The All-Axis Podcast

The Automotive Industry Reset and Navigating the Shift to Hybridization

• Michael Thiessen, Joe McCabe

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0:00 | 43:12

The automotive sector is navigating a major strategic recalibration as global OEMs adjust production targets, balance EV adoption realities, and lean heavily into hybrid powertrain strategies.

In this episode, host Michael Thiessen welcomes back Joe McCabe, President and CEO of Auto Forecast Solutions (AFS), for his annual automotive market forecast. Drawing on over 25 years of industry intelligence, Joe breaks down the "reset mode" transforming global automotive manufacturing. He provides deep analysis on shifting EV timelines, the surge in hybrid vehicle demand, supply chain adjustments, and what these strategic pivots mean for component suppliers, mold makers, and precision machining facilities.

Whether you are an automotive supplier, tool and die manufacturer, or industry analyst, this episode offers vital market foresight to help align manufacturing operations with upcoming production shifts.

In this episode: 
00:00 - Introduction: The 2026 Automotive "Reset Mode" 
04:45 - EV Reality Check: Shifting Timelines & Consumer Demand Factors 
11:30 - The Hybrid Resurgence: How OEMs Are Adjusting Platform Investment
18:50 - Impact on Tier 1 & Tier 2 Suppliers, Tooling, and Tooling Timelines 
27:15 - Global Supply Chain Dynamics & Regional Production Trends 
35:40 - Strategic Recommendations for Manufacturing Leaders

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Speaker - Voiceover

Welcome to the All-Axis podcast from the experts at Tebis. Each episode will talk about technology topics, trends, or solutions that manufacturers need to know in today's rapidly evolving times. Sit back, enjoy the discussion, and let us know what you think.

Speaker 1 - Michael Thiessen

Hello, my friends. Welcome to the All Axis Podcast. Here we find ourselves again in a very special time where we can kind of figure out what's going on in our industry. And uh in order so that we can decode what's going on, um, we always like to invite our experts to this because we all know that I am not the expert. I'm just the mouthpiece here so we can have this discussion. So we invited this particular gentleman in. Now, I think it's now the second year already, or third year already, something like that. Uh so he has already become a household item for the All Axis podcast to kind of uh get a forecast. We're not talking weather forecast because we all know that that's a lost cause, but we're looking a little bit into the automotive industry. Things are changing constantly, policies change, uh the motive direction changes. So if you're really not on top of uh what's going on and kind of talk to this particular individual to see where this industry is heading, uh you might be putting your money on the wrong horse, so to speak. So that's why we always invite him to this podcast to give his insight uh onto this industry and also kind of figure out where is it going, or how does the policy changes impact, and also what can you do as a manufacturer to kind of make your own decisions on on how you're gonna navigate through this entire uh situation. Who is this person that we're talking to? Um, of course, it is Mr. Joe McCabe from the Auto Forecast Solutions, or as we also call it the AFS, and he's gonna take us through what happened a little bit last year, what's gonna happen this year. He has been the president CEO of this particular company. He has been doing this for more than 25 years and giving uh his insight and his knowledge and expertise in the automotive industry to all the different the different areas and the different uh talking platforms. So without any further ado, Joe, thank you for being once again on the podcast.

Speaker 2 - Joe McCabe

Michael, it's my pleasure as always. Thank you for the warm introduction and uh always looking forward to this.

Speaker 1 - Michael Thiessen

So I went uh uh as always when I prepare for um our podcasts, I always go and see what have you been doing. And I went to your calendar of events from last year, and you have this beautiful PDF page of where you pretty much put all your events on there. And I gotta say this, you are a pretty busy beaver last year, and uh so that's awesome because there was a lot of things that were happening throughout the course of the year, and we spoke last year, I think it was right around the same time, February of 2025. We asked you, hey, what's your predictions? What's your forecast? Blah, blah, blah, blah, blah. And I want to ask you the predictions that you had, the forecasting that you had, was there anything that surprised you or that caught you off guard that you were not expecting last year?

Speaker 2 - Joe McCabe

Yeah, that's a good question. So, off guard, no. We, you know, the big story is battery electric vehicles. We never drank that Kool-Aid. Uh, we told people for years uh when governments and environmentalists support an uh uh agenda that is not supported by the consumer, the consumer's gonna win. And uh, you know, there's a lot of times we were called way too conservative. Uh, it actually came in lower than we thought. We were we were always on the low end going, this penetration rate of bioelectric vehicles just doesn't make sense. It's not a it's not a black mark against their technology and the coolness factor and everything about it. They're just not for everybody. And um, so that path continued. Uh, 2025 was sort of the beginning of a reset year for a lot of manufacturers. They finally said, you know, enough's enough, and we're gonna take it on the chin. And you saw GM and Stellantis and Ford all say we're gonna take multiple billions of dollars of a hit on our books because we're finally admitting that maybe this wasn't the course of action. But if only surprise, and I'm it's a pleasant surprise, they finally made that decision. They finally just didn't say, we're gonna invest in this thing until it just, you know, we're in it to the end. They've they they there's a lot of competition. Uh the Japanese are doing great in a space, hybridization is doing great. They're worried about the Chinese, all these influences that are pressurizing the market right now, affordability, you name it, that they finally said, okay, let's do a reset. And we are, I'm gonna call us, we're in the reset mode right this second.

Speaker 1 - Michael Thiessen

This reset mode, as you call it, obviously, our big threes as well, the Japanese, or some of the Japanese, they went into this full steam. Let's go electric, let's design electric, at least when I look at the um, I don't know if you can still call it the big threes uh that we have here with uh I'm still gonna call it Chrysler, I'm old school.

Speaker 2 - Joe McCabe

Yeah, yeah. Um Detroit three, we call them, right? But even with Stellantis, it's sort of uh sort of a Detroit three, right? Right, right.

Speaker 1 - Michael Thiessen

So all these all three of them went heavy into this, heavy into the EV market. Do you think now uh from what I'm reading through the grapevine that potentially this F-150 Lightning is getting scaled back even to the point of should we should this be canceled or not? Do you think there was a lot of investment that was done? And uh because investment is also people that they've invested in, especially in that EV market, that this is now causing issues.

Speaker 2 - Joe McCabe

Yeah, they cancel the next generation uh uh the lightning. So that is now canceled. They're gonna sort of sit back for a few years, and uh in 2029, they're gonna bring out an e-rev version of the lightning. So, you know, an e-rev is the we see as the next frontier for pickup trucks. You know, the US consumer, we could sue pickup trucks, large SUVs. This isn't Europe where it's small cars and you can electrify them and things like that, or China where they're sort of forcing the agenda of electrification. In the United States, we like big, we like big products. And getting a truck buyer to buy the BEV space made no sense to us, even and adding $20,000 on top of it even made it worse for them. So extended range, we think is their next uh shot at this. And basically what extended range is is that you take an engine, but it's a generator only on a vehicle. Does not provide propulsion, does not provide uh towing power, torque, you name it. It provides uh security. It provides the ability to say, yep, I have an engine on this vehicle. It is still a battery-powered vehicle. The all the power will be coming from the batteries to motivate the motors, uh, to motivate the wheels. So uh Stellantis is doing with the RAM charger. They're doing a gigantic engine with a gigantic battery uh that allows them to keep their engine production, which is great. Ford is going to come to it. We're deciding if they're gonna use something that's off the shelf already, which makes a lot of sense, or try to put like a little generator in there. Uh, but GM is uh staying the plug-in hybrid route. So it's gonna be sort of a battle in the next four or five years about what consumers want. Do they want a plug-in hybrid which allows dual powertrain motivation, which is GM strategy, or they want extended range, which is engine only a generator? So time will tell. It just does prove out that they they decided that we have to go back to some hybridization concept. So, you know, let me look at the scout Volkswagen Scout. The very first product they came out, when you pre-ordered this last year, they gave you an extended range version and a BEV version. They knew they had to hit the market with options, not just electrification. And a high, high percentage of pre-orders are on the EREV version. So this is where we're gonna see the big three or anyone in the truck business. The other answer to that is they're gonna say, well, we're not gonna just bring you uh big trucks, we're gonna bring you small trucks. So everyone's coming out with a small truck now. You know, the Rangers are already out, the Maverick's already out. Ford's talking about a $30,000 electrified small pickup truck, Key is going to make a pickup truck. Everyone says, look, this is what the consumers want. We're not gonna lower the prices of our big boys, but we're gonna give you more options. So you're gonna see more options going down, hopefully committing people to the smaller side and then roll them up the um the value chain up to a larger truck in the future.

Speaker 1 - Michael Thiessen

So do you see that throughout the course of this year, our manufacturers, the dye makers and the molt makers, they should see again an uptick on some of because now they've decided, okay, let's do this this uh extended range vehicles and all of that, because they were kind of last year a little bit on the let's let's sit back and see what happens. And I don't think last year was happening all that much in terms of production of new models and stuff like that. Do you do you think this year uh the mold and dime makers will have more work because of that change now or the decision that was being made?

Speaker 2 - Joe McCabe

Well, the automotive space is glacial and speed. So when decisions are made, we're talking about things that are gonna happen three years from now.

Speaker 1 - Michael Thiessen

Yeah.

Speaker 2 - Joe McCabe

So this is the when we talk about an outlook this year. Last year came in at about 15.3 million units of production in North America. We're 15.1 this year. So we're gonna call it flat, if not a little bit of down. This is at reset. What you're gonna see is a lot of manufacturers say, well, we're gonna extend existing vehicle programs, which they've done over the last several years, which means push the future ones out until we decide what we want to do. You're also seeing less trim variants. The idea here is instead of having seven different trim variants that they're losing money on, make three or four. The idea is going back to a simpler model, looking at the manufacturers that are winning and learning from them. For example, Toyota always wins, right? You gotta follow the Toyota method. Now, they might be not be day one, but everyone thought they were making a mistake by not driving all in on BEVs. They said no, hybridization is the way to go now. Fuel cells are ultimate goal 20 years from now. Uh, and they were right that you want something a balanced portfolio, heavy, heavy in hybridization. They are so everyone's sort of dialing it back right now. So these decisions they're making today aren't going to turn into money tomorrow.

Speaker 1 - Michael Thiessen

All right.

Speaker 2 - Joe McCabe

But they will make people recalibrate how they go after business. Now, you know, with the current White House situation, you are seeing manufacturers bring more production back to the United States. They're moving it from country, you know, whether it's moving from Canada to Mexico, or they're moving it, you know, straight over. You know, we're seeing the the Koreans that were leveraging the IRA money uh with a leasing program of the 7500 going, uh-oh, that's gone up. So now we better start producing in the United States. So um, you've seen the Japanese going, yeah, we know we have to commit here. We're seeing the Japanese actually build here, they're going to export product back to Japan, which is sort of unheard of. So we're seeing a shift in the landscape. Um, and a lot of it is they, you know, they're worried about this this potential China threat that's that's knocking on the door.

Speaker 1 - Michael Thiessen

Right. You already touched a little bit on this, but let me go back to 2025 was this year where now a new White House took over. They looked at some of the policies, some of the direction they were changed, directional change happened, government mandates were reduced on, especially on the EV side on it. And now, do I dare say that we have somewhat stabilized again? Because obviously, last year was a lot about tariffs and the scare about all of those things, what is happening? Do you think this has now been leveled out a little bit so we can focus a little bit more?

Speaker 2 - Joe McCabe

Yeah, I like the tariff situation to go away. That it's such a wild card every single day. Uh, I'm not a fan of the fact that we are still putting pressure on our border allies, that we should be having a much better relationship with Canada. You know, yes, it's one-tenth the population of the United States, but they need our product and we need their product, and it's a it's an important ally. Same with Mexico. So I'm a little uh I'm waiting for that, the whole USMCA or whatever they're gonna, whatever bilateral trilateral agreement comes out in the next year or so. Uh that would make me feel a little more confident about the word stability and leveling out.

Speaker 1 - Michael Thiessen

Right.

Speaker 2 - Joe McCabe

Um, when it comes to the product set, you know, I'm happy that many that consumers can can consume what they want. You know, it was a field of dreams approach where build it and they will come and people didn't want to spend $20,000 extra more for BEV when they know the ice was just a great product. Right now, when you take away the cafe rules and you take away the penalties on the manufacturers, that's sort of a win. That's a $2 billion win. They're not to buy credits anymore from the likes of uh likes of Tesla. So there's some positive issues. Yeah, there's always going to be some pushback and environmental and why are we doing this? But in all honesty, if you wanted to be an environmental player, then go buy a BEV. There's a ton of them out there.

Speaker 1 - Michael Thiessen

Oh, yes. A lot of choice.

Speaker 2 - Joe McCabe

Yeah, so it's easy to talk about this goal of clean air and a clean world and for you know our future generations and things like that. Well, then put your money where your mouth is, go buy the BEVs.

Speaker 1 - Michael Thiessen

Correct.

Speaker 2 - Joe McCabe

And they just weren't. I mean, the idea here is, you know, we got the 8% of sales, that's great, but this idea of getting to 100% was ludicrous. Uh, we're gonna get you to about, we have two paths of the electrification path by the end of the decade, either 7% or 11% install uh adoption rate by BEVs. That doesn't discount the fact that a lot more hybridization is coming. Toyota, again, one BEV has enough material for six plug-in hybrids or 90 regular hybrids. So if my carbon footprint concept is their agenda, I'd rather move 90 people 25% of the way there than one person 100%.

Speaker 1 - Michael Thiessen

Yeah.

Speaker 2 - Joe McCabe

And it's simple math out there that look, BEVs are going to, they're not going away, they're here to stay. So it's always going to be part of portfolio. But now we can go back and say, I can actually build a product a consumer wants, it's going to help the manufacturers calibrate in the right direction.

Speaker 1 - Michael Thiessen

You know, we're in we're in an interesting time right now because right around 10, 11 years ago, Tesla started some of the the new sales. They brought out these electric vehicles and all that kind of stuff. And now we're 10, 15 years later almost. So now we see a lot more of these EVs in the used car market area. And we can kind of see how do these electric vehicles resell? Because the lifespan of these batteries are 10, 15 years, then you have to exchange them. It's a lot of money to put a new battery system in place. If BEVs are here to stay, how does that impact the used car market?

Speaker 2 - Joe McCabe

Yeah, that's an interesting one because there was that always that threat of, you know, if you're lucky, you get eight years. But that's, you know, the be the batteries are existing, they're surviving. You know, do they have a life cycle? Yeah, we don't know if the life cycle is 20 or 30 years, but you know, the most consumers don't keep their vehicles that long. The used car market right now. I think if I want a battery electric vehicle, you know, I have the option of spending more on a new one or going to one that's only three years old and getting a good price on a used car market. So it might promote more people to say, I'm gonna give it a shot if the price is right.

Speaker 1 - Michael Thiessen

Right.

Speaker 2 - Joe McCabe

That's the real problem here. The cost was the number one driving factor. People going, yeah, I can I can argue about range and I can argue about infrastructure, but if this cost is too high, I mean, they're just ridiculous prices. Average car right now is $50,000. I think the average uh financing is pushing $800 a month. These are unsustainable numbers. Yeah. We have a huge affordability problem. And um now it's about dialing back. So I think to use car market, once things settled, well, they basically benefit because they can bring a lower cost option. But they always move with the market, right? Prices go up, use car market, but that you know, they go with it. And so we got to find this happy medium where we get back to affordability. It's not gonna be tomorrow, and it's not gonna be all of a sudden ten thousand dollars off the hood across the board, but we have to settle in on something a little more affordable.

Speaker 1 - Michael Thiessen

See, I I always was a big believer on in the EV market or the EV cars in states that make sense. So California, for example. I lived there for about a good year and a half two years. Neighbors had electric vehicles, he had solar panels on the top top of his roof that powered his electric vehicle and his beer fridge, of course, the important items. Of course. And he didn't have that far to go, 25 miles uh each way. It was perfect. Yeah. Pretty much when at no cost he traveled. So I think in the in certain states, it makes absolute sense to have an EV car that you can then power by the sun or solar, whatever you have, but and and it needs to be a this personal decision. And I was a big defender on that government should have no point in mandating that by a certain time frame you need to be X amount of EVs. Right, correct. And I think there's a point for it, and I agree with you, these EVs are going to be here to stay. When you look at some of the EVs that are in produced in China and are running in China, beautiful vehicles, absolutely high technology. And of course, you understand, we all understand what's happening in that entire atmosphere, especially in China where the government is kind of subsidizing uh the manufacturing and all that kind of stuff. But when I'm seeing that our neighbors to the north and the south are allowing this flood to come in already, it's kind of scary when you look at this.

Speaker 2 - Joe McCabe

Yeah. So we have taught the Chinese for the last 30 years how to make a great car.

Speaker 1 - Michael Thiessen

Yep.

Speaker 2 - Joe McCabe

The Europeans, the Americans, all that. Uh, they're selling our technology back to us. And and look, that's that's how this market works. You know, China wants global dominance. They don't want to be an export-only market. They can't afford that. So they're gonna want to plant their flag. So they're gonna plant their flag in South America to use it as a launching pad into North America. They use Eastern Europe as a launching pad into Western Europe. They're doing really well right now in Europe. And Europe is finally waking up going, uh-oh, we have to put the same guidelines the US has where you have to have local content in order to get any kind of incentive. Right now, they really don't have that. So the BYDs and the Xiaomi's and ex-punks of the world are coming in and eating everyone's lunch.

Speaker 1 - Michael Thiessen

Oh, absolutely.

Speaker 2 - Joe McCabe

China does not care about profitability, they care about market share. That's primary. Profitability will come someday. But if they can come in uh into a market and do that, BYD in Mexico is selling tens of thousands of vehicles in Mexico today. They're not reporting them because if you don't join the AMIA organization in Mexico, you don't have to legally report your volumes. Everyone else, so they decide not to join, and all of a sudden you're talking about tens of thousands of vehicles. So a lot of people in Southern California and Southern Texas are going, what's the PYD? Because people are driving across the border, going, well, that's in Mexico. Canada is tired of taking our leftovers. We were leaving, right? Uh Ingersoll is shut down from GM. Oshawa's gonna go to two shifts. Uh Brampton uh for Stellantis is a who knows, they're losing product to Belvedere. Oakville is gonna get a super duty truck. That's not gonna be forever, right? So you're talking about this constant exodus out of Canada, and they have their own economy to manage. They're gonna say, well, enough's enough, right? We have to make our own manufacture. That's the problem. Canada always just took someone else's overflow production business. And then, you know, when a White House like this comes in and says, you better build in the US, they go, you got it, and they shut and they evacuate the market. So the idea here is that uh they're gonna let the Chinese in. It's gonna take a long time. It's not gonna be overnight, my God, where are all these Chinese cars from? But what it's gonna do is it's gonna put the competitiveness back in this market on pricing.

Speaker 1 - Michael Thiessen

But the problem though that we're gonna run into, and I think the Europeans have seen this already, because VW in Germany, they're running into the situation right now where they're saying, well, crap, B of ID, they can sell this car at a fraction of the cost. Right. Mainly because uh you can call it government subsidies or cheaper labor or whatever you want to call that, that they can create a vehicle that cheap with this much technology that now they're looking at, well, crap, we can't sell anymore as many cars as we have. So we need to reduce production and we have to lay off people. Is that going to happen here in the US too? Once either this administration is out of there or maybe another administration is in where now because we can't build walls forever against this technology.

Speaker 2 - Joe McCabe

So if China, what China so for Europe, that's the whole Point right, they're trying to say local content rules will help sort of sub sort of sort of keep them off. That you better build here, which means if you build here, you're employing people. Yeah, that's the goal, right? To get the employment up.

Speaker 1 - Michael Thiessen

Yep.

Speaker 2 - Joe McCabe

The Canada's strategy is look, we're gonna let you sell $49,000 a year. We're not we don't expect you to build to tomorrow, but if we can get you to sell here enough, that justifies local production. The magical number is $50,000. If you can sell 50,000 cars in a year, X importing them makes no financial sense. You should just make them on, you know, build where you sell. When it comes to the United States, I see it's gonna be either A, they're gonna partner with somebody, so we'll be able to control the narrative, or B, they'll come and save a plant. Or C, they're gonna put in tens of billions of dollars to incentivize the market. But with the current White House, there's no way they're gonna walk in without them basically sort of giving us the moon, the stars to do. Correct. Um, a future one, who knows? But you're right. The the threat of the employment loss due to sales of imported products is a monster problem that they have to stay on top of. So I think we're gonna play a little smarter when it comes to allowing the Chinese in. You're right, keeping them out forever, it's impossible. That's just not how this market works. But you're already seeing players like Ford and all that partnering with battery suppliers that are Chinese and saying as long as we can control the narrative, as long as this idea of getting information here and sent back to China is sort of has a boundary around it, uh, then uh we're gonna let them in, right? Because consumers are gonna want to consume what they want to consume.

Speaker 1 - Michael Thiessen

Well, it's also, I mean, there's so much talk about these uh rare earth minerals and creating deals with other countries in order to get it into the US uh cheaper or having more capacity of those, because that's what China has. China has is sitting on all of these rare earth minerals that is being used for the battery production. And of course, it it makes it cheaper for them to do this while we have to import and pay a hefty price for this. And also from some of our regulations that we have inside of it, that our labor cost is higher, our building cost is higher. So it's it's gonna be a struggle. I like the idea of getting it back, getting the the manufacturing back into the US and getting some of that stuff happening again. My my problem is a little bit the expertise. What happened over the last 15, 20 years? We lost that expertise, that ingenuity of how to build stuff because I'm seeing this with some of our customers too, where they're trying to grow. But what do you get the people from?

Speaker 2 - Joe McCabe

That's been number number one problem is the labor side. Uh, we've we've talked to suppliers that when they're looking to plant their flag elsewhere, we'll look at labor first and worry about the business second because they need the people to get the job. They'll cross their fingers going, okay, I'm gonna move to the south, I'm gonna go to the southeast. I know there's great business there, but I got to find a state that's gonna give me the incentive to be there, which is a lot of it is the people side. I mean, unfortunately, you have some states that don't do drug testing anymore because that would sort of eliminate a bunch of your workforce. But that is the biggest problem right now. And we, you know, when people talk about what's the future, you know, AI, okay, it's coming, Skynet's coming. Yeah, it is. But, you know, find a future-proof uh business, find something to turn a wrench, you know, be an electrician, be a be a plumber, be a, you know, be something that works with your hands that's going to be AI proof. Go to a tech school. And we're seeing a lot of people say, okay, Honda starts their education process at the elementary level by showing them the coolness of the automotive space. Absolutely. And it's, you know, they're clean rooms now. They're not, you know, not walking home smelling of gas and uh oil under your fingernails. These are these are really advanced manufacturing facilities that need to get that ingenuity back and the and the people that really care about the market to understand how it's it's a great career if you choose to go down this path. So, yeah, labor's always been the number one problem. Uh, that's why people will flood to an Eastern Europe and get cheap labor or South America get cheap labor and then use it as a launching pad.

Speaker 1 - Michael Thiessen

Yeah. And and that interest needs to start, like you said, from early childhood on to get that excitement to build something with your hands and uh that you contribute to that particular industry. Let me ask you this. Let me pivot to some of the health of some of the manufacturers that we see out there. Because obviously we deal in the automotive space, and from what we saw a little bit, Nissan uh over this past year, they had a beautiful facility down in California, their Nissan Design USA uh facility. That has now been closed. Are there other companies or other manufacturers that are a little bit in distress, let's say this way, that causes some issues there?

Speaker 2 - Joe McCabe

I'd say Nissan is the biggest of distress. After a divorce with Renault, they're trying to find a partner. You know, Nissan is not top three in any market they compete in, which is a problem. But they have great trucks, they have great uh great technology, so they're gonna find a way. But you know, when you talk to some of these manufacturers, they go to a lot of conferences, like you say, and you hear about the leadership and they go, you know what? We decide we found out that we make 24 different door handles for five different manufacturers. Why? We should have three from one, right? And they're finally, you know, it's funny, you just assume in 2026 there's always manufacturers that figured out the efficiency side. They haven't yet. They're still going back and going, why are we doing things this way? Why are we spreading out our costs in such an inefficient way? You know, you look at Tesla, you tell you know, what's our four colors, two sets of wheels, two interiors, and that's it. I mean, it's very bare bone to get the job done. I'm not saying we should follow the Tesla model, but when they deconstruct those things, they find out the that behind the instrument panel is just one big tube they hang stuff off of, and you open a GM instrument panel, and it's like, you know, it's a the wiring, you don't know what goes which which which ways up. Those little areas, this is where we're seeing this regrouping, this going back and saying, look, we got to find a better way. This market, we're not gonna have a 17 million unit production market in North America again. That was that was 2016 days. Now we're gonna be in the 15s and the 16s. We got to get smart. We have more global competition, we have more players that are uh you know breathing our neck, yet you still have pricing pressure. Pricing pressure still controls this market. You can't all of a sudden come out with this magical $10,000 vehicle and now you're the winner. It's not gonna work. You still have all your costs. So we're seeing a lot of people go back to the drawing board and say, all right, let's go and say bare bones, where are we spending money? Where are we losing money? Where are we being smart? Where are we being stupid? If we don't need that facility, let's can it, right? Unfortunately, we're gonna have to get rid of it and we're gonna have to regroup because at the end of the day, I tell people all the time every manufacturer has one customer. It's a shareholder. We as consumers are a means to an end. That's it. There's no altruism in this business. There's no, you know, this idea here is that you know they have to make money. And unfortunately, if making money means heads will have to be, you know, removed and production has to be scaled back and locations have to be re-evaluated, that's what they're going to do.

Speaker 1 - Michael Thiessen

There, there's one concern that I want to get your input on too. That obviously I live and breathe the automotive world. My kids are in the automotive sector, so I can kind of see what's going on. But the one concern that I have is when I look at lease costs of new vehicles, they're just out there. They're extreme. $800 a month and so forth. Do you feel that a consumer is kind of backing off on this and saying, you know what, $800 is a lot of money for a leased vehicle. I'm just going to go and look at the used car market and just buy a used car that's two, three years old and then go that direction because that means then my new car production is going to suffer again.

Speaker 2 - Joe McCabe

Yeah, but that that lasts for about six months because then back to our problem of everyone wants to make money, the used car market goes, great, we're the next cash cow. So if you're selling your car for 50,000, I'll sell you used one for 40, even though I should have, oh, even though I should have sold it for 30. So, you know, they're not sitting there going, hey, we have all this cheap product over here. They're saying, okay, we have all this product that now we can make some money on. And as the manufacturers were trying to bring down costs, well, then the only way you bring down costs on a leased vehicle is you try to bring the monthly cost down, which means the residuals are way too high, which means the used car market is pretty high. If somebody's used car market exists because people just didn't want to buy the vehicle out, because it just didn't make any sense.

Speaker 1 - Michael Thiessen

So you're your thinking is that okay, they're going to maintain this relatively high lease cost, go with individuals that can afford this lease, and then also bet on the used car market that that is pretty high because then other people are flocking towards that.

Speaker 2 - Joe McCabe

Well, the other thing is uh, you know, we don't for like EVs right now, you can get a lightning for a song and a dance, you can get a lyric, right? Because the idea here is please let the consumer try a plug out. Hopefully they will cons will they'll get over all the noise and go, hey, this thing is pretty cool. It's not a disruptor in my life. I always come back to this idea that convenience is the only is the word we have to play with. It's convenience, right? If I have an inconvenience, I have to plug this thing in, I'm not gonna buy it. You know, if I have a gas station two miles from my house and going, yeah, it's cool, but it's right there, I'm not gonna buy it. Change aside, and infrastructure aside, uh US consumer, you know, we're who what we are. We want what we want. Don't tell us what to do. And if I'm inconvenient, if I'm inconvenient, well now I'm not gonna buy this thing. But a lot of manufacturers going, okay, if I want to push to BEV, I'm gonna have really good lease prices, right? I gotta have you try it. If you turn it in, which you're not gonna buy it at the end of the day because it's the residual is gonna be way too high. Well, now that high price market's gonna be on the used car market, right? The used car market, yeah, they're gonna bring their prices down because they have to move the metal.

Speaker 1 - Michael Thiessen

Right.

Speaker 2 - Joe McCabe

Um, so it's this constant, this industry's for decades has been this constant push-pull of where is that sweet spot threshold between new and used? But that threshold lasts for a very short amount of time because everyone's that prices sort of converge.

Speaker 1 - Michael Thiessen

Right. Are there any items that or any part of the industry that you are saying, you know what, I really gotta pay close attention onto this, that, and the other? What would that be for 2026 that you really put your focus on?

Speaker 2 - Joe McCabe

It's a great question. What we tell people from a supplier community is when you look at, so let's look at it from a vehicle manufacturer. I'm a supplier looking at a vehicle manufacturer lens, and that lens needs to be sustainability. How are they gonna how are they gonna weather the ups and the downs?

Speaker 1 - Michael Thiessen

Yeah.

Speaker 2 - Joe McCabe

So I look at what's called an evolutionary platform. I look at a vehicle platform that says this vehicle platform can go down one line or two lines and can be dialed in based on consumer demand. So Stellantis has the stellar platform that they can build an ice, they can build a BEV, they can build a plug-in hybrid, any kind of mix. All the manufacturers go in instead of us having five lines doing five different mixes, let's have one or two. And let's slipstream in here different powertrain variants and design the product in such a way that it can be morphed into whatever we need it to be based on to consumers. We don't have to wait three more years because we poured concrete around this platform that cannot be shifted. So we always look at a manufacturer to say what platforms are coming out and how flexible is that platform? Number one. And number two, how flexible are your manufacturing capabilities? How fast can you react to those market shifts? Uh, like I said, the Japanese are very good about this. The Koreans are doing a phenomenal job about this. Um, you know, when they put their mind to it, you're gonna see a lot more product going into Savannah real soon. For, you know, we see a plug-in hybrid sportage coming right around the corner that's currently being imported from Korea. And it won't take them years, it will take them months to get that moving. So you look at that side of things. You look at from a supplier side, you look at this, the the health of the company, you know, how diverse are they? How well are they hedging their bets? Are they only an automotive? Are they also an aerospace? Are they other markets so they can sort of hedge their bets when there's a downturn? So these are the things we really pay attention to from a manufacturing side of how flexible something is, and are they bringing the right product out? So the suppliers that go after that business go, yep, that's a horse, that that's a horse I want to back, right? That's something that says, yep, the volumes you're giving me make sense. The volumes we were getting from some of these programs made absolutely no sense. They were they were tenfold too high. The lighting was at 250 a year at one point. They built 26,000. But the supplier that said, I'm gonna run to that, that oh my god, this is great, and and drank that Kool-Aid is now hemorrhaging with uh with stranded capital.

Speaker 1 - Michael Thiessen

Right.

Speaker 2 - Joe McCabe

So that's what we're looking at.

Speaker 1 - Michael Thiessen

So would you tell manufacturers right now? Because there's there's multiple things that obviously you could a manufacturer can do. Either they they can you can tell them, you know what, stand still as you are right now, don't put a lot of investment in in new machinery and new technology or new whatever, because you don't see the storm is coming next year or whatever. Or the message could be right now is the time to invest into new technology, new bit uh new machines, new whatever, because the business will be a lot higher next year and you need to be prepared for it. What would that message be?

Speaker 2 - Joe McCabe

Message would be that suppliers should be working with their vehicle manufacturers hand in hand. It's always been a problem, the the that relationship. The Japanese, they keep on coming back, have a great relationship with their supplier community. Not everyone else has that same idea. You know, if someone's gonna give me a part that's a penny less, I'm gonna look at that other supplier.

Speaker 1 - Michael Thiessen

Yeah.

Speaker 2 - Joe McCabe

When we talk to suppliers, what we'll do is they'll say, hey, I'm I got this opportunity coming and they're telling me it's X volume, you're telling me the volume is 50% less. What should I do? I said, what you should do is you should walk in and say, hey, manufacturer, if you believe in the volume, pay for my tooling up front. If you believe in the volume, I'm gonna give you scaled pricing. I'll get you to $10. But the first 10,000 parts will be $25. I need to feel confident that I'm working in, I'm walking in this as a relationship. And if things turn sour, I need to know they turn sour exactly when they do it. So I can prepare because a lot of these suppliers are one or two bad programs away from bankruptcy. It's unfortunate. So this idea of just reacting to the market and not pushing back and saying, fool me once, right? You know, don't tell me market conditions are this when you plan a mark, when you plan a product that wasn't going to make any sense. Tell me why we should work together. And we're getting finally suppliers that do that. It's easier for the tier one suppliers to do it because of their size and strength. It's a little harder as you go down the tiered structure, right? Because they are relying with the tier above them for that conversation. But this idea that this should be a more cohesive market out there, this should be more of a team playing environment. Yes, we're all to make money, yes, we all have to be staying competitive and things of that nature. But this idea of I'm gonna give you volumes and they may or may not hit, but tough is an unsustainable market. And when suppliers go out of business, manufacturers are gonna have a harder time because when their list of players gets lower, those lists go, well, look, we're we own this market, we're gonna charge higher prices.

Speaker 1 - Michael Thiessen

Right.

Speaker 2 - Joe McCabe

And we're concerned about the tool and die side of the business because you can still import a significant amount of these tools from China, and it makes a huge competitive problem for local production. I think there should be some ruling that says the tools and dies are part of the local content rule. Right? There should be everything about the supply chain. I don't think it's being really covered 100% yet. There's still some orphans out there to go, wait a second, I'm really hitting really some competitive problems here. You want US US US, but you know, but you still want the best price.

Speaker 1 - Michael Thiessen

All right. So you probably have companies contact you at AFS and want to get your insight. And because it's it's all about data. And uh, data can give companies decisions of which direction they should they should go. Where can companies go to contact AFS or contact you to get you in contact with them, to give them your insights and hire you for some of those things? Where can they go?

Speaker 2 - Joe McCabe

Yeah, you can go to our website at autoforecastsolutions.com. Put them on your Google Alerts, Auto Forecast Solutions. You will be flooded with how much stuff we are in the industry, with your organization and the media, you know, in automotive news, we're everywhere. We always thought data is data, but that's half of it. The other half is the intelligence behind it. You know, we're bringing 30 years of experience of so what and why? Rarely will a supplier show us an RFQ that we go, yep, we agree with that. They're always way too high. If you add up all the RFQs out there, we got 20, 20 million unit market, which is not true, right? Everyone thinks we have the best product. You got to look at every, so we look at every vehicle, how it competes within its brand, within its industry, globally, in its segment, if it has a geopolitical pain because there's a lot of competition coming, if it's a product that we're moving away from. Our job is sort of rein in the reality and give the so what and the why behind it. But you got to have the information behind it. So, yeah, check out our website, follow us in any kind of media stream. You're gonna see us, you know. I presented conferences all over the place where we give that insight. But, you know, we eat and breathe this stuff, and we actually, you know, my automotive nerds will uh show you the right way. We got an unbelievable team that I've my I've worked my entire career with.

Speaker 1 - Michael Thiessen

Your automotive nerds. That's a great, great term. Any final thought of that you can give the manufacturers out there what to look for or advice for them or what they should do?

Speaker 2 - Joe McCabe

Yeah, look, try to get through the noise. I mean, the idea is a ton of it out there, and you know, everyone in this business is smart at what they do, right? You know, the idea here is you know, advocate for yourself, join the supplier communities like APMA in Canada and MEMA in the United States and you know, INA in Mexico. Get there so they're advocating for you at the White House or advocating for your business and your community. Make sure you join your associations when you're in your same company and that you can actually, there's no threat of being next to your competition because you can work together for a greater good and say, how do we keep this industry alive? Just be present, be proactive. This idea of reactiveness, you know, praying that RFQs are show up on your desk, that that is a busted model. Get out there, tell the message, and remain competitive. You can't remain competitive if you don't know what's going on every single day and you don't know what's coming. And our job is to sort of tell you what's here today and what's coming in the future.

Speaker 1 - Michael Thiessen

Great message, great final thoughts. Joe, as always, thank you for being on this podcast here. You give a lot of good insights. Hopefully, the listeners are listening to what you're saying and acting upon that. And uh, that's all we can do. Joe, thanks again for being on there.

Speaker 2 - Joe McCabe

Michael, always a pleasure. Always love our conversation and uh looking forward to doing us again. Awesome.

Speaker 1 - Michael Thiessen

Well, you heard it here first. AFS and the automotive nerds, they're working very hard and trying to find out what's happening in our country, what's happening with our manufacturing in our industry, and they can give you the best advice of what to do, what not to do. Joe's point of being active in your associations in in order to make smart decisions so that you can really have also a leverage on the decision making, what's happening at the government level and all this is very, very important. Be obviously be on the lookout always. Don't always put your money on one horse. Make sure that your company has diversity, that you could not only are working in the automotive sector, but also maybe look into the Eurospace sector. There's a lot of work out there. And also, there's a lot of work coming back into the U.S. I hear from a lot of our clients that they're extremely busy right now. A lot of work is coming on streaming in. So try to talk to your associations, seeing how you can get more active. Uh, if you have any kind of um topics that you want to bring up, reach out to us at uh the All Axis Podcast. We always love to hear from you. Thank you so much for tuning into this episode. We hope you enjoy we enjoyed this episode today about the uh automotive forecast. Don't forget to subscribe to us on Spotify, on Apple Music, or wherever you get your podcast. And also share the episode with your coworkers, with friends, with neighbors. Leave us a review. We'd always love to hear back from you for more updates. Check us out on Instagram, on LinkedIn, and all the other social media channels. Until next time, keep shaping the future of manufacturing and stay active.

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Thank you for joining this episode of All Axis. Please leave a comment or review with your feedback or what you'd like to hear in future episodes. To learn more about manufacturing technology solutions and Tebis's capabilities, visit our website at Tebis.com. That's T E B I S.com.

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Michael Thiessen

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