg Audio Studios, podcasts, radio news. I'm Matt Miller and I'm Hannah Elliott and this is hot Pursuit.
I guess to see you. It's great to see you. Do you look fantastic? Oh?
Thanks?
I don't know if my zoom for some reason, I look very red.
I'm not, it's just the lighting.
What uh what a day yesterday, today, probably tomorrow. Like wow, these tariffs, I mean, this new world order.
It's exhausting. It's I mean, my nerves are shot.
From my point of view as a journalist, like so exciting, you know, But I look at my four oh one k and I'm like.
No, I know, I know. I can't believe that, Like they went through with it. He went through with it because we've been hearing about this is gonna happen, and he kind of like, ah, right, well we'll see because everything has been so volatile anyway.
Everyone was actually did it. Everybody was like, you know, it's so surprising, And I'm like, what he's been telling us.
The whole time, you know, that really doesn't mean much.
Sometimes I always think of the Far Side cartoon where the two people are looking up at the billboard of the the two sheep are looking up at the billboard of the wolf, and one sheep says to the other, I like him because he says what he's thinking. And and the wolf is saying, I'm going to eat you. You know, Yes, I love He's been he's been telling us like he's going to eat us. And here here it is. It's incredible.
Yes. So I spent the whole week leading up to this writing a story about how classic car collectors and brokers and shippers and logistics specialists and legal authorities, we're all freaking out because going into the Trump had not announced any exemptions and had said specifically there will be no exemptions on the twenty five percent automotive tariffs that he was going to enact effective April third, which is today, and that goes for cars and parts coming into the country,
a flat twenty five percent tariff.
So have won unless their USMCA compliance, yes, and in which case they will be taxed only on the percentage of parts that are not American.
So if a car is coming in with twenty five percent US parts, it'll it'll be taxed on the rest, It'll be taxed on the seventy five percent that are
not American. All that to say, there wasn't any exemption written in for classic cars, which would have been a really big deal because that means that if you're buying something at r M Sotheby's upcoming sale in Milan, like you've got a Aston Martin that you've got your eye on, like our Steve Sarah told me that tax on another twenty five percent to what you're going to pay, and that kind of kills the deal because why would you
pay that premium? You just wouldn't. It also meant that people who were going to consign cars to sales in the US, to auctions or whatever, especially in Monterey, we're pulling their cars already from the auctions because why would you pay another twenty five percent to sell your car? Just doesn't make sense. The good news is, as of yesterday afternoon, I did see some guidance that was sent around to from customs to shippers that said that there will be an exemption for cars that are twenty five
years or older. Now that doesn't mean that cars that are fifteen years old won't also be tax which is kind of tough because what about the cool Mercedes and jdms that we want to get over here to collect They're still collectible, they're just not old. So that's it
cars exactly. So that's kind of an issue. But the flip side of that, which is kind of good for us, is that potentially it means that any of these collectible cars that are already in the US are going to be worth more because if we if we if the importation of these cars slows down, it's kind of good if we already have our own collectible cars.
Well, so there's there's a lot of moving parts here. But basically, so classic cars will not be they will be exempt from the twenty five percent auto tariff that goes into effect today. We're recording this on April third.
Yes, if they're older than twenty five years old.
If they're older than twenty five years old, they will be exempt from that twenty five percent tariff. If they're coming from Europe, for example, they will still be subject to a two and a half percent tariff.
Yes, and that has always been the case.
Yes, And but my question is on Saturday, when the ten percent blanket tariffs go and to effect, I guess those will apply to classic cars as well. And then on Wednesday, when the additional tariffs go into effect twenty percent. For example, on the EU, are those going to hit like classic car if you import like a nineteen sixty four nine to eleven from Stuttgart, are you going to have to pay next week at the end of next week, you know, basically twenty or thirty percent on that car.
The answer to that is no to my as of today, to my best understanding, because I did read the executive order that was released yesterday when they are talking about the reciprocal tariffs, right, and that order said some goods will not be subject to the reciprocal tariff. These include steal in aluminium articles and autos. Automotive parts already subject to tariffs. So at least with the reciprocal tariffs, autos and automotive parts will not be subject. Now when the
flat ten percent, that's a little unclear. That's a little unclear.
I guess I need to plast the two and a half percent that currently.
See that's a good question.
Wow, so a little bit confusing, But for the most part, it does look like exemptions if you're buying cars over twenty five years.
Old, and yeah, I mean that's not me, but it it's a lot of people.
Well you might what if you find a car.
There are great marks overseas, they're all right hand drive. But that's fine. I can get behind it. I will say. I talked with one shipper told me at at Silver Tiger Logistics. He said they bring over about a thousand cars a year and they regularly have flights that the value of the cars on the single flight is over one hundred million dollars. Wow, So this is this is I mean, it seems niche, but it's a lot of money and a lot of goods that would have been subject to this.
Yeah. I mean, by the way, I was at the Moto GP races in Austin last weekend and it strikes me, and I'm sure you see this another for example, a Formula one. It strikes me that if you've got it down to a science, packing up and shipping vehicles is so easy completely. They've they've got boxes like already built and they just roll the chassis in, you know, sinch it down, close the box and it goes into a container perfectly.
So completely, like theoretically you could have it done with a single phone call.
Right. Well, I'm just saying, like Silver Tiger or.
Yes, yes, our cars cars.
They do it all the time, so yes, constantly. For them, it's not a big deal. If you're one person and it's the first time you've ever done it, then it's kind of a pain. But if you're doing regularly, yeah, so very interesting stuff. We're going to talk by the way, to Chris Bryant, who is a Bloomberg opinion writer and one with whom I worked for many years in Berlin. Very smart guy.
That's so cool. I I still need to go to Berlin. I've never been, but yeah, Chris Brian is one of my favorite columnists at Bloomberg. He's I read is. I have notices attached to his column so I read them whenever they come out. And he's really good at tying in the business side, the product side, putting it all in context. And yeah, he's he's great.
I've been struck by his columns lately. I've been struck by his his knowledge of these kind of niche products. I mean, you are a hypercar expert, because that's your job, but Chris is like an editorial writer for a financial news organization, so it's pretty cool that he knows. For example, you know that the Valhalla has much improved interior, you know.
So, yeah, yeah, you know what I like too. I firmly believe that the products of any given automotive company speak to the company. So when you get into a certain product and your note seeing things, those are a direct They're a distant, but they're a direct result of what is happening within the company structurally and financially, and you can draw a straight line. And when I read Chris, he completely clarifies what's going on internally at the company
that I see in the product. I mean, there is a correlation. And it's so cliche to say, but there's a direct correlation between what is going on within the behind closed doors at certain companies and the end product. And that's always true.
Yeah. Absolutely, I've been loving his stuff lately as well. I too have an alert set on my Bloomberg so that I can get his column sent directly to me. Let's get into it, Chris Bryant from Berlin.
Chris, thanks for joining us. I want to go right into your column today me too.
I'm so glad you wrote that. And this is the first time I actually understand the ownership structure of Porsche, Bugatti, Remac. I've never gotten so acusing and so weird.
Yeah, I mean, can I just jump in and ask for me the biggest question, which is I don't think Porscha needs Bugatti, and I feel like that's kind of where you landed in your column. But I don't see what Bugatti gives Porsche at this point.
Well, I mean it's a topic that I was wrestling with and just to catch catch people love. I mean, you know, there's now sort of discussions basically that that Martirimac, this amazing Croatian entrepreneur, would like to, in conjunction with investors, maybe take over the half of Bugatti Remac that Porsche own.
And I don't know. I mean, Porscha's really under pressure.
They need to be more luxury, they need to sell more expensive vehicles, and they have this amazing asset that they never talk about, that you kind of never really
hear very much about. And Martima has been getting on with the job for the last three four years and then suddenly, yeah, these tensions have emerged, and you know, it seems like Porscha maybe wanted to take over the joint venture and now maybe he does, and it's all a bit unclear, but I just can't help thinking out They've got this this great asset that produces vehicles that you know, highly sought after that people have to you know, a clamor to get hold of, and then they might sell it.
I mean, I don't know.
I did come down on the on the side of the argument, yeah, that maybe they maybe they should just because there aren't enough commonalities with the rest of the Porsche business and making hyper cars we can talk about that, the economics of that are not always great.
Well, let me ask you really pointedly, what is your sense about Porsche's plan to develop the hypercar success or something in addition to the nine eighteen Spider And is there a sense that Porsche had hoped to leverage Bugatti intelligence, infrastructure, whatever else in order to develop the new hyper which obviously we haven't seen and has sort of disappeared.
Yeah, we've not seen it, right, I mean, I think the original plan for Porscho was, you know, we saw this mission acts hypercar that they developed, an all electric hypercar that I think they showed a couple of years three. Yeah, back then it probably seemed like a smart idea. Of course, now you know, a lot can happen in.
A couple of years.
And even Marty Rimack, who developed the Remagnivera, which you know, broke all kinds of records as a all electric hypercar, had some comments last year along the lines as well, it's not really selling as much as we hoped. Many of the customers in this in this bracket who were buying a you know, a seven car, they you know, they feel that electric hypercars like the kind of emotion. They still want to combustion engine all the rest of it. And you know, even hinted that he might not develop
another one. And so if I was Porsche probably looking at that space now, I might have reservations about bringing in all electric hypercar to market. And therefore, you know, if they have to go back to the drawing board, then it could take a long time.
And that's why you.
Know, some people thought, well maybe Bogat you could help fill that gap. I mean, if they if they took control of that joint venture, then they sort of instantly have a hypercar in the portfolio. They wouldn't have to develop a new one. And Hannah, I think you were there, like the new Toboon is very impressive vehicle.
Now, yeah, it's it's amazing, and I think they've sold out. And yet just as you say, you know, Remec and let's not forget Peninferina with their electric Batista, which is also using REMAT components, Like now is not the time to be selling an electric hypercar. My question for Portie is why do they not pivot to a hybrid, you know, supercar, something like their nine to nineteen, the lemm prototype that they've already developed. Why not just move that into production.
Hybrid too? Right?
Yeah, I mean to me that that would make a lot of sense. And from you know, what I hear on the ground from collectors is that Porsche was accepting statements of intent and really trying to drum up buyers for this mission X, this hypercar. Now. I asked last year, I asked Porsche, what's going on, what's the latest? Can
you confirm or deny? And of course they don't want to confirm or deny where they are in the program, but they did say, we've never accepted deposits because what we showed in twenty twenty three was only a concept, you know. Therefore, they have plausible deniability that it's not like they canceled anything. If they didn't commit to anything
in the first place. But if you talk to you know, high end buyers and collectors, they all say, oh, yeah, Porche's been trying, Porscha's been, you know, offering me allocations for this, and I didn't want it because it was electric, which takes the question, then why not simply pivot and make it a hybrid, because they've already got a hybrid prototype that you know, has the numbers for it.
Yeah, performance, I think that absolutely should do.
Of course, I think that, you know, always the story with hypercars is can you develop then add a reasonable costs because clearly you've always got to be trying to stretch the boundaries of the possible and that always is a challenge. And of course what's really hard right now is that they just have this competitor who seems to have cracked it right with Ferrari. I mean, say what you like about the fad. Personally, I'm not a big fan.
I know a lot of people have mixed opinions about that vehicle, but it's going to be an absolute cash machine for Ferrari. You know, they're all sold out seven hundred and ninety nine units, so that's a lot more than they produced. It's a lot more than they produced with le Ferrari. They managed to allocate them all very quickly. I dare say they in a couple of years or come out with the spider version as well, a few
hundred of those. So they're going to make you know, billions of revenue with that and analysting very high margin. And so if Porsche is not able to do that, you know, if they came with a hyper car and then it wasn't very profitable for example, that would be you know, disastrous too, So so you know, really difficult one. I just I get the feeling of the fact it hasn't happened, you know, reflects either challenge is on the engineering side or yeah, the power train in front is
a question. And then simply they've just got so much on their plate at the moment. You know, the electric strategy is not you know, gone up and smoke China's strategy too, so you know, trying to get all those.
Things in line.
I think maybe it's like too much and the thing that's like not happened yet.
I want to just say that the F eighty being sold out at those prices just proves the fact that rich people have more money than sense. I mean, people are just throwing money at it because it's ferrari, And I think probably those buyers are not true car lovers, because how can.
You say that?
How can.
Seeing the same car that I'm seeing?
I see the weak powertrain?
What are you talking about?
Is it the six even or is it only four cylinders? Who knows? I didn't tell you what it is.
Read nine hundred horse power? It does, I don't care, But that doesn't get under the hood and count the cylinders. I mean, I can't even none of us on this call right now could drive that car to its full capacity because we're not professional driver.
So many cars and look, I've driven many many cars that have huge horse power numbers, but they're hybrids and they have a two liter four cylinder, and they're just not pleasing vehicles to drive. The horse power doesn't matter anymore. That's why something like a Rimeck hypercar makes me feel a little bit sick. I mean, it's just a waste
of a soulless waste of money. And the only people who want something like that are like Lewis Hamilton, because he just has so much money and doesn't care that much about it.
I would withhold judgment until you've driven it, my friend, I guarantee you fair, if you drove it, you would be screaming with joy and pleasure.
Well, I also paid for it, right, because I would much rather have something that has true character, and I sincerely doubt that that does. Although you're right, I haven't driven it. I want to step back, though, for a moment and walk through just the ownership structure of Bugatti Remac because I don't think Chris, that a lot of people understand it, and I think after reading your column
I do for the first time. So basically, Porsche owns a forty five percent steak in the joint venture of Bugatti Rimac, and Rimac owns the other fifty five percent, but Porsche owns twenty percent of Remac, so in a sense, they actually own more. And I wonder if this is just a legacy of Wolfsburg, Like, are the Germans just into these incredibly complex ownership structures or is there any kind of reason for that?
Well, I mean not. You know the history as well as I do.
You know this used to be owned by Volksbag and it was Ferdinand Pich.
His baby.
You know, he is the one who.
Rescued Bugatti, developed the you know, the ve run and great expanse really you know, brought it up to the modern era. And then of course we had diesel Gate, we had you know how a dec CEO came in with the or the electric strategy, and Bugatti didn't really seem to fit in that structure anymore. And as you know discussed, he didn't have the you know, the economies of scale, the shared parts and all the rest of it.
And so they found this sort of neat solution. You know, they saw Marty Rummack, and to be honest, I always think, my goodness me. You know, he'd already had investment from Porsche into his you know, component maker and all the rest of it in the his Rimant group. But then they suddenly came to him and said, hey, you know you're gonna have Bugatti. The guy was thirty three years old.
I mean, it's incredible. And that's what they did because at the time, you know, he developed the Nevera and the expectation was that he would then develop basically an electric Bugatti. I think that was the feeding back then, and you know that the future for Bugaddy was going to be electric too, and he would essentially make it a kind of an electric version of the Shiron. Now
than goodness he didn't. But yeah, as a result you have this structure with you know, the state got past the Porsche portion went public and so then you had forty five percent on the Porsche side fifty five on the Remax side. With importantly Marti Rimak as the CEO, so he's the one driving the force there. And to be honest, I mean he's made some good decisions. As say, he didn't develop an all electric Bugaddi, I think that would have been a mistake in hindsight. So it's a hybrid,
the tur Beyon. It's a good decision. You know, developed a relatively low cost. He's got Cosworth, you know, providing the engine. I think you know he won't have any problems on the Cylindercount with that engine.
Matt.
That's sixteen of them, I think, so you know takes that box for you. And so yeah, in the theory's going okay. But you know, actually, if you look at the financials, which I did in the Porsche accounts, you know that they lost money last year and the sales tumbled almost fifty percent, and that's partly because of just the motorcycle.
This hiron ran out. That turbion has not arrived yet.
They've got a couple of victuals, you know, convertible in the track only car that will tide them over for a bit. But nevertheless, there's probably some things that Porscha and Bagaddi didn't you know, sorry, Porscha and Rimac didn't entirely agree on, and the result is now you have this sort of type of war between two of them.
I would say to your point about Mate Rimac, he is a really interesting individual and just listening to you to describe this timeline, you know, there's there's somebody else who's been in the car world, who's been very young, who's been a disruptor with electric cars, and that person was Elon Musk And and you know, I remember interviewing Elon twelve years ago, before all of before he became who he is now, and watching and speaking with Mate over the past few years. It's almost like Mate is
the antithesis. He's the other side of the same coin of Elon, where this is someone who's very young, incredibly intelligent and a disruptor. Of course Mate is doing it in a different way, but I do think it's really interesting to watch him developed, And I don't I don't really know what my point is with this, other than to say I don't think this is the last act of Mante by any means.
Well, certainly not only is able to buy Bugatti. I mean, yeah, I think one of the things that struck me most about your story, Chris is that the price seems so low, right, isn't it a billion euros or there is.
What bloom News is reported, Yeah, as a total value for Bugatti remark, that does seem low, But there are reasons, right, I mean if you think about actually how much revenue they make in a year. You know this is a joint venture. They still one hundred cars a year, and now okay, find those cars are four million, three four million, but that's still you know, I need three four hundred million euros of revenue plus as say, they don't actually
make money at the moment. Now that should change with the tubion, but in that sense pure financial is not going to be worth that much. However, of course, as we know, hypercar companies are of course highly sought after. His trophy assets, and you've seen a lot of them change hands, notably McLaren recently, so I'm sure there are a lot of people out there'd be very interested in
acquiring that stake. Is clearly Mutti roommack we need some financial backerds if he wanted to to purchase that stake.
That's what by the way, folks shagging paid for Jucati as well, was a billion euros. And I think the difference between to me what Porsche does and Bugatti does. Porsche makes these near perfect, beautiful machines. Bugatti makes artwork that you can drive at incredibly high speed. So I feel like there's a vow to Bugatti beyond just the revenue. And I don't think that three x revenue or even two x in a year or two with prices going in this direction, is that high a price to put
on it. But you're the expert, right because you're the one looking at these car companies all day long, at the financials, and then you know, typing along in our Berlin office.
This is not I'm sure that's not the end of the story. And my argument today was, you know, Porsche isn't under no pressure to accept that any offer presented to them, they don't have to sell.
In fact, they.
Could have good reasons to retain it if they thought that, you know, taking a control of Bugatti and therefore, you know, bringing that into the Porsche fold, you know, talking about it regularly was going to like, you know, improve their valuation. You know, just even like a sprinkle of Baghatti on that on their share price could do could be worth you know, billions in market value, because you know, stop market valuations for car companies that they're not entirely logical.
You know, Ferrari a company that is doing excellent job, but it makes fourteen thousand cars a year and is now you know, the most valuable European automaker, worth more than Fox five, which is which makes nine million cars
a year and owns Lamborghini and Bentley. So you can't say, well, it's just because you know, of luxury here whatever, you know, some of this stuff is is just sort of almost like magic, and so I would imagine that it might have been people at Porsche who thought, you know, maybe if we did more with Bugatti, we could have some of that kind of Ferrari evaluation magic too.
It's so un German, though, isn't it Hannah Bugatti? It's French. They have a castle.
They have a castle.
It's like, you know, Porsche should have like a Bauhaus cement box in which they build their machines. It just does.
They do have a nice museum.
Yeah, it's nice, but it's like modern architecture, all angles and straight lines, and it just doesn't it doesn't seem very Bugatti esque.
Can we pivot a little bit, Chris and ask how tariffs are going to affect all of what we've just discussed? And maybe this isn't a pivot, it's more of a segue. The addition of twenty five percent at this point, twenty five percent onut a motive tariffs? Does that change the proposition for what Porsia is trying to do and how Portia is pivoting? And also within relief to Ferrari, which we're calling a competitor, and I know you guys tend to when you're analyzing these companies, but is it really
a competitor. Ferrari just seems to be quite in their own, you know, the porch, right, And let's be honest, like historically Portia is a very sort of humble, just sporty track car. You know, they've never been Ferrari. So sometimes when I read about Porsia being a competitor Forra, I'm kind of like, well, no, they're not at all. But that's not a value judgment. It's just like Ferrari is in a whole other echelon and always has been.
I agree with everything you've just said, but I think the thing that's changes is Ferrari has managed to move even into it even more of its own lead right over the last past couple of years. When it became public company, you know it probably about a decade ago now, I don't think anybody would have dreamed of the kind of stock market value and the kind of profitability that
they've really managed to generate now. And I think that's obviously, like, you know, inspired everybody else in the industry who thinks, well we can have a bit of that too. But when then you look at the pricing power, I mean, really, Ferrari is moving away now average price per vehicle of more than four hundred thousand euros, so similar amount of dollars, and Porsche down on kind of one hundred and fifteen thousand euros. So again like similar amount of dollars. You know,
it's a huge gap. And so yeah, when Tara happened, Uh, they're obviously much more of a problem for portion than they are for Ferrari came out straight away, I think, within hours and said, okay, this is what we're going to do. Well, you know, we're going to honor our contracts on your two nine six that you ordered, like you know, two years have go. But the new models, you know, you're twelve cylindery, you know, the price is going to go up by ten percent.
I think that's what they said.
I mean, truly, will anybody even blink at that?
I sit somewhere in the middle of this debate.
I think that Ferrari is getting close to the point where customers will care. And you know, clearly your your Ferrari collector who has thirty forty cars, who buys the fad not because they love the car, but because they want the the SP four. When that comes, you know, these people they'll just you know, they take the hit. It's not about the money, and they'll be fine. But they still have to sell a decent amount of range
cars every year. And if those vehicles really start to depreciate and they are now like if you bought an SSF ninety or a two nine six, you're sitting on quite the loss and you feel like you've got to do that again and again, and then they increase the price of the next car.
You know, then you are starting to hit the limit there.
And so yeah, we're talking about very privileged people who yeah, you know, anybody who can buy a Ferrari is already doing fine in life. So, you know, small violence, but at the same time it is a threat to the business model and very interestingly as well. One thing that Ferrari has been doing that again everybody else in the industry is trying to do, is personalization.
And I mentioned it again today.
You know, you turbinion will cost you for a million dollars, but you know, add on another million by the time you've spect it, right, And what Ferrari has been saying recently is actually these customized options that the twenty five
thousand dollars paint job. These are the things that when you come to sell the vehicle that the secondhand customer is not willing to pay for because why would I pay that, you know, which is frankly an absurd price to pay for a paint job for a secondhand car that wasn't you know a color that I chose because it matched my you know, yacht or whatever and.
So, and this is contributing to the depreciation.
Just to finish the thought that basically, yeah, if Ferrari start to depreciate more because people are specting them a lot, then that's a bit of a threat to the business model.
To me, that's a sad fact of buying custom vehicles or adding aftermarket accessories. The next buyer is not willing to pay for those almost ever. I wonder about the the other car makers and how they'll be hit with tariffs. We've already heard from Folkswagen today that they're they've got cars on boats that they're not going to ship right now, they're holding them in port, and that they're going to charge an import fee on those cars that do get to the US and get the tariff. So do you
know anything more from other automakers? I mean, how is this going to affect the global industry?
Have you got them?
Have you got six hours for me to answer that question? I mean, yeah, it's it's an absolute nightmare, Like for everybody, there's nobody who's not affected. You know that, Yeah, the four f one, fifty or whatever, you know, produced in America but full of you know, foreign parts, and so, you know, is a headache. But of course, you know, the German automakers, including Porsche, who bring cars over from Europe,
are really you know, going to struggle here. And you know, the thing that I really bothers me is that, you know, American cars in particular were already far too expensive. You know, the average price where are you remind me forty five fifty thousand dollars something like that.
And now what's going to.
Happen is that those affordable models, many of which were being brought in from South Korea or from Mexico and so forth, relatively smaller cars, very in margins, those are the ones that are gonna, you know, suffer and ultimately will probably be cut and some of them maybe will be able to shift to the United States. But there's a reason they weren't being produced in the United States because it was too expensive. And so if you you know, you stop being able to.
Provide new vehicles to.
Middle class, ordinary consumers, then you know, it's not a good situation for the industry.
I think it's really sad.
Frankly, how soon do you expect that we are going to see real effects of this? I mean, aside from just when we go down to the dealership and try to buy a new car, I'm talking effects in terms of the mix on the road of American cars versus foreign made cars. I mean, are we going to see a change a year from now?
I mean, I do think it'll take some time to feed through. I mean, the tariffs came into force today, but we've still got, you know, to wait a bit for the can sorry for the part situation. Just in the last few minutes, actually, we've had Canada come out and say that we're going to do, you know, basically the same to the United States that the US has done to us, and we'll have to wait and see what other kind of retaliation we'll have as a result of this as well. So I don't think we've heard
the last of it. Yeah, but I mean this, yeah, to be blunt, is going to be severe, and it's going to be really really tough on this industry where you know, if the hope is that carmakers are going to reach are production, then you want these carmakers to be profitable, and instead they're going to take massive hits to their earnings, which is earnings that they can't invest. And I recognize that, you know, the United States was importing a lot of cars.
Uh you know, roughly half.
Of the US production was being imported. But at the same time, it was you know, considered to be a good thing that Mexico, Canada and the United States had created this kind of automotive plane where people could could could trade and supply chains were set up accordingly. And to just overnight say we're not doing that anymore is to you know, cause huge problems for the industry.
I would guess, by the way, Hannah, that the mixed shifts in terms of used cars and new cars because to Chris's point, you know, the affordable cars that were dragging the average price down to forty five or fifty thousand dollars, they won't be sold here anymore, or they won't.
Potentially, I mean, they won't be that cheap. Said that. Did you see that piece?
Yes? But I think the American cars that you would think more people would have to buy are just so exorbitantly expensive. I was looking yesterday at a Chevy suburban and if you want the six point two liters of V eight, it starts at eighty six thousand dollars.
It's a lot of Wow.
That's like supposed to be a middle class family vehicle, right, but it's twice as much as like the average income and you know in flyover country. So I just can't believe people are going to be able to buy new cars anymore, and you won't be able to find the little inexpensive ones from Korea.
We've had this record before too. I mean, this is essentially what happened in the pandemic, right The price of new vehicles went up, the the supply went down, and the users market exploded in prices rose. And I'm sure we're going to see a similar thing again where people, as you say, forced out of the new market have to buy used and that's going to, you know, put pressure on prices again. It's going to create inflation, and I'm not sure that's what we.
Want, Chris. Is there any sense that there will be like a flip flop, for lack of a better word, that a year from now, President Trump and this administration are going to say, actually never mind, you know, we're going back to what it was before.
Wait, you doubt the stability of President Trump's policies.
I mean, just a question next year or next week, you know, is there any likelihood of that?
I wish I had a crystal ball, but I would say this, I think Trump has been relatively consistent, not just about tariffs, but particularly about the order industry. He's always had a bone to pick with, you know, car imports, specifically ones for example. This has been a constant, you know.
And the fact that you know, it didn't we didn't have more you know, radical tariffs in the first time, I don't think it should blind us to the fact that this has been something that he's been wanting to do for a while, I think, And so now I don't really expect you know, a massive climb down from this, you know, as we've seen today. I mean, you've had a terrible reaction in the market to you know, Liberation Day, tariffs, stocks melting down, the dollar, you know, selling off.
And you know, I used to think.
Of Trump as the kind of you know, the president of of sort of business in the stock market who judged himself by the fact that you know, stocks went up, right, and now doesn't seem to care about any of that anymore. And you know his hope, of course, I should mention this to be fair is to you know, return manufacturing to the United States and create jobs and all the rest of it. But you know, these people who you know working manufacturing plants also need to be able to afford cars.
I just kept thinking. I mean, on the one hand, I guess union wages are around eighty dollars an hour, which is which is good, But you're still not going to be able to buy a suburban. Uh, it's just going to be out of their out of their reach. So let's bookend this discussion with Aston Martin. I think it's great to start with a Portia and Bugatti, stop in the middle to talk about middle class cars and tariffs.
And then affordable car. Now back to election.
So I just you know, I have heard Laurence Stroll's pitch for why Aston Martin should be worth more, and I leave there saying like, yeah, man, he's totally right. Uh, it should be worth at least, you know, like half of a Ferrari valuation. But I think you pointed out in uh when you wrote a column about this a couple of days ago, that it's only like one percent
of Ferrari's valuation. And what is the problem with Aston Martin Because even if you find flaws here and there with their vehicles, they're still like iconic cars that I think most people would love to drive or even own.
I think if you hit the nail on the head, I mean, I think there is a lot of passion for this brand. I think they do produce very highly desirable vehicles, and yet somehow they always contrived to kind of get it wrong. And part of that was the thing. You know, the original IPO was a little oversold, a lot of hype. You know, they went public at a kind of four billion valuation, and then they learned that, you know, supply and demand. They've always had a bit
of a job to get that right. They wanted to grow stroll for example, how this target you wanted to get to ten thousand units a year. I think they sold six thousand last year. And you've had these periods throughout the asked in history where you get the kind of build up of stock on deed of four courts, and you know that then causes all kinds of problems, you know, to reduce prices or it hits the residual values and so forth, and then you have to like
sort it out again. So the currently they're in the process of trying to balance supply and demand again, which means reducing wholesales and all the rest of it. And you know it contributes to this kind of stop start profit warning here there capital rais you know again and again and you know, stroll again. You know, he's a billionaire many times over from his days in the fashion world. But I don't think he probably expected to have to put as much money as he's had to put into
Aston Martin as he's done. I think now his consortium is you know, it's about six hundred of million of change they put in. Now hopefully that will be the end of it, with the fifty million he put in this week. But again back to your evaluation point. You know, he owns a Formula one team as well, which carries the same name, and I mean, look at what's happened to F one team valuations.
Now, I think his Aston Martin.
Team, which is you know, by no means the most expensive, has a one point eight billion pound enterprise value or something, which you know, we're talking three times what this car company that sells you know, thousands of vehicles a year in employees, I don't know how many people. You know, there's a huge golf there now and clearly, you know that's partly because the economics of F one have changed.
I mean F one teams now make money they didn't before that, the huge trophy assets, you know, the story f You know, US fans are bracing all the rest of it, whereas the car industry remains capital intensive, you know, periods of pricing difficulties, supply demand and all the rest of it. And yeah, Aston's had some problems too that you know, they haven't always got everything right technically. Coming back to our HyperCard discussion, I mean, they produced the
Valkyrie goodness me. I mean I think one person involved in that project that it almost bankrupted the company.
You know what beauty though that yeah, I mean wow, Yeah.
If you do things like that, and they really really pushed the push the boat on that one, then you know you have problems. And clearly that you know, they had all kinds of engineering difficulties with that, I think. But now the next one is the Valhalla, which is kind of like I think they refer to it as sort of like a hypercar at supercar price and delivery.
They call it not nearly as nice.
There you go, let's just hope that they have an easier job producing that vehicle, because that will be a real test for the company. Now and they've got this sort of very sensible sounding, very reliable CEO now who did a great job at Bentley. Bentley was another one like never used to make money at Folk Sparden and now is making twenty profit margins, which is you know, great, and they hope he'll be able to repeat the magic at Aston.
But I don't know.
People have been burned so many times by this company, you know, not just recently and it's you know, stop market history, but before that's I think seven times bankrupt or whatever.
While we're on the topic of Adrian, you know, he's coming from this very disciplined German ownership company and of course very conservative Bentley and everything. You know, a very nice guy. Everything I hear about him, and he is he's great in a crisis. Does that model will that work at Aston Martin? I mean, it's a completely different culture, and you know, from what I hear, they really desperately do need discipline. So now they've got their discipline Daddy
and Adrian Hallmark. Is that gonna work well?
I think it will as long as they let him get on with the job. I mean my impression, I mean it is a bit unfair, was that, you know, Lawrence Strall, he's executive chairman and maybe like to kind of get involved quite a lot, and they really just need to let Adrian do his thing. I think they will now, And I think we had a we had a good Bloomberg News feature on the company a couple of months ago where they said exactly that that they they were going to give the freedom to kind of,
you know, execute his plan. Now it's is all very straightforward, sensible stuff, you know, not like spending a fortune developing new vehicles all the time, but you know, trying to produce derivatives, trying to push the personalization thing.
That they're already doing pretty well on.
By the way, they're at like I think eighteen percent of revenue from personalization. Now that's kind of Ferrari levels. They're probably not getting the same kind of pricing, but do you know what I mean that they're they're well advanced down that path, and so they can do that and get these programs delivered on time, not have dealers
clogged with inventory again. They've got a brand new lineup of vehicles now, all of them have been refreshed, including the DBX, which is their SUV which I've I'm not a huge fan of, but they've done a good job now out with the refresh I think the interior looks better.
Good.
But don't you like about that? We love it.
You love the DVXSSIV.
I mean, I think it's really fun to drive. It's uh, sounds great, feels great. As you say, the interior has been updated and is pretty fantastic, I guess.
And look, but they're currently only selling I think three or four thousand of a year. I mean, I think the Benti Yaga, which is also a matter of taste, but you know that sells a lot more, and that's key to the economics of these companies. You know, that's been obviously very very important for all of these companies
that they have SUVs that sell. And I think Aston needs to do more with it's on, hopefully by you know, better marketing and so forth, that they can they can boost the volumes of that because that was obviously be very instrumental in driving a return to profits, which is what we need to see. I mean, this is a company that just has lost money, but for years, years and years he is and they're promising this year and this year finally we're going to be profitable and we're
going to generate cash. If they can do that for a few quarters, you know, things could change.
It's kind of it is kind of like you're in this dysfunctional relationship where it's just like, just lie to me one more time, and I'll still believe you because you're beautiful, because the cars are beautiful, and we all want it to succeed, and it's such a known thing and we love James Bond and all of these things, and we just take it because we want to believe.
I've dated Aston Martin before and I wanted to break up for like years. It took me years to finally get the courage to leave her. But yeah, I think, first of all, I want to say that the Benega like objectively, is fugly right, and the.
Aid Martin looks far better than Yes, yeah, bar none, I mean no comparison three on that.
Yes, we all agree. I think I also wanted to point out just as an aside, there are a couple interesting connections between the Bugatti terbillone and the Aston Martin Valkyrie. Right, Cosworth makes or at least worked on both of the internal combustion engines, and Rimac clearly did both of the electric drive trains. So that's pretty cool that we can get from one to the other.
Well, this ties into another sort of bookend question that I wanted to ask Chris, was when we're talking about these, you know, hypercars that are the halo cars for the brand, whether it's the Turbion or the Valkyrie in Valhalla or whatever hypercar Portia is or is not making. Obviously the fans want those, But to your point Chris and your
column about Bugatti, those are lost leaders often. So what is the rationale at these companies, whether it's Aston Martin or Porsche, to make a halo hypercar that they might lose money on but then maybe it generates value and hype for the brand in other ways. Can you walk us through that, because at this point it's like, well, if you're losing money, why make them?
Well I think that's right, Hannah, and I think the point is that, like it isn't always the lost leader you can make good money. And I was looking, for example, look at can exec right, They've managed to really you know, turn around the good business now and I think they probably have hopes for producing higher volumes that they're even making I believe for for Seedar.
Hyper carnal camera.
Yes, you know it's not you know, obviously not making billions, but like you know, I think they are profitable and you know, they've done that on the huge constraints, capital constraints in the fact that these vehicles, you know, they have to build them and get them homologated, which means you know, they've got to pass all the rules and regulations surrounding emissions and safety and all the rest of it.
Really hard nuts crack. But you know, the promises is the Ferrari thing, right, if you can industrialize that process and you can get people queuing up to buy these cars. And now Ferrari have got this e factory where they're able to turn out you know, a huge amount of space and develop them and not just of course the hyper cars. So you know, if you really get the business model chraining, then you have a vehicle like the the SP three, which is not the height of technology.
It's not about being like the absolute, you know, best of the best, high performance, so you can make huge margins on a car like that. Because actually, if I'm honest, if you gave me the choice tomorrow, and I hope somebody will between an f AD and SP three, I would take the SP three and that would have been really good back because of course those cars now I believe they were like a couple of million new and
now they're trading up. I was told the other day by a dealer like two or three million over.
This is the dog that everyone it's chasing.
No, that's what they want.
And so people are buying the FAD just to get the SP four or because they just have to have the FAD in their collection. So if you could develop a business model, well people buying cars not because they love them, because they just feel they have to have them.
And that's an excellent business mode.
Now, not everybody can achieve that, but I'm sure that's that that's the hope of many of these.
Come course, I guess that that's the reason why you shell out for the F eighty. You're like, yeah, I'll take the V six, you know, because I want to get awesome. Dude, I'm so glad that you write for us, and it was great to be able to work next to you for a few a few quick years, a few brief years in the Berlin office. But we'll have to have you on.
Again, please do. I love it. Thank you.
That was Chris Bryant, my old buddy from Berlin.
So cool, too, enlightning.
Yeah, to hear from him, and he so thought full on these things. And I know because I lived well, I didn't live in the office, but I spent a lot of time in the office, and he was one of the other people that was reliably always in the office on freezer plots. I can't believe you've never been to Berlin, by the way.
I know, I know, I know. I find it shocking myself. I've been. I feel like I've been to every other town in Germany, but I have not been to Berlin. And I think that I like it the best.
Yeah, it's definitely up your alley. I know, like you would really appreciate the people and the culture. It's very different from the rest of Germany.
I don't want to I don't want to rain on Stuttgart, but I have to imagine that Berlin is a little more interesting.
The mustaches in Berlin are ironic as opposed to those in Stuttgart. They're meant very sincerely.
Ironic and iconic. I love it. Have I ever told you my family's from Fulda? The German side of my family tell me that, Oh, yes, the Mullenhauer side, the German side. The Mullenhauers are from Fulda. So I've been. I mean, I truly have been in a lot of places in Germany, Hamburg, Frankfurt, you know, Munich, Dusel, Dwarf, all all of them. But no Berlin.
So none of my family is German, but I would be there. My brother, my dad all went to boarding school on Switzerland, so we all speak German. And I have a somewhat of a preference for German cars. I just feel I feel like they're so solidly engineered and built. Stuff doesn't just fall off of a German car like it will with an Italian car or No.
I just had a really sad thought, what does does this mean we're not going to get German cars anymore?
I hope that's not the case. I hope that's not the case. Love, I do love the US product, so I.
Don't it's not competitive. Oh come on, man, it's not competitive.
You've got to drive the Escalade IQ.
Right, I did. And it's funny you mentioned that piece will be in the magazine next week.
All right, So are you still not allowed to tell us you're driving Impressions or Oh.
Well, I certainly can. Maybe we talk about it though when it publishes. But in general, I would say best of the bunch. I mean best of the bunch.
I mean, I love obviously, I have a soft spot in my heart for the F one fifty and so many different variants, and I love the GM trucks and especially the SUVs, you know, the Tahoe and the Yukon.
Just gonna have to drive corvettes, I guess.
And corvettes obviously. It's a supercar, so I love that one too.
I'm not going to take that, babe.
By the way, I have coming to me today. I am testing out an American and they say it's the only American made motorcycle. It's it's a brand that you cannot yet by this motorcycle from which you cannot yet buy this motorcycle. But Buel is going to drop off their new Supercruiser or the prototype of their Supercruiser. You know. Buell Motorcycles, I know of them.
I don't think used to be.
Used to be owned by Harley Davidson. They made really cool, kind of eclectic bikes. Eric Buell was I mean, his thought was lower the center of gravity as much as possible, So he was like he was one of the first or at least of recent bike makers to put the exhaust under the motorcycle, you know, and then everybody Ducatti started doing with the Panagalis. But Harley, I you know, I guess that business somehow failed at Harley Davidson, and
I think it went bankrupt. So for seven years they couldn't really do anything.
Did you say that they are They claim that they're the first American.
The only American motorcycles. So what they say about Harley Davidson, That's exactly what I said.
I was Harley May.
I ran into I ran into the CEO and owner at uh In Austin, at the Moto GP and one of his one of his people, was saying that one of his engineers he was working at the buel stand and I said, what about Harley? And she said something to the extent of less than half of the components, you know, Harley Davidson are actually made in America.
That's royally splitting hairs.
What about Arch I don't even know if it's true.
What about Zero? I could list you other brands.
I hadn't thought about Zero, because I don't think there's a motor. Is it that's an electric You're not.
Gonna call a zero motor motorcycle? Honest on a contingency.
Maybe, but I would guess they also have componentry that's not all made well.
Everybody has componentry that's not well.
This is the idea of Buell. The idea is that greater than half, like the Lion share. I think they say seventy percent of their components are made right here in the US of A. And this is something that we are paying a lot more attention to right apparently. Tesla apparently sixty to eighty percent. I've heard different estimates. Sixty to eighty percent of their components are made in the US, and obviously the cars for sale here are also assembled here. That's far more than any other car maker.
I think with Ford and GM it's something like fifty three percent, but it's more than that with Honda, Honda sixty four percent.
Yeah. And also let's not forget that Mercedes. Companies like Mercedes and BMW literally are making cars in America, right, So yes, they're.
Not with foreign parts, right, just order all the parts. And by the way, I was having a discussion with with a European motorcycle maker this weekend. They're worried about the tariffs and they are actually evaluating the idea of just sending the motorcycle here in parts and assembling it. Yeah, at a US address.
Of course, because there's it's all shades of gray. There is not a single car that only uses and is only uses American made parts and is assembled in America and sold in I don't think there's a single one, Karma.
But Tesla is near as damn it to that. I mean, they are pretty close to being fully made in America.
I mean, but Tesla would be on its way out. This is the worst of times for Tesla.
Really seeing more and more bumper stickers that say I bought my Tesla before Elon went crazy, yeah, or something to that effect.
I know, and I mean this this is not meant to be a political statement, but I've never cared where stuff is made. I don't understand why we can't have Italian marble, French wine, Swiss chocolate, Italian leather, British tweed. American luxury is not enough for me. I need the world's fair, you know. I would like Japanese sake and Scottish whiskey.
Yeah.
This, these are the best of the best. I want the best of the world. Why don't you want that too?
No, I totally do. But I think there's a there are a few different issues. One is, you know, obviously the populist drive is to give jobs that people that live to people that live here, right, And then I do care a lot of times where my clothing is made really tools Japan. But that's yeah, because I want high quality stuff, I know, right, you know, if I buy something that's you know, woven, cut and sewn in America, it's just or in Japan. Obviously it's just likely to
be higher quality. Well, you're some eleven year old puts it together in Sri Lanka, right, But.
The fact that you're buying Japanese denim implies that you're not satisfied with a denim and you're not wearing Levi's.
I'm mostly not, but that's because you know, the old looms that were made back when American teens were high quality, we were sold to the Japanese at World War Two.
I know, you know what's really wild. I was just at Levi's, like special itelier, and they were saying how difficult it is to source vintage Levi's because they for you know, their VIPs and stuff. Yeah, like it's extremely hard. And they were saying exactly what you said, which is, we were so stupid to give away all of those looms to Japan because now Japan just runs the market and they're so smart, and you know, kudos to them for that.
True. And now I have to use chat shept to translate all of my uh, all of my letters into Japanese, and then I send them to the Flathead and I say, please send me these T shirts.
And I just don't want to. I don't want to. I don't want to lose all of these beautiful luck uxtory things that we've become accustomed to. We've become accustomed to a certain level of lifestyle, and of course, but I'm a first world girl.
I don't want to lose. To Chris's point, also, the affordability, right, I mean, I want people in this country to be able to get good paying jobs without being you know, incredibly gifted, talented, extraordinary people. Right, just go to a job, make enough money to raise a family. On the other hand, if those products aren't going to be affordable to any of those people, what's the point. I guess I was thinking yesterday, maybe not everybody gets to drive a car?
Is that the idea? Like, not everybody needs to have access to this.
I would love it if all ride bicycles everywhere. Honestly, I think that would be first of all, for sure be a better world if everyone rode motorcycles or bicycles, no question about that.
Yeah, right, for sure. Yeah.
And second of all, even in other countries, the people who are assembling Ferraris and Rolls Royces are not purchasing Ferraris and Rolls Royce. Good, there's more thing unusual about that.
That's a good point. But if you're you.
Are sewing in Dor's workshops, are not wearing Dor couture.
If you're assembling, you know, a pickup truck at the rouge, you should be able to afford to buy that pickup truck. That was the idea with Henry Ford. Right, I'm gonna pay them five dollars a day so that they can buy the Model Ta or whatever it was.
I'm more capitalists than that.
I learn more and more things about you every every day, Hannah, you got anything cool coming up?
I'm driving a Volvo this week. Last week I had Have you had cheese car? Yeah? Have you had the a MG cle E Mercedes? Speaking of German cars?
I it's have I have not? But I am a huge fan of the cle Yeah, sleeper hit.
It's a complete completely I was like, what loved it, really loved it?
Which one is it the fifty three or the sixty three?
Fifty three? I'm looking at the Maroni right now. Actually it's the fifty three. The AMG starting price seventy two eight, which is cheaper than the Escalade or the whatever sub you mentioned. Yeah, it's an inline six four and forty three horse power and that's all you need. That's really that's really all you need.
But wait, we're talking about a coup, right, why would you compare it to the Escalade?
Well, because you just mentioned earlier that not an Escalade, but whatever, the Silverado or some suburban you are I can't remember all the suburban. Yeah, and you mentioned it was like eighty six thousand, And I'm saying this with the options, this incredible luxury product, AMG. No less starts at seventy two. I actually think that's a rather good deal.
No, it's I mean they are I love They're so high there, so luxurious.
It looked good too, It looks super good.
To be fair, you can get a suburban with a five point three leader, the tried and true V eight for much less. But I'm just saying six point two a pay up.
Yeah. Oh. Also, I did have the urus Se, which I think we've already talked about. I had that to the Lamborghini Uru, the one you did, the one you did, which only we don't need to get into it other than to say it only confirmed my thought that it's the best suv on the market right now period. I'm not saying it's my favorite, but I'm saying it's the best.
Do you feel like when you close the doors there's not that solidity that you want from an SUV? I feel that well, they made of carbon fiber.
If you want solidity, you're gonna have to go with the g. Let's be honest, I mean, speaking of favorites, agreed, What are you doing this weekend?
All right? Uh, let's see this weekend, I'm just gonna be driving this Buele. I'm riding this duel. I'm going to I had this buel American made motorcycle like an hour north of here to Danbury, Connecticut, where I will test drive a road King And we have yet to determine how American that is. But I'm going to test drive a road King to see if I prefer it to the Fat Bob.
And is this this is one that's for sale specifically, yes, that you might be coming home with.
Yeah, well, I mean I'm pretty sure I want the Fat Bob. I rented it with riders Share in Austin over the weekend and I had a great experience with that, the Turow of motorcycles. Yeah. Yeah, so I'm just I have a two wheel weekend ahead of me.
Wow, you're really I feel like you're riding more bikes than ever these days.
It's well not since I mean before I had kids, you know, it was every day, but I get it. But now whenever I can awesome. Well that's all for this week, I guess We'll see each other back here, same time, same place next week.
I'm Matt Miller and I'm Hannah Elliott, and this is Bloomberg. M