The US automotive market and European automotive market are evolving in different ways, but both can learn from one another. This episode of Talk Auto brings together Jonathan Smoke, Executive Vice President and Chief Strategy Officer at Cox Automotive Inc., and Philip Nothard, Insight Director at Cox Automotive Europe, for a transatlantic look at automotive industry trends. From AI adoption and robotaxis in the US to the rapid growth of Chinese manufacturers in Europe, the conversation explores the lessons emerging from both markets and what businesses can learn.
In this episode of Talk Auto, we discuss:
Guests:
Jonathan Smoke - Chief Strategy Officer, Cox Automotive Inc.
Philip Nothard - Insight Director, Cox Automotive Europe
00:00 Jonathan Smoke
We have lived through the last 25 years of what I'll call the internet era of car shopping and buying. That era is dead. That era is over and long live the Agentic AI era of car buying. It's gonna change the world and the way that dealers even surface in terms of connecting with the consumer.
00:18 Holly Mottram
Now, changing gears a little bit. Quite simply, robotaxis.
00:21 Jonathan Smoke
Ultimately, I think that robotaxis and autonomous vehicles are part of the answer to affordability that can't be perfectly solved by innovative financing programs and Chinese manufacturers.
00:34 Rich Price
What do you think the US needs to prepare itself for once the Chinese OEMs do find their way in?
00:40 Philip Nothard
Chinese new entrants are coming, they have got the US in their sights. The reality is that Chinese manufacturers could actually offer products and solutions for customers that are not currently being served by the current operators in the US.
00:56 Jonathan Smoke
To naively say that a Chinese brand and a Chinese model shouldn't be available is missing the point that it's a global industry. Dealers in the US are quiet today, but off the record they will say, well, of course we want to be able to sell Chinese models. In our forecasting, our view of the future, it's the only way we get back to 17, 18 million possibility.
01:17 Holly Mottram
01:21 Holly Mottram
Welcome back to another episode of Talk Auto. I'm Holly. And this month we have a particularly special episode, don't we? As we have been now going at Talk Auto for 12 months.
01:24 Rich Price
And I'm Rich.
01:35 Rich Price
We have and to celebrate our first anniversary, we're joined by some very special guests today. Jonathan Smoke, all the way from Atlanta joins us. He is our Exec Vice President and Chief Strategy Officer for Cox Automotive. And with him, we've got Philip Nothard, who's our Insight Director for our business in Europe, who was also our very first guest. How are you guys doing?
01:58 Philip Nothard
Yeah, very well, very well. And I can't believe it's twelve months since I was first on this talk auto. So yeah. Excited for this one.
02:03 Holly Mottram
No, was incredible to you on and now 12 months later it's full circle moment isn't it?
02:10 Jonathan Smoke
And it's a sp especially especial for me to be able to sit next to him in this special
02:15 Philip Nothard
I think it's the same voice. We've we've known each other a long time, but the first time we've met in person.
02:20 Holly Mottram
Well, Well, hopefully then we can have a really interesting chat. And let's first off dive straight into the topic.
And this one I'm really looking forward to recording. What we're going to be doing is talking about comparing automotive markets in the US and UK, both of your specialisms, and what we can learn from each other. So I guess starting off, Jonathan, you've been in the UK for a couple of days now, haven't you? Yes. Four or five days. What stood out to you as a clear difference between the UK and European markets in comparison to your experience in the US?
02:51 Jonathan Smoke
Well, it doesn't take long to see the incredible range of choice that's here. I think if you if you were to randomly survey people around the world which market has more variety in vehicles, people would probably choose America on that list. But you have over a thousand more models actively selling right now than we do in America for a sixteen point two million market where you're you have a two point two million market. So the choices are honestly
I think to a consumer could be overwhelming in terms of what's there. And it has implications as well to the complexity of the market from after sales perspective for what we see at Manheim, you name it. You just have so many permutations and details that on the one hand one hand, if you're a car lover, it's awesome just to drive around and look in the car park. I've been at
I've been at our Manheim location at Leeds the last couple of days and just looking out the window was fun to see the cars that are that are coming through. so that range of choice is certainly be bewildering. And then on top of that, of course the Chinese jump out pretty quickly. We don't have those cars. We don't even know what is that brand. What is that? You know, that's a key difference.
04:08 Rich Price
Cool. And Phil, you're obviously involved not just in the UK, but Europe as well from an insight perspective. Are you seeing the fact that there is a big volume? I noticed the other week I was in Madrid and there were brands in Spain, for example, that we don't have in the UK. We know some of the reasons why those brands currently aren't traveling to the States, but do you anticipate that the UK will also
to have more brands coming.
04:41 Philip Nothard
clearly and it you know we've covered this before that you know the UK now we're approaching 80 brands compared to 40 in the sort of pre-pandemic 2019 period so to back what Jonathan's saying there the choice is significantly accelerating. I think clearly from a a US compared to a UK European perspective, you know, there's a lot of learnings for the US. You know it's not all the manufacturers that we've got entering the UK that are going to necessarily win and go into the US.
You know, clearly the UK, Europe have got sort of four or five leaders that are really making a a difference and making a impact on the market share in the UK and Europe. You know, and again, it's not about all the choices. They won't all win. They won't all want to enter the US market. But I think clearly, you know, if you're looking at from a US perspective, you know, what they shouldn't they shouldn't really overestimate what the Chinese manufacturers are doing in UK and Europe.
what they should do is un not underestimate the pace of these new entrants, the speed in which they're coming into the market, the strategies, the strategic partnerships that they're gaining, the after sales, the service, etc., that they are gaining ground and grain gaining that market share. So, you know, I think of as something that the US needs to look at from the UK Europe is actually which brands are entering and actually offering that consumer full end to end service. Those are the ones that are making an impact.
And you know, those are the ones that could change and offer the US market some choice and something that, you know, they haven't currently got in the marketplace.
06:11 Rich Price
Absolutely. And is that, with the US in mind, obviously it has fewer brands and fewer models, derivatives, etc. Is there anything else that you think challenges the US versus what you've seen in the UK? I was reading something that you spoke about from a forecasting perspective and you said about how leasing is likely to take off in the US.
06:34 Jonathan Smoke
We've been saying that for a few years.
06:35 Rich Price
But to sort of tackle that affordability for the consumer. In the UK, for example, PCP and Leasing have run the show for years. Is the US market essentially looking to borrow the UK playbook? And how sustainable do you think that is?
06:53 Jonathan Smoke
I definitely believe the US should be borrowing some pages from the UK playbook, no question, because I would say a key impediment to the US market today is affordability and that shifts the market towards dependence on a smaller portion of the population. It's really the top forty percent of households in the US that are buying new vehicles anymore. and increasingly it's more the top 20%. So we've shrunk the pool.
Of who can buy a new vehicle. And we are a country that is very dependent on personal transportation. And the used car market can't fix all of that because the affordable models are no longer being built and sold and delivered. So huge epiphany for me is understanding PCP, understanding as well that lease w when you talk about leasing, it's a part of your fleet world. In the US, when we say fleet, that doesn't include leasing.
but certainly yes, the percentage that those two programs alone really means you have a more balanced demand market in the US. you don't run the risk of if there's a stock market correction, you're gonna lose the top twenty percent who've been driving your market. from that perspective, I think it's it's much more healthy. and so I do think that there's a page that I we could do a session at NADA, the biggest
you know, gathering every year of US dealers and kind of share some insights that I think dealers would be very excited about. And it begs the question why on earth aren't the finance companies offering something similar in the US?
08:36 Rich Price
Okay.
08:37 Holly Mottram
Okay. Interesting. Now that's the US taking a page from Europe. Now where Europe might be able to take a page from the US is in AI adoption in dealerships and retailers.
08:48 Jonathan Smoke
Yeah, I believe so. I mean, there's certainly pieces of the technology page. you know, as an observation as well, I would argue that AI is much more in the economy and changing things hour by hour, day by day in the US. It's not that the UK has none of that going on, but the relative pitch and furor I you know, I've been here almost a week and no one's talking about l last week's news that
the former Anthropic person said that said that w there's a ten percent chance we're all gonna be annihilated soon. and so you've got that happening. You've got this incredible fur at a grassroots level of consumers against data centers and a lot of what's being built out to AI AI. And there's no question it is the difference in the strength in the US economy today versus Europe and UK is coming from the investment and incredible
money that's being poured in into AI. But then you have, yes, I think I think from listening to your podcast, but also talking to the to the team here, I think there's a little more apprehension, a little more let's see how this works out. And in the US, you have rampant experimentation going on, and we are at the forefront of that. you know, and it's
There's a couple of areas that I think from a retailing perspective that matter most to a dealership's performance, and those are the same no matter where in the world you are. And AI is being applied to customer relationships. We made it a very large investment earlier this year to buy a company called Fullpath that basically gives dealers what's called a CDP, that is a customer data platform, but it's really a way to use AI.
To manage all of the relationships with a dealer and incorporated with our data from our first party sites like Auto Trader and Kelley Blue Book, it means that the dealership is in a position to have a call, a text, an email, a pop-up on the website to inform a consumer that is actively investigating something on their website or on Auto Trader and the like. And I think interestingly, there's there's an ideal in the US called
11:11 Jonathan Smoke
Maximizing the lifetime value of a customer. I would say it's been an ideal that has been impossible to do, but AI really creates opportunities that's that's a real thing to be able to achieve. And then of course inventory management is the other place that the bread and butter, finding inventory, pricing inventory, managing inventory, and those are two areas where we're pushing AI c capabilities into our solutions, and we definitely know dealers.
really want to see improvements. But there's other areas that are just like about automating the back office, about preventing fraud in credit applications, you name it, I think there are examples of AI really producing value. So I think we're on the cusp of it. And I also don't hear as much, even on your podcast, one of the things that struck me is that we have lived through the last 25 years of what I'll call the internet era of car shopping.
and buying. That era is dead. That era is over and long live the Agentic AI era of car buying. And so our consumer-facing properties are where the biggest disruption is happening. And we're in full AI mode. consumers want to converse that way. Consumers that are starting in Gemini or ChatGPT want to stay there. It's going to change the world and the way that dealers even surface.
in terms of connecting connecting with the consumer.
12:42 Rich Price
Okay, I think I actually read that you and your team from Cox Automotive in the US in a study there was over 80% of dealers are now using AI in some form of In their dealership day in day out. you talked about the impact that's having and some of the things they're doing But I guess I throw something to fill on that with his head in the UK and Europe. How do you think?
What are you seeing our adoption in the UK being of AI, how that's being utilized and what do you think we could learn from the US?
13:18 Philip Nothard
I think as Jonathan said, there is more of an apprehension of the use of AI. You know, we're not we're a little bit more nervous about it. You know, it's US are definitely, you know, monetising using AI to monetize the value of what it can do through efficiencies and productivity and services. You know, I think if you look at it from a UK perspective, recent surveys are talking more down towards the 60% of dealers using AI.
When you actually dig down into that, it's more about in the chat functionality and the customer engagement functionality and less so in terms of that forecasting the connectivity of data. And I think one thing that is becoming clear now, you know, we've got enough data as an industry. You know, we've got more data than we probably know what to do with at the minute. The big question's gonna be is using AI to connect that data to create those monetizations of it.
connected to and start to think about that whole end to end ecosystem within the automotive sector and using AI to inf improve those capabilities.
14:17 Holly Mottram
Yes, used very differently, I think, in the UK and US or Europe and the US at the moment. I feel like what you're saying in the US is AI is not a competitive necessity anymore. It's gone from a competitive advantage to a competitive necessity, where you have to have it in order to kind of access that next level of customer need and customer requirements.
14:37 Jonathan Smoke
And and along with it actually comes risk. this has been a chapter the last couple of months. At the beginning of the year it was all about what can AI do? How quickly is it changing? It's all for the good. You had dealers also experimenting with I don't need a DMS, I'm gonna use AI to write my DMS and I can cut the ties with the software priv providers. So the so-called SaaS Apocalypse start started. but then we had Mythos
Then then we have the things like Anthropic. I believe, you know, your your head of government is proposing to be the neutral party that's helping helping the world regulate AI and keep it from going out of control, or that was proposed at the at the UN yesterday. So there's there's an aspect of that too, that dealers are also aware they're on the leading edge and that they're, you know, am I in using AI am I exposing myself to
totally disruption and problems that we've yet to really un understand before. So there's there's a there's an element of yes we need to experiment, we need to do this aggressively, but it also underscores you need to have the data, you need to have the approach that's really baking in enterprise security and so it's not just I'm gonna fool around with ChatGPT and produce a new DMS.
16:01 Philip Nothard
talking about you know clearly talking about AI and data but actually the right data is going into the AI and actually the data that's coming out of the AI is checked before it's used because you know the if it isn't checked then it is going to have a an impact on financials if you're not careful. So you know it it's kind of get over that nervousness, that apprehension, use it but use it in the right way is going to be crucial for the UK and Europe.
16:27 Rich Price
That was going to be my next question, Jonathan, to you was if 80 % or more are adopting in the US, what actually are the material impacts positively that it's having on the dealers? What is it actually doing for them? What are they using to gain advantage?
16:43 Jonathan Smoke
Well, I say it fits the theme that everyone is looking at defending margins, improving productivity. a sad statistic for the industry is we've had the same number of vehicle sales per salesperson forever. And the internet era actually didn't improve upon that. and AI, I think there's more faith that, especially with the Agentic AI, there there's an opportunity to change that. perhaps, and I think it links with what you're actually seeing more of the traction in the UK.
what is an obvious let's do this because it's better for the customer to improve the connectivity. Because you now with the Agentic AI tools can interact with somebody on their terms, on their chosen media, and that's what the tools enable and like the full Fullpath solution we have or some of the things we're doing in the CRM space. So I think even if the goal is merely improving the purchase process,
Which then triggers back to my observation that, well, there's even more choice here. This is this is an even more complex for a consumer to feel good. I guarantee you there are consumers in the UK who are using Gemini and ChatGPT and Claude and Perplexity and Grok to say, what's the best vehicle for me? And and that's happening. And it could be wrong today if if the right data in the in the right directions aren't aren't influencing the knowledge that
there. So I don't think dealers can afford to kind of avoid being a part of that consumer conversation.
18:16 Holly Mottram
I absolutely agree. think especially on the search function as well. Somebody I know was looking to purchase a new vehicle and they said they didn't know very much about the industry. I said, well, don't ask me, ask an AI. Put in what your requirements are, what you do for work, how far you work, what fuel type you'd like, if you need a car seat, if you need et cetera, and it'll spit out what's the right car for you. So the world is definitely changing when it comes to AI and how consumers are using it to search for vehicles, to research.
and therefore dealers do need to adapt that requirement to fit into that new world. Absolutely. Now changing gears a little bit, this is a topic that we find quite interesting. Quite simply, robo-taxis. So we know that in the US these are fairly common, I think you'd say.
19:05 Jonathan Smoke
Yeah, we've we've reached a tipping point and they're they are a reality and more markets, consumers are are really gravitating towards them.
19:14 Holly Mottram
Absolutely and...
19:15 Rich Price
Well, this week we've seen on the news Tesla releasing a vehicle in the UK that's got no pedals, no steering wheel, no anything but two front seats on a screen. cab. Yeah, the cyber cab. Obviously, it's been in the US now all that technology has with other OEMs as well. How do you think that will translate across to the UK and other countries in the EU?
19:43 Jonathan Smoke
We we believe it it will translate. Ultimately I think that robotaxis and autonomous vehicles more broadly are part of the answer to affordability that can't be perfectly solved by innovative financing programs and Chinese manufacturers. There's still a fundamental issue of transportation is vital, and not everybody lives somewhere where they can rely on public transportation for a hundred percent of their
transportation needs. So we from a strategy standpoint, we look at it in two phases. And right now we're in the phase that it's scaling. The dominant model in the US is not to be too technical, but it's level four ring fenced monitored with Waymo and Zooks being the top sources of that transportation.
But what we see in the markets where that is at play, and that includes Atlanta, is consumers love Waymo's once somebody has tried a Waymo, they don't want to go back to a random Uber or Lyft or other type of identity. You know also you don't have to talk. America's a tipping culture and there's no tipping of a robot.
20:55 Rich Price
told to anybody.
21:05 Jonathan Smoke
It it's it's just super predictable. It's the same experience. The quality I think is top notch. So we're finding this incredible attitude of if they've tried it, that's all they want, that's all they want to do. And so we've crossed that chasm of people being afraid of it. and I think interestingly demographically, one of the most underserved communities are elderly people.
you know, the situation where you're trying to take the keys away from dad because, you know, he really shouldn't be driving anymore. I think there's huge opportunities, even for people that you consider Waymo maybe to be a a young person's game. so this near term it's impacting ride hailing. it's really not getting to the scale and the economics that it's a threat to personal transportation, because at the end of the day, that's good for me if I want to go out with my friends.
or coworkers, you know, down in the city, or if I want to go to a soccer match or w what whatever the situation, it's more of that extra trip that we've actually seen ride hailing take over portions of the miles that get put on on vehicles. but when those economics get to some crucial levels that they tip over into
essentially being more rational for a person to get 100% of their transportation needs from ride hailing, that's where personal ownership starts to be a threat. Now we think we're at least 10 years from that in the US. So we've got a long way to go. There's differing models like Tesla's model that you mentioned. That's true level five. No pedals, no steering wheels. It is proving to be a little bit more.
challenging for them to implement and that it's a very controlled experiment in the US but theoretically that's the ultimate disruptive technology that if it's suddenly cracked through and all the miles and all the cameras and all the things that they have in Tesla vehicles worldwide, it could mean those vehicles are available everywhere all at once. so it's a real threat that would speed up that adoption timeline a a bit.
23:21 Jonathan Smoke
but I think that's where you get into concepts we've discussed this week like total cost of ownership, what does it mean to the car park? What does the typical household own in multiple vehicles? In the US, we believe people aren't going to give up all their cars. But for households that have more than one car and the average household in the US has two point one cars, you start to s to question do I really need that second vehicle? Because the insurance costs, the maintenance costs, the tax cost,
You know, make it make those things a little bit more I don't need this anymore because I get what I need from Waymo or Tesla or whoever the provider is. So it's huge. And it is AI at the end of the day. so it connects to a lot of the other things that we think are defining the next twenty years. but it's definitely one where the US is ahead. And I think then you can question, well, what are the roadblocks that you're running into with regulations, with insurance?
who has liability in the case of an accident, that kind of thing.
24:23 Holly Mottram
I'd be interested, Phil, to get your take from a European, US perspective. think Bolt just came out to say that they were... 25,000 in Europe. what's your take on how it's going to take off in the
24:34 Philip Nothard
Clearly, you know, y you're talking about trials just starting now in the UK twenty twenty six, they're talking about H two twenty twenty seven before we'll have any real significant vehicles on the road doing anything in the UK. So we are several years behind the curve of where the US there is and you know John's talking about ten years. So we're already two or three years behind where the US are in terms of that autonomous vehicle. There is a different challenge, particularly when you start to look at UK and Europe.
Because of regulations and local regulations, you know, with they're talking about 25,000. I think the technology's there, the ambition's there. Unfortunately, it's the regulation, the permissions that could be the blocker that slows that adoption in the UK and Europe. And I think the other thing that we are now starting to talk about a little bit more, and it's talking about in the US, is actually all the regulations are built around the traditional vehicle with the pedals, with the steering wheel.
So there's actually a call now that actually regulations now to start to need to think differently and create regulations and testing around autonomous vehicles without a steering wheel, without pedals, because the blocker is you're doing tests and regulations based on today's vehicle, not the vehicle of the future, which is what we're trying to get to with autonomous vehicles. So I think it's coming, but we are two or three years behind the curve of where the US are currently.
26:00 Holly Mottram
Absolutely. Now just to introduce a new section into the podcast. To celebrate our 12 months of Talk Auto, we are going to ask you to give us three words to summarize the past 12 months of the automotive industry in your respective markets. Now that is quite a challenge to condense it all into three words. I wonder if you...
26:25 Jonathan Smoke
Yeah.
26:28 Holly Mottram
this is fine. Jonathan, let's start with you in the US market.
26:34 Jonathan Smoke
well I'd start with tariffs. you know, it's a it's one of those funny words that mean something in the US and mean other things in the UK because w saw the ticket for our car park last night. There w there was a tariff. It's like, ooh, that just sends chills for us and what has happened. You know, the US has swung massively away from free trade and free trade with our most immediate partners that have definitively
influence the way that vehicle production for the vehicles that are sold in the US are done. So it's created a real it's thrown a real wrench into the machinery in terms of the supply and it's actually one of the inhibitors that's keeping the market as low as as we're experiencing. And we're not done. I mean we're threatening more tariffs on Canada. that impacts three of the top ten vehicles sold in the US and you know I mentioned before w we're of high volume.
market for vehicles. So when two of the top Hondas and the top Toyota are suddenly now twenty five percent more expensive, it ri it really changes the economics of the situation. But generally I would say it it tariffs are one of three factors that are then influencing something that I think probably overlaps. I
I don't know what if you're gonna say, but inflation has been another word that I would uncover because you see it in fuel prices. In the US, inflation is being driven by tariffs in markets where the tariffs apply, so the vehicle markets in that category. But so far it's been the manufacturers have mainly absorbed the added cost, but we're at the sort of breaking point. There's no more absorption that they can do. So if you have twenty five percent more in Canada, it's gonna be a different world for car inflation.
over the coming months. but we also have AI being driven by all that AI driving inflation with AI investment. So buying a server, buying a computer, buying an Apple iPhone is dramatically more expensive today than it was before. frame of reference, our our company buys a lot of servers. And a server we were buying at the beginning of the year was twenty thousand dollars on average.
28:53 Jonathan Smoke
Today we're paying over $80,000. there's real inflation that's tied to this AI investment, investment theme overall. And what does that do? It makes our affordability challenge even more acute because there's no room left for the median and below income consumer to be able to handle their increased fuel and housing and other expenses. And so vehicle purchasing is
is constrained and off the table. So that sounds dire when you combine those two things together.
29:28 Holly Mottram
Two heavy words.
29:30 Jonathan Smoke
My third word would be resilience. Okay. Because I would say everyone's been amazed that tariffs alone should have pushed us under sixteen million and we're on pace for at least sixteen one this year. you know, as I mentioned, the buyers in the upper income segment are alive and well, and I think a lot of that has to do they skipped a trade during the supply chain crisis and now they're driving a much older vehicle than they were before.
And more importantly, when they pull into the service lane, they have $2,000, $3,000 expenses due on the to repair a vehicle and they're saying, you know what, that new monthly payment does look at attractive. So it's been remarkably resilient, but it's on the backs of a much narrower slice of the pool that then influences what's being delivered to the marketplace and gets us further away from really having vehicles that work for every everyone. So in the short term, it's promising.
Longer term it's really is this good for us.
30:29 Holly Mottram
Phil, firstly, I would be interested to see what you think about those three words and then, yeah, let's hear yours for the UK market.
30:38 Philip Nothard
I mean they are obviously translatable. I mean the whether you know you talk about tariffs that impacts the UK and Europe and we know what's going on at the minute around the tariffs going into Europe from the UK, that impact with potential to hit the UK export market into into Europe. So I think you know, without being repetitive on it, I think, you know, energy is the big factor at the minute that's been talked about and will be talked about probably for the next twelve months, impacts in all markets, particularly UK.
in Europe and coming into the automotive sector 'cause it hits the automotive supply chain, hits services within the automotive sector, but it hits the consumer, back to that affordability, back to that cost of ownership, et cetera, and that entry point into the market. I think what we can't not talk about is probably the ZEV mandate, which is fairly unique to the UK. It does play into into Europe with their net zero thresholds. But
you know, the net the ZEV mandate has been the talking point for some time now in the UK. We are obviously anticipating some consultation decisions that are imminent, but I can't see that there'll be any significant change. There might be some changes to the threshold, but nothing significant that will will change the
31:50 Jonathan Smoke
You're not gonna tear up the rule book with
31:52 Philip Nothard
himself. I don't think so. You'd hope so, but I don't think so. So I think there's there's there's probably those two areas. I think probably the third one is is really thinking about, you know, the impact of the new entrants and what that would does to the whole of the UK and European market landscape. You know, we're talking about a two point two million market in the UK, we're talking about growth across Europe, you know, on a backdrop, which is a challenging economy. We're talking about high energy costs.
We're talking about sticky inflation, we're talking about sticky interest rates, yet all markets across the UK and Europe have got single or dig double digit growth in UCA registrations, which is primarily driven by the new entrants coming to the market, which we talked about previously. So I think there's probably those three areas that are key topics that have been the talking point for the last twelve months.
32:41 Holly Mottram
And that's it.
32:41 Rich Price
Great, thanks, Phil. So moving on to our sort of final section of today's podcast, and we touched on it earlier, but it's that what could the US learn from the UK and Europe? Jonathan, you spoke about the way that potentially you look to finance the vehicles with the consumer. But I guess the first question on that to you, Phil, would be given that we've now had the Chinese entrance into the UK and Europe for
quite some time now. Eventually you would assume, I don't know exactly when it will be, will it be before the current administration leaves or will it be immediately after the Chinese OEMs will enter. But what do you think the US needs to prepare itself for once the Chinese OEMs do find their way in?
33:33 Philip Nothard
I think we touched on it earlier that you know the Chinese new entrants are coming. They have got the US on their sights. You know, they know that the US is a market that they want to enter. I don't think it's a priority for them at the minute. They've still got enough to go out in the UK and Europe. And then you've got US and you've got India, which are two big marketplaces that they do want to go after, but i the timing has to be right for them to enter those marketplaces. I think clearly, as I said before, that you know
the the leaders that are coming into the marketplace they are entering strategically. They are entering into localisation. So we talk about plant partnerships in the UK, we're talking about plant partnerships across across Europe. So they are investing in localisation in terms of that resource and services. So I think one thing we shouldn't really underestimate is for the US, some of them are valuable products. They do
answers some of those challenges that Jonathan mentioned earlier and that cost of ownership, that price entry point, and gives them choice. And it and you know reality is that Chinese manufacturers could actually offer products and solution for customers that are not currently being served by the current operators in the US.
34:48 Jonathan Smoke
No no question. And to naively say that a Chinese brand and a Chinese model shouldn't shouldn't be available is missing the point that it's a global a global industry. Because outside of Tesla and Rivian, two, you know, EV companies
the company that produces more vehicles in the US is Honda. so is it the is it the assembly and the content in the car or is it the brand and where the company's owned and even defining what a Chinese car is, technically but from an ownership pers perspective, Mercedes Benz is a Chinese company the way some of some of our government is defining it. So you have pol you have Volvo and Polestar.
as immediate eggs examples, you have partnerships with American companies, with Chinese firms. but I totally agree there's a place for this. I think what you're gonna see is you know, it'll take time. It's a minimum of three to five years. I don't think it's gonna happen under the current administration, but I do think it's possible that the current administration negotiates a deal that leads to the investment.
in assembly in the US, you're probably gonna end up with vehicles that are actually not directly offered in Europe or the UK today. They're probably gonna have some US content, especially with the technology that go go into the vehicles. And that'll add cost by the way to the vehicles, but still it'll be a dramatic improvement in capability and affordability for the US consumer. and there's plenty of you know, as I mentioned, you just run into a personal transportation crisis.
If we don't have more solutions for affordability. but you know, on on top of that, you have you know just the polarization and the K-shaped economy, which by the way is another thing I don't hear over here as much about, but it is the di there's no discussion that we have in the US that doesn't bring up the K-shaped economy, that the economy is good for upper income people, but it sucks for everyone else. and you know, I think transportation is a big part of that.
37:04 Philip Nothard
I think that's because the upper end are leaving the UK. That that's probably why it's not talked about t a at that level. But yeah, I think I think you're right. I think the you know, I think if there's learnings that thinking about what we're talking about today, this shift
in the automotive landscape is it's not local. It's not y specific to the UK, it's not specific to Europe, it's not specific to the US. This is a global shift that's starting to happen. And it's happening at different rates.
37:37 Jonathan Smoke
And by the way, the same is true on the retailing side. Our three of our six largest dealer groups in the US are three of the top dealer groups in the UK. it's not like they aren't aware of what's happening in other markets and dealers are in the US are quiet today, but off the record they will say, Well, of course we want to be able to sell Chinese models.
And I think that's in our forecasting, our view of the future, it's the only way we get back to seventeen, eighteen million possibility.
38:15 Holly Mottram
I your affordability point is spot on there as well. think that's something that we've seen in the UK is one of the biggest advantages of having these new market entrants is that affordability perspective and essentially the value that you get for your buck is fantastic with those. And yeah, as you say, I think the consensus is definitely not if those brands are entering the US market, it's going to be when. I know you gave a vague timeline on that, where do you think the opportunity is for these brands in the US? What opportunities do you think they will be pursuing in that market?
38:44 Jonathan Smoke
Well, I think I think there are opportunities everywhere. So it's not like one geography or one segment because the Chinese are delivering high quality, they're turning design. And I've heard you talk about the huge difference in delivery of a new model and the innovation that's occurring there. so I think that has broad appeal from luxury buyers to the tech savvy.
young people to the to the buyer that's just looking for affordability. And by the way, yes, we tore up our our regulatory book last year and that's caused us to go backwards on EV adoption, but hybrids are growing even more rapidly. in fact I think our hybrid share and growth is equivalent to what is happening in the UK and the Chinese manufacturers are playing in that space too.
So it could take the form of something that's a little more amenable to the average American consumer. We're a long way from having parity and petrol pumps with charging stations. it it is I ran the numbers when I heard you talk about that, it was like unbelievable. And is that it you know, is that true? And I got all the numbers and yes. In fact it's it's getting closer to I think two to one.
Yeah difference on the charging side. In the US, it's five to one gas pumps o over charging stations. But nonetheless, we're making progress. There's been almost forty percent growth year over year in new in new charging networks. We've hit a tipping point that I think is no longer a political thing. this this is a practical thing. And I think there's enormous potential for that path to go. And I think the Chinese play a role, whether it's hybrid or or EVs.
40:35 Rich Price
Do you think the the consumer in the US is as open-minded to moving from a ice vehicle to an EV? Like we've obviously we're almost forced into that in the UK to a degree with the ZEV mandate Obviously the OEMs are forced to build those vehicles. Otherwise, they're gonna gonna be fine You don't have those same same restrictions, but from the consumers perspective as well. Obviously America's always been viewed as that
41:05 Jonathan Smoke
The laggard that doesn't want the identified.
41:07 Rich Price
The very happy to the huge, huge engines, gas guzzlers. That's generally a perception. Maybe it's not the reality.
41:19 Jonathan Smoke
No, I mean what we see in our research data is the majority of Americans say whether or not they own one today, they are they are considering an EV for their next purchase. and people who who have owned EVs are not going back to that. and part of the tipping point I think that we've achieved and I think maybe it has even greater staying power over the l longer term when it's not being forced on you.
That it's actual the practical economics of what is the best powertrain for me, what is the best vehicle. I mean, we've clearly got parts of the country that even even the best of EV technology today is probably not going to be the best vehicle in winter months in Wyoming or you know, var various places. but for the typical American with two vehicles, just kind of share the math. We have six million EVs in the car park today.
out of 290 million. if we just replaced one vehicle with an EV in all the households that have more than two vehicles and add the additional criteria only the people who can charge at home. So they have a garage, they have charging capability, so it's the easiest slam dunk use case po positive uptake. That would be sixty five million EVs in the car park.
And so I'm a huge proponent. The economics makes sense. You add fuel prices that are more likely to be higher rather than lower or or remain at this level for the foreseeable future. And I think a lot of Americans are picking up to it and thank God it's not it it was defined if you drove an EV you were you were stating what your political affiliation is and we're pass
43:10 Holly Mottram
Brilliant. Well, I think one question I think to end this conversation on thank you both again for being on is what's one thing that you would urge the automotive industry in both of your markets to take away from the conversation that we've had today?
43:26 Philip Nothard
I mean I touched on it a little bit earlier. I think clearly, you know, Jonathan and I were talking about where we're slightly more advanced in the UK, Europe, compared to the US. You know, we're constantly feeding Intel insight into what the Chinese new entrants are doing in the marketplace, slightly more advanced in terms of that transition to electrification. But transversely to that, you know, we're talking about AI and where US are sat in terms of their use and capabilities and adoption of AI and
you know, really embracing AI and where it can work within organisational services, whereas we're a little bit more behind in the UK and Europe. So I think you've touched on it before that this change, whether it's electrification, AI, autonomous, and you enter and change landscape of brand representation, it's global. It's changing. So the more we think about the global perspective and think ahead, that the winners are going to be the ones that are connecting with other marketplaces, watching other marketplaces, understanding what is happening.
what the transition looks like and what they can learn from what's happening in other marketplaces like we've been talking to about today, you know, the learnings that the UK and Europe are experiencing from the Chinese new entrants, that, you know, some positive, some not so positive, some opportunities that answer some solutions and problems that the US are experiencing around that cost of ownership, EV product, etc. So I think generally takeaway is really look globally.
Don't just lo local at your your current marketplace. Think bigger, think about what's happening in other marketplaces and the bigger shift in automotive.
44:58 Jonathan Smoke
Yeah. You just said exactly what I was gonna say is learn learn from each other because at the end of the day, we have the same issues, we have the same opportunities, we just have slightly different constraints and priorities. and we can benefit from taking pages from the playbook. We don't need to reinvent the wheel. The the experimentation we're doing with AI and robotaxis, I guarantee you will make an easier path for adoption.
over here. So let us be on the bleeding edge and and you get the best of that. likewise we'll learn from the Chinese and what that's doing to the used car market to our our the dealer retailer networks and but in the near term boy the beginning conversation let's take a page from what the UK has done to address affordability and I think that could actually be
a winner that everyone would get get behind. Right.
46:01 Holly Mottram
Well thank you both for being on. It's been a really interesting conversation and I quite like the fact that the one takeaway is kind of the same for both of you which is look to the other markets, look bigger and take those lessons.
46:12 Jonathan Smoke
We listen to each other.
46:14 Rich Price
I was just going to ask you Jonathan, do you think there's anything that the UK are sort of stubbornly ignoring that the US are doing today?
46:23 Jonathan Smoke
Stop only ignoring. No, I would say in more in more cases than not, I honestly believe the UK is ahead. I would probably go back to the embracing technology. Some of that's just sort of in our crazy DNA in the in the US to be swayed by Silicon Valley and you're a little more immune immune from that. but probably it'll be for the better over over the longer term. So I don't I don't think I see evidence of
dragging your feet that's gonna be detrimental.
46:55 Philip Nothard
I think one thing that you do see in the UK is those that, you know, have either got ownership from the US or close relationships with the US, be it in the dealer market or the services market, such as ourselves, you know, we're not you're not as blocks at at this adoption to AI and because we can do our own thing. We can look to other markets, we can look to the US at what they're doing and start to adopt what is happening. We're not constrained by the current
political constraints that we face at the minute. So I think you know there are options there and I think we must be clear that yes, we are behind the UK the US in many spaces around AI adoption, but there are some operations that have really embraced AI and are incorporating it in their, you know, services and productivity and efficiencies and starting to monetise the use of it within their organisations.
47:45 Holly Mottram
Definitely a learning curve for both markets, isn't it? to keep you on your toes. Brilliant. Thank you so much for being on. Hopefully you've had a good time and a good conversation I think we've had. So thank you very much, both of you.
47:48 Rich Price
Great, I thought I'd throw that one in.
48:01 Jonathan Smoke
Yeah, it's pleasure.
48:06 Holly Mottram
Thank for tuning in for the 12 month anniversary of Talk Auto. As ever, we have an email in our show notes if you'd like to get in touch to contact the show.
48:14 Rich Price
Yeah and follow us wherever you get your podcasts and you can watch us on YouTube at the Cox Automotive Europe YouTube page.
48:20 Holly Mottram
and we'll see you next month for another episode of Talk Auto.