Auto Industry News: Crazy Corvette Markups, BIG Cadillac Power, and Red Flags at Rivian
Quite a few eyebrow raisers in this week’s news roundup. Cadillac debuted its 682-hp V-8 monster Escalade-V. A three-row, three-ton SUV capable of shooting 0-60 in under 4.4 seconds? Sure! Why not?! Folks could use a little excitement before the brand dumps all its eggs in the EV basket. And speaking of fragile things, Rivian’s bright future as the next electric darling is starting to look a little shaky. The EV startup nabbed a record incentive package from the money-movers in Georgia, but it showed dismal Q1 earnings and saw its stock drop as big backer Ford sold off millions of shares.
But first, Corvette fans signing up for the new Z06 might want to get a few things in writing, as at least one prospective buyer saw himself looking at a potential $100,000 markup for the new track-focused model. Keep reading for a full rundown, as well as some market insight on current supply chain issues and inflation levels.
Indy Fun, Vintage Concepts, & Mondo Markups
For the third year in a row, America’s sports car nabbed the honor of being the official pace car for the Indy 500. The 2023 Chevy Corvette Z06 70th Anniversary Edition will make its debut at the race, piloted by former driver and nine-time Indy 500 starter Sarah Fisher.
Three Z06s will be at the event, all decked out in the 70th Anniversary digs and optioned with the Z07 package. While Chevy has no plans to offer replica versions for sale, the race winner will get to take one of these 670-hp beauties home.
The 106th Running of the Indy 500 is scheduled for Sunday, May 29, 2022.
What Would You Pay for a New Z06?
With its mid-engine performance, incredible good looks, and signature V-8 rumble, the 2023 Chevrolet Corvette Z06 promises to be a hot ticket item when it hits showrooms next year. And while fans anticipated a higher-than-average asking price for the hardcore, track-focused Vette, they likely didn’t expect markups to the tune of $100,000.
In a reddit post dated May 10, 2022, user idontcare717 posted a screenshot of an alleged email response from a salesperson at Dimmitt Chevrolet in Clearwater, Florida outlining a pretty alarming pricing structure for the new Z06. According to the note, the dealership requires $5,000 just to hold a customer’s spot in line, then another $20,000 at the time of the order, and then an additional $75,000 at delivery plus MSRP. Before accepting the deposit, the dealership requires a signed form proving the customer agrees to pay the full $100k markup.
While Dimmit has yet to publicly confirm or deny the truth of the email, the dealership has limited all comments on its social media channels. (This is not entirely surprising, as reddit armies can be ruthless.) Regardless, Markups.org indicates this isn’t the only rumored price hike on the horizon – though it does ring in at the highest. At the time of writing, three additional dealerships located in Texas and North Carolina show $50k markups on the Z06. A dozen more from across the county show markups for the Corvette Stingray ranging from $5k – $40k.
Classic Concepts
In less controversial news, Lime Rock Park will serve up a “once in a lifetime gathering” of classic Corvette concept cars this coming Labor Day Weekend, September 5, 2022. The Historic Festival, which is celebrating its 40th year, brings together vintage racers of all flavors for five days of automotive fun. In addition to the racing, car show, 17-mile parade around town, and swap meet, the event will also showcase more than a dozen examples of Corvette concept cars that have never before been assembled as a group. Spanning several decades, these hand-made concepts offer a glimpse of what the future could have held – and in some cases did, like the 1968 Astro II which introduced the mid-engine Corvette.
Additional confirmed examples include the 1956 Corvette SR-2, (pictured above), 1957 Corvette SS, 1959 Corvette Stingray Racer, 1961 Mako Shark, 1969 Manta Ray, 1972 Reynolds Aluminum Corvette, 1986 Corvette Indy, 1990 CERV III, 1992 Stingray III and the 2009 Corvette Stingray Concept. Learn more and get tickets HERE.
New Vehicle Debuts
Automakers dropped two new go-fast models this week, joining the recent score of new vehicle debuts. Here’s hoping inventory levels out before all these rides are set to hit the product pipeline.
Audi RS3 Returns
After taking a model year off, the Audi RS3 returns for 2022 with a familiar engine and a few new features. The sporty sedan still wears its unconventional turbocharged 2.5-liter five-cylinder engine, though it kicks out a few more ponies than the outgoing model. The bump in power propels the RS3 from 0 to 60 mph in 3.8 seconds.
A seven-speed dual-clutch automatic transmission also carries over. However, the standard all-wheel-drive system now features a new torque-vectoring rear differential which Audi says “significantly reduces the tendency to understeer” by increasing drive torque to the outer wheel with the higher wheel load when powering through turns. A side bonus to this high-tech torque splitter? The vehicle now comes with a controlled drift mode.
Set to hit dealerships this summer, the 2022 Audi RS3 will start just under $60k MSRP.
Cadillac Puts Down Big Power
The Cadillac brand plans to be all-electric by 2030. But it looks like the company is going on an all-out bender before it completely gives up the sauce… er, ICE power.
Last week, Cadillac debuted the 2023 Escalade-V, a three-row SUV packing a supercharged 6.2-liter V-8 engine pumping out 682 horsepower and 653 pound-feet of torque. Or in Cadillac’s words, “the industry’s most powerful full-size SUV.”
That hand-built powerplant – effectively pulled from the Blackwing – catapults the three-ton SUV from 0-60 mph in under 4.4 seconds, according to the company. Cadillac also says the Escalade-V can complete the quarter-mile in 12.7 seconds at 110 mph.
To help keep a grip on the road, Cadillac equipped the new Escalade with its Magnetic Ride Control adaptive suspension technology, as well as an electronic limited-slip differential. A high-performance Brembo brake package provides much-needed stopping power.
Developing a big burly SUV with a big burly V-8 engine under the hood is a surprising move for a company so vocal about its upcoming EV plans.
Remember, it was only last year that Cadillac told dealers to either pony up $200,000-$500,000 in EV-accommodating upgrades or accept a buyout from GM. The brand lost about 30% of its dealer network as a result, though they were admittedly low-volume stores. Additionally, just this week, Cadillac begins taking orders for its all-electric Lyriq luxury crossover. The vehicle is being touted as a milestone marker for the brand, “setting the standard for the future,” according to GM President Mark Reuss.
It will be interesting to see how Cadillac’s new strategy fares for the brand, and whether it can turn Lyriq reservations into actual purchases. It will certainly need them if it wants to regain its former luxury crown.
Did you know…?
Volkswagen is officially building an all-electric truck for the U.S. market. Expected to arrive by 2026, the new hauler and its corresponding R-SUV will wear the Scout badge. Yea, that Scout, of International Harvester fame. No word yet on a design or specific target demo, though it is expected to be a full-size model.
Rivian Gets Georgia Greenlight… And Immediately Throws Up Some Red Flags
Despite vehement opposition from local residents, electric start-up Rivian managed to secure $1.5 billion in incentives and tax credits to build its second U.S. factory in Rutledge, Georgia. The subsidy package is the largest one ever offered by the state of Georgia. It is also the biggest auto assembly subsidy package in U.S. history, according to Greg LeRoy, executive director of Good Jobs First, a grassroots group dedicated to corporate and government accountability in economic development.
The state celebrates the $5 billion plant and projected 7,500 jobs it will bring east of Atlanta. LeRoy, however, criticizes the deal’s lack of transparency and planning. Since incentives will cost roughly $200,000 per job, he feels “the state can never break even.”
LeRoy also noted that Rivian is still an “unproven” company, with no real production track record. He believes this uncertainty – coupled with the strain such a plant will put on local public resources and property tax rates, as well as the rural environment – raises some serious questions.
A Few Red Flags
EV startups – even those with a product as viable as the R1T – have a habit of flopping. Faraday Future, Dyson EV, Byton, Nikola: they’ve all kicked the bucket. Just last week, Canoo seemingly joined their ranks. The EV maker said it is so low on cash, it may not be able to stay in business.
But those guys aren’t Rivian, you say. And you’d be right… except that Rivian is showing a few worrying signs of its own.
Shortly after securing Georgia’s incentive package, Rivian’s stock sunk 21% when its big-name investor Ford began selling off shares. The Washington Post reports the Blue Oval dumped about 8% of its holdings, or 8 million shares, when the post-IPO lockup period expired. (It’s worth noting this is also around the time customers began taking ownership of their new electric F150s.)
A little later that same week, Rivian reported its unexpectedly low Q1 revenue of $95 million and noted a $1.6 billion loss. A mere few days after that, the EV maker announced its first recall. With only a few thousand R1Ts on the road, 502 of them need to visit a Rivian service center for a front passenger seat replacement due to an airbag safety risk.
While Ford sold an additional 7 million shares last week, other notable investor Amazon is holding steady while billionaire backer George Soros increased his stake by purchasing an additional 6 million shares. Additionally, Rivian remains confident it has enough cash on hand to weather the remaining supply chain issues, which CEO R.J. Scaringe feels are already improving.
Market Happenings & Legislative What-Have-Yous
Rivian’s optimism is refreshing but contradicts what experts are saying.
A new study released by RBC Capital Markets notes that global port congestion is actually worsening, with one-fifth of the world’s container fleet essentially sitting in traffic and less than 40% of ships arriving on time. Further complicating matters? Freight, fuel, and insurance costs are also rising, and the “full ripple effect” of China’s COVID shutdowns and Russia’s war on Ukraine have yet to be felt.
Gas prices jumped again, too, rising 15¢ in one week to hit a new national record of $4.48 a gallon (AAA). Economists forecast even higher numbers as we inch toward Memorial Day weekend. Diesel is also at a record high: $5.56/gallon. And since diesel effectively runs the country – fueling the commercial planes, trains, and trucks that move our retail goods and services – it looks like the highest inflation the U.S. has seen in four decades is set to continue.
A Little Relief
Earlier this month, the Fed announced a half-percentage-point increase in interest rates as a stabilizing effort. It marked the single largest interest rate hike in more than two decades. Federal Reserve chair Jerome Powell noted he would be willing to do so again, taking a page from Alan Greenspan’s 1994 playbook. Economists are doubtful the current Fed can navigate a true soft landing, however, rather predicting a “soft-ish” plunk at best and a full-fledged recession at worse.
In some good inflation-relief news, used vehicle prices are finally dropping. While still up about 14% from last year, according to CNBC, wholesale prices dropped 6.4% since January with average selling costs dropping the last three months as well. (However, a few models are still selling for more than they did when they were new!)
The Engine Block is your one-stop source for any and all auto industry news. Keep an eye on our weekly round-up of enthusiast coverage, product reviews, vehicle spotlights, auto show/expo features, and more. Be sure to check back Friday for a list of the best off-road experiences in the Southwest.
