Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I'm Matt Miller and
Speaker 1: I'm Hannah Elliott and this is hot Pursuit.
Speaker 2: I guess to see you. It's great to see you.
Speaker 2: Do you look fantastic? Oh?
Speaker 1: Thanks?
Speaker 2: I don't know if my zoom for some reason, I
Speaker 2: look very red.
Speaker 1: I'm not, it's just the lighting.
Speaker 2: What uh what a day yesterday, today, probably tomorrow. Like wow,
Speaker 2: these tariffs, I mean, this new world order.
Speaker 1: It's exhausting. It's I mean, my nerves are shot.
Speaker 2: From my point of view as a journalist, like so exciting,
Speaker 2: you know, But I look at my four oh one
Speaker 2: k and I'm like.
Speaker 1: No, I know, I know. I can't believe that, Like
Speaker 1: they went through with it. He went through with it
Speaker 1: because we've been hearing about this is gonna happen, and
Speaker 1: he kind of like, ah, right, well we'll see because
Speaker 1: everything has been so volatile anyway.
Speaker 2: Everyone was actually did it. Everybody was like, you know,
Speaker 2: it's so surprising, And I'm like, what he's been telling us.
Speaker 1: The whole time, you know, that really doesn't mean much.
Speaker 2: Sometimes I always think of the Far Side cartoon where
Speaker 2: the two people are looking up at the billboard of
Speaker 2: the the two sheep are looking up at the billboard
Speaker 2: of the wolf, and one sheep says to the other,
Speaker 2: I like him because he says what he's thinking. And
Speaker 2: and the wolf is saying, I'm going to eat you.
Speaker 2: You know, Yes, I love He's been he's been telling
Speaker 2: us like he's going to eat us. And here here
Speaker 2: it is. It's incredible.
Speaker 1: Yes. So I spent the whole week leading up to
Speaker 1: this writing a story about how classic car collectors and
Speaker 1: brokers and shippers and logistics specialists and legal authorities, we're
Speaker 1: all freaking out because going into the Trump had not
Speaker 1: announced any exemptions and had said specifically there will be
Speaker 1: no exemptions on the twenty five percent automotive tariffs that
Speaker 1: he was going to enact effective April third, which is today,
Speaker 1: and that goes for cars and parts coming into the country,
Speaker 1: a flat twenty five percent tariff.
Speaker 2: So have won unless their USMCA compliance, yes, and in
Speaker 2: which case they will be taxed only on the percentage
Speaker 2: of parts that are not American.
Speaker 1: So if a car is coming in with twenty five
Speaker 1: percent US parts, it'll it'll be taxed on the rest,
Speaker 1: It'll be taxed on the seventy five percent that are
Speaker 1: not American. All that to say, there wasn't any exemption
Speaker 1: written in for classic cars, which would have been a
Speaker 1: really big deal because that means that if you're buying
Speaker 1: something at r M Sotheby's upcoming sale in Milan, like
Speaker 1: you've got a Aston Martin that you've got your eye on,
Speaker 1: like our Steve Sarah told me that tax on another
Speaker 1: twenty five percent to what you're going to pay, and
Speaker 1: that kind of kills the deal because why would you
Speaker 1: pay that premium? You just wouldn't. It also meant that
Speaker 1: people who were going to consign cars to sales in
Speaker 1: the US, to auctions or whatever, especially in Monterey, we're
Speaker 1: pulling their cars already from the auctions because why would
Speaker 1: you pay another twenty five percent to sell your car?
Speaker 1: Just doesn't make sense. The good news is, as of
Speaker 1: yesterday afternoon, I did see some guidance that was sent
Speaker 1: around to from customs to shippers that said that there
Speaker 1: will be an exemption for cars that are twenty five
Speaker 1: years or older. Now that doesn't mean that cars that
Speaker 1: are fifteen years old won't also be tax which is
Speaker 1: kind of tough because what about the cool Mercedes and
Speaker 1: jdms that we want to get over here to collect
Speaker 1: They're still collectible, they're just not old. So that's it
Speaker 1: cars exactly. So that's kind of an issue. But the
Speaker 1: flip side of that, which is kind of good for us,
Speaker 1: is that potentially it means that any of these collectible
Speaker 1: cars that are already in the US are going to
Speaker 1: be worth more because if we if we if the
Speaker 1: importation of these cars slows down, it's kind of good
Speaker 1: if we already have our own collectible cars.
Speaker 2: Well, so there's there's a lot of moving parts here.
Speaker 2: But basically, so classic cars will not be they will
Speaker 2: be exempt from the twenty five percent auto tariff that
Speaker 2: goes into effect today. We're recording this on April third.
Speaker 1: Yes, if they're older than twenty five years old.
Speaker 2: If they're older than twenty five years old, they will
Speaker 2: be exempt from that twenty five percent tariff. If they're
Speaker 2: coming from Europe, for example, they will still be subject
Speaker 2: to a two and a half percent tariff.
Speaker 1: Yes, and that has always been the case.
Speaker 2: Yes, And but my question is on Saturday, when the
Speaker 2: ten percent blanket tariffs go and to effect, I guess
Speaker 2: those will apply to classic cars as well. And then
Speaker 2: on Wednesday, when the additional tariffs go into effect twenty percent.
Speaker 2: For example, on the EU, are those going to hit
Speaker 2: like classic car if you import like a nineteen sixty
Speaker 2: four nine to eleven from Stuttgart, are you going to
Speaker 2: have to pay next week at the end of next week,
Speaker 2: you know, basically twenty or thirty percent on that car.
Speaker 1: The answer to that is no to my as of today,
Speaker 1: to my best understanding, because I did read the executive
Speaker 1: order that was released yesterday when they are talking about
Speaker 1: the reciprocal tariffs, right, and that order said some goods
Speaker 1: will not be subject to the reciprocal tariff. These include
Speaker 1: steal in aluminium articles and autos. Automotive parts already subject
Speaker 1: to tariffs. So at least with the reciprocal tariffs, autos
Speaker 1: and automotive parts will not be subject. Now when the
Speaker 1: flat ten percent, that's a little unclear. That's a little unclear.
Speaker 2: I guess I need to plast the two and a
Speaker 2: half percent that currently.
Speaker 1: See that's a good question.
Speaker 2: Wow, so a little bit confusing, But for the most part,
Speaker 2: it does look like exemptions if you're buying cars over
Speaker 2: twenty five years.
Speaker 1: Old, and yeah, I mean that's not me, but it
Speaker 1: it's a lot of people.
Speaker 2: Well you might what if you find a car.
Speaker 1: There are great marks overseas, they're all right hand drive.
Speaker 1: But that's fine. I can get behind it. I will say.
Speaker 1: I talked with one shipper told me at at Silver
Speaker 1: Tiger Logistics. He said they bring over about a thousand
Speaker 1: cars a year and they regularly have flights that the
Speaker 1: value of the cars on the single flight is over
Speaker 1: one hundred million dollars. Wow, So this is this is
Speaker 1: I mean, it seems niche, but it's a lot of
Speaker 1: money and a lot of goods that would have been
Speaker 1: subject to this.
Speaker 2: Yeah. I mean, by the way, I was at the
Speaker 2: Moto GP races in Austin last weekend and it strikes me,
Speaker 2: and I'm sure you see this another for example, a
Speaker 2: Formula one. It strikes me that if you've got it
Speaker 2: down to a science, packing up and shipping vehicles is
Speaker 2: so easy completely. They've they've got boxes like already built
Speaker 2: and they just roll the chassis in, you know, sinch
Speaker 2: it down, close the box and it goes into a
Speaker 2: container perfectly.
Speaker 1: So completely, like theoretically you could have it done with
Speaker 1: a single phone call.
Speaker 2: Right. Well, I'm just saying, like Silver Tiger or.
Speaker 1: Yes, yes, our cars cars.
Speaker 2: They do it all the time, so yes, constantly. For them,
Speaker 2: it's not a big deal. If you're one person and
Speaker 2: it's the first time you've ever done it, then it's
Speaker 2: kind of a pain. But if you're doing regularly, yeah,
Speaker 2: so very interesting stuff. We're going to talk by the way,
Speaker 2: to Chris Bryant, who is a Bloomberg opinion writer and
Speaker 2: one with whom I worked for many years in Berlin.
Speaker 2: Very smart guy.
Speaker 1: That's so cool. I I still need to go to Berlin.
Speaker 1: I've never been, but yeah, Chris Brian is one of
Speaker 1: my favorite columnists at Bloomberg. He's I read is. I
Speaker 1: have notices attached to his column so I read them
Speaker 1: whenever they come out. And he's really good at tying
Speaker 1: in the business side, the product side, putting it all
Speaker 1: in context. And yeah, he's he's great.
Speaker 2: I've been struck by his columns lately. I've been struck
Speaker 2: by his his knowledge of these kind of niche products.
Speaker 2: I mean, you are a hypercar expert, because that's your job,
Speaker 2: but Chris is like an editorial writer for a financial
Speaker 2: news organization, so it's pretty cool that he knows. For example,
Speaker 2: you know that the Valhalla has much improved interior, you know.
Speaker 1: So, yeah, yeah, you know what I like too. I
Speaker 1: firmly believe that the products of any given automotive company
Speaker 1: speak to the company. So when you get into a
Speaker 1: certain product and your note seeing things, those are a
Speaker 1: direct They're a distant, but they're a direct result of
Speaker 1: what is happening within the company structurally and financially, and
Speaker 1: you can draw a straight line. And when I read Chris,
Speaker 1: he completely clarifies what's going on internally at the company
Speaker 1: that I see in the product. I mean, there is
Speaker 1: a correlation. And it's so cliche to say, but there's
Speaker 1: a direct correlation between what is going on within the
Speaker 1: behind closed doors at certain companies and the end product.
Speaker 1: And that's always true.
Speaker 2: Yeah. Absolutely, I've been loving his stuff lately as well.
Speaker 2: I too have an alert set on my Bloomberg so
Speaker 2: that I can get his column sent directly to me.
Speaker 2: Let's get into it, Chris Bryant from Berlin.
Speaker 1: Chris, thanks for joining us. I want to go right
Speaker 1: into your column today me too.
Speaker 2: I'm so glad you wrote that. And this is the
Speaker 2: first time I actually understand the ownership structure of Porsche, Bugatti, Remac.
Speaker 2: I've never gotten so acusing and so weird.
Speaker 1: Yeah, I mean, can I just jump in and ask
Speaker 1: for me the biggest question, which is I don't think
Speaker 1: Porscha needs Bugatti, and I feel like that's kind of
Speaker 1: where you landed in your column. But I don't see
Speaker 1: what Bugatti gives Porsche at this point.
Speaker 3: Well, I mean it's a topic that I was wrestling
Speaker 3: with and just to catch catch people love. I mean,
Speaker 3: you know, there's now sort of discussions basically that that Martirimac,
Speaker 3: this amazing Croatian entrepreneur, would like to, in conjunction with investors,
Speaker 3: maybe take over the half of Bugatti Remac that Porsche own.
Speaker 4: And I don't know. I mean, Porscha's really under pressure.
Speaker 3: They need to be more luxury, they need to sell
Speaker 3: more expensive vehicles, and they have this amazing asset that
Speaker 3: they never talk about, that you kind of never really
Speaker 3: hear very much about. And Martima has been getting on
Speaker 3: with the job for the last three four years and
Speaker 3: then suddenly, yeah, these tensions have emerged, and you know,
Speaker 3: it seems like Porscha maybe wanted to take over the
Speaker 3: joint venture and now maybe he does, and it's all
Speaker 3: a bit unclear, but I just can't help thinking out
Speaker 3: They've got this this great asset that produces vehicles that
Speaker 3: you know, highly sought after that people have to you know,
Speaker 3: a clamor to get hold of, and then they might
Speaker 3: sell it.
Speaker 4: I mean, I don't know.
Speaker 3: I did come down on the on the side of
Speaker 3: the argument, yeah, that maybe they maybe they should just
Speaker 3: because there aren't enough commonalities with the rest of the
Speaker 3: Porsche business and making hyper cars we can talk about that,
Speaker 3: the economics of that are not always great.
Speaker 1: Well, let me ask you really pointedly, what is your
Speaker 1: sense about Porsche's plan to develop the hypercar success or
Speaker 1: something in addition to the nine eighteen Spider And is
Speaker 1: there a sense that Porsche had hoped to leverage Bugatti intelligence, infrastructure,
Speaker 1: whatever else in order to develop the new hyper which
Speaker 1: obviously we haven't seen and has sort of disappeared.
Speaker 3: Yeah, we've not seen it, right, I mean, I think
Speaker 3: the original plan for Porscho was, you know, we saw
Speaker 3: this mission acts hypercar that they developed, an all electric
Speaker 3: hypercar that I think they showed a couple of years three. Yeah,
Speaker 3: back then it probably seemed like a smart idea. Of course,
Speaker 3: now you know, a lot can happen in.
Speaker 4: A couple of years.
Speaker 3: And even Marty Rimack, who developed the Remagnivera, which you know,
Speaker 3: broke all kinds of records as a all electric hypercar,
Speaker 3: had some comments last year along the lines as well,
Speaker 3: it's not really selling as much as we hoped. Many
Speaker 3: of the customers in this in this bracket who were
Speaker 3: buying a you know, a seven car, they you know,
Speaker 3: they feel that electric hypercars like the kind of emotion.
Speaker 3: They still want to combustion engine all the rest of it.
Speaker 3: And you know, even hinted that he might not develop
Speaker 3: another one. And so if I was Porsche probably looking
Speaker 3: at that space now, I might have reservations about bringing
Speaker 3: in all electric hypercar to market. And therefore, you know,
Speaker 3: if they have to go back to the drawing board,
Speaker 3: then it could take a long time.
Speaker 4: And that's why you.
Speaker 3: Know, some people thought, well maybe Bogat you could help
Speaker 3: fill that gap. I mean, if they if they took
Speaker 3: control of that joint venture, then they sort of instantly
Speaker 3: have a hypercar in the portfolio. They wouldn't have to
Speaker 3: develop a new one. And Hannah, I think you were there,
Speaker 3: like the new Toboon is very impressive vehicle.
Speaker 1: Now, yeah, it's it's amazing, and I think they've sold out.
Speaker 1: And yet just as you say, you know, Remec and
Speaker 1: let's not forget Peninferina with their electric Batista, which is
Speaker 1: also using REMAT components, Like now is not the time
Speaker 1: to be selling an electric hypercar. My question for Portie
Speaker 1: is why do they not pivot to a hybrid, you know, supercar,
Speaker 1: something like their nine to nineteen, the lemm prototype that
Speaker 1: they've already developed. Why not just move that into production.
Speaker 2: Hybrid too? Right?
Speaker 1: Yeah, I mean to me that that would make a
Speaker 1: lot of sense. And from you know, what I hear
Speaker 1: on the ground from collectors is that Porsche was accepting
Speaker 1: statements of intent and really trying to drum up buyers
Speaker 1: for this mission X, this hypercar. Now. I asked last year,
Speaker 1: I asked Porsche, what's going on, what's the latest? Can
Speaker 1: you confirm or deny? And of course they don't want
Speaker 1: to confirm or deny where they are in the program,
Speaker 1: but they did say, we've never accepted deposits because what
Speaker 1: we showed in twenty twenty three was only a concept,
Speaker 1: you know. Therefore, they have plausible deniability that it's not
Speaker 1: like they canceled anything. If they didn't commit to anything
Speaker 1: in the first place. But if you talk to you know,
Speaker 1: high end buyers and collectors, they all say, oh, yeah,
Speaker 1: Porche's been trying, Porscha's been, you know, offering me allocations
Speaker 1: for this, and I didn't want it because it was electric,
Speaker 1: which takes the question, then why not simply pivot and
Speaker 1: make it a hybrid, because they've already got a hybrid
Speaker 1: prototype that you know, has the numbers for it.
Speaker 4: Yeah, performance, I think that absolutely should do.
Speaker 3: Of course, I think that, you know, always the story
Speaker 3: with hypercars is can you develop then add a reasonable
Speaker 3: costs because clearly you've always got to be trying to
Speaker 3: stretch the boundaries of the possible and that always is
Speaker 3: a challenge. And of course what's really hard right now
Speaker 3: is that they just have this competitor who seems to
Speaker 3: have cracked it right with Ferrari. I mean, say what
Speaker 3: you like about the fad. Personally, I'm not a big fan.
Speaker 3: I know a lot of people have mixed opinions about
Speaker 3: that vehicle, but it's going to be an absolute cash
Speaker 3: machine for Ferrari. You know, they're all sold out seven
Speaker 3: hundred and ninety nine units, so that's a lot more
Speaker 3: than they produced. It's a lot more than they produced
Speaker 3: with le Ferrari. They managed to allocate them all very quickly.
Speaker 3: I dare say they in a couple of years or
Speaker 3: come out with the spider version as well, a few
Speaker 3: hundred of those. So they're going to make you know,
Speaker 3: billions of revenue with that and analysting very high margin.
Speaker 3: And so if Porsche is not able to do that,
Speaker 3: you know, if they came with a hyper car and
Speaker 3: then it wasn't very profitable for example, that would be
Speaker 3: you know, disastrous too, So so you know, really difficult one.
Speaker 3: I just I get the feeling of the fact it
Speaker 3: hasn't happened, you know, reflects either challenge is on the
Speaker 3: engineering side or yeah, the power train in front is
Speaker 3: a question. And then simply they've just got so much
Speaker 3: on their plate at the moment. You know, the electric
Speaker 3: strategy is not you know, gone up and smoke China's
Speaker 3: strategy too, so you know, trying to get all those.
Speaker 4: Things in line.
Speaker 3: I think maybe it's like too much and the thing
Speaker 3: that's like not happened yet.
Speaker 2: I want to just say that the F eighty being
Speaker 2: sold out at those prices just proves the fact that
Speaker 2: rich people have more money than sense. I mean, people
Speaker 2: are just throwing money at it because it's ferrari, And
Speaker 2: I think probably those buyers are not true car lovers,
Speaker 2: because how can.
Speaker 1: You say that?
Speaker 2: How can.
Speaker 1: Seeing the same car that I'm seeing?
Speaker 2: I see the weak powertrain?
Speaker 1: What are you talking about?
Speaker 2: Is it the six even or is it only four cylinders?
Speaker 2: Who knows? I didn't tell you what it is.
Speaker 1: Read nine hundred horse power? It does, I don't care,
Speaker 1: But that doesn't get under the hood and count the cylinders.
Speaker 1: I mean, I can't even none of us on this
Speaker 1: call right now could drive that car to its full
Speaker 1: capacity because we're not professional driver.
Speaker 2: So many cars and look, I've driven many many cars
Speaker 2: that have huge horse power numbers, but they're hybrids and
Speaker 2: they have a two liter four cylinder, and they're just
Speaker 2: not pleasing vehicles to drive. The horse power doesn't matter anymore.
Speaker 2: That's why something like a Rimeck hypercar makes me feel
Speaker 2: a little bit sick. I mean, it's just a waste
Speaker 2: of a soulless waste of money. And the only people
Speaker 2: who want something like that are like Lewis Hamilton, because
Speaker 2: he just has so much money and doesn't care that
Speaker 2: much about it.
Speaker 1: I would withhold judgment until you've driven it, my friend,
Speaker 1: I guarantee you fair, if you drove it, you would
Speaker 1: be screaming with joy and pleasure.
Speaker 2: Well, I also paid for it, right, because I would
Speaker 2: much rather have something that has true character, and I
Speaker 2: sincerely doubt that that does. Although you're right, I haven't
Speaker 2: driven it. I want to step back, though, for a
Speaker 2: moment and walk through just the ownership structure of Bugatti
Speaker 2: Remac because I don't think Chris, that a lot of
Speaker 2: people understand it, and I think after reading your column
Speaker 2: I do for the first time. So basically, Porsche owns
Speaker 2: a forty five percent steak in the joint venture of
Speaker 2: Bugatti Rimac, and Rimac owns the other fifty five percent,
Speaker 2: but Porsche owns twenty percent of Remac, so in a sense,
Speaker 2: they actually own more. And I wonder if this is
Speaker 2: just a legacy of Wolfsburg, Like, are the Germans just
Speaker 2: into these incredibly complex ownership structures or is there any
Speaker 2: kind of reason for that?
Speaker 4: Well, I mean not. You know the history as well
Speaker 4: as I do.
Speaker 3: You know this used to be owned by Volksbag and
Speaker 3: it was Ferdinand Pich.
Speaker 4: His baby.
Speaker 2: You know, he is the one who.
Speaker 3: Rescued Bugatti, developed the you know, the ve run and
Speaker 3: great expanse really you know, brought it up to the
Speaker 3: modern era. And then of course we had diesel Gate,
Speaker 3: we had you know how a dec CEO came in
Speaker 3: with the or the electric strategy, and Bugatti didn't really
Speaker 3: seem to fit in that structure anymore. And as you
Speaker 3: know discussed, he didn't have the you know, the economies
Speaker 3: of scale, the shared parts and all the rest of it.
Speaker 3: And so they found this sort of neat solution. You know,
Speaker 3: they saw Marty Rummack, and to be honest, I always think,
Speaker 3: my goodness me. You know, he'd already had investment from
Speaker 3: Porsche into his you know, component maker and all the
Speaker 3: rest of it in the his Rimant group. But then
Speaker 3: they suddenly came to him and said, hey, you know
Speaker 3: you're gonna have Bugatti. The guy was thirty three years old.
Speaker 3: I mean, it's incredible. And that's what they did because
Speaker 3: at the time, you know, he developed the Nevera and
Speaker 3: the expectation was that he would then develop basically an
Speaker 3: electric Bugatti. I think that was the feeding back then,
Speaker 3: and you know that the future for Bugaddy was going
Speaker 3: to be electric too, and he would essentially make it
Speaker 3: a kind of an electric version of the Shiron. Now
Speaker 3: than goodness he didn't. But yeah, as a result you
Speaker 3: have this structure with you know, the state got past
Speaker 3: the Porsche portion went public and so then you had
Speaker 3: forty five percent on the Porsche side fifty five on
Speaker 3: the Remax side. With importantly Marti Rimak as the CEO,
Speaker 3: so he's the one driving the force there. And to
Speaker 3: be honest, I mean he's made some good decisions. As say,
Speaker 3: he didn't develop an all electric Bugaddi, I think that
Speaker 3: would have been a mistake in hindsight. So it's a hybrid,
Speaker 3: the tur Beyon. It's a good decision. You know, developed
Speaker 3: a relatively low cost. He's got Cosworth, you know, providing
Speaker 3: the engine. I think you know he won't have any
Speaker 3: problems on the Cylindercount with that engine.
Speaker 2: Matt.
Speaker 3: That's sixteen of them, I think, so you know takes
Speaker 3: that box for you. And so yeah, in the theory's
Speaker 3: going okay. But you know, actually, if you look at
Speaker 3: the financials, which I did in the Porsche accounts, you
Speaker 3: know that they lost money last year and the sales
Speaker 3: tumbled almost fifty percent, and that's partly because of just
Speaker 3: the motorcycle.
Speaker 4: This hiron ran out. That turbion has not arrived yet.
Speaker 3: They've got a couple of victuals, you know, convertible in
Speaker 3: the track only car that will tide them over for
Speaker 3: a bit. But nevertheless, there's probably some things that Porscha
Speaker 3: and Bagaddi didn't you know, sorry, Porscha and Rimac didn't
Speaker 3: entirely agree on, and the result is now you have
Speaker 3: this sort of type of war between two of them.
Speaker 1: I would say to your point about Mate Rimac, he
Speaker 1: is a really interesting individual and just listening to you
Speaker 1: to describe this timeline, you know, there's there's somebody else
Speaker 1: who's been in the car world, who's been very young,
Speaker 1: who's been a disruptor with electric cars, and that person
Speaker 1: was Elon Musk And and you know, I remember interviewing
Speaker 1: Elon twelve years ago, before all of before he became
Speaker 1: who he is now, and watching and speaking with Mate
Speaker 1: over the past few years. It's almost like Mate is
Speaker 1: the antithesis. He's the other side of the same coin
Speaker 1: of Elon, where this is someone who's very young, incredibly
Speaker 1: intelligent and a disruptor. Of course Mate is doing it
Speaker 1: in a different way, but I do think it's really
Speaker 1: interesting to watch him developed, And I don't I don't
Speaker 1: really know what my point is with this, other than
Speaker 1: to say I don't think this is the last act
Speaker 1: of Mante by any means.
Speaker 2: Well, certainly not only is able to buy Bugatti. I mean, yeah,
Speaker 2: I think one of the things that struck me most
Speaker 2: about your story, Chris is that the price seems so low, right,
Speaker 2: isn't it a billion euros or there is.
Speaker 3: What bloom News is reported, Yeah, as a total value
Speaker 3: for Bugatti remark, that does seem low, But there are reasons, right,
Speaker 3: I mean if you think about actually how much revenue
Speaker 3: they make in a year. You know this is a
Speaker 3: joint venture. They still one hundred cars a year, and
Speaker 3: now okay, find those cars are four million, three four million,
Speaker 3: but that's still you know, I need three four hundred
Speaker 3: million euros of revenue plus as say, they don't actually
Speaker 3: make money at the moment. Now that should change with
Speaker 3: the tubion, but in that sense pure financial is not
Speaker 3: going to be worth that much. However, of course, as
Speaker 3: we know, hypercar companies are of course highly sought after.
Speaker 3: His trophy assets, and you've seen a lot of them
Speaker 3: change hands, notably McLaren recently, so I'm sure there are
Speaker 3: a lot of people out there'd be very interested in
Speaker 3: acquiring that stake. Is clearly Mutti roommack we need some
Speaker 3: financial backerds if he wanted to to purchase that stake.
Speaker 2: That's what by the way, folks shagging paid for Jucati
Speaker 2: as well, was a billion euros. And I think the
Speaker 2: difference between to me what Porsche does and Bugatti does.
Speaker 2: Porsche makes these near perfect, beautiful machines. Bugatti makes artwork
Speaker 2: that you can drive at incredibly high speed. So I
Speaker 2: feel like there's a vow to Bugatti beyond just the revenue.
Speaker 2: And I don't think that three x revenue or even
Speaker 2: two x in a year or two with prices going
Speaker 2: in this direction, is that high a price to put
Speaker 2: on it. But you're the expert, right because you're the
Speaker 2: one looking at these car companies all day long, at
Speaker 2: the financials, and then you know, typing along in our
Speaker 2: Berlin office.
Speaker 3: This is not I'm sure that's not the end of
Speaker 3: the story. And my argument today was, you know, Porsche
Speaker 3: isn't under no pressure to accept that any offer presented
Speaker 3: to them, they don't have to sell.
Speaker 4: In fact, they.
Speaker 3: Could have good reasons to retain it if they thought that,
Speaker 3: you know, taking a control of Bugatti and therefore, you know,
Speaker 3: bringing that into the Porsche fold, you know, talking about
Speaker 3: it regularly was going to like, you know, improve their valuation.
Speaker 3: You know, just even like a sprinkle of Baghatti on
Speaker 3: that on their share price could do could be worth
Speaker 3: you know, billions in market value, because you know, stop
Speaker 3: market valuations for car companies that they're not entirely logical.
Speaker 3: You know, Ferrari a company that is doing excellent job,
Speaker 3: but it makes fourteen thousand cars a year and is
Speaker 3: now you know, the most valuable European automaker, worth more
Speaker 3: than Fox five, which is which makes nine million cars
Speaker 3: a year and owns Lamborghini and Bentley. So you can't say, well,
Speaker 3: it's just because you know, of luxury here whatever, you know,
Speaker 3: some of this stuff is is just sort of almost
Speaker 3: like magic, and so I would imagine that it might
Speaker 3: have been people at Porsche who thought, you know, maybe
Speaker 3: if we did more with Bugatti, we could have some
Speaker 3: of that kind of Ferrari evaluation magic too.
Speaker 2: It's so un German, though, isn't it Hannah Bugatti? It's French.
Speaker 2: They have a castle.
Speaker 4: They have a castle.
Speaker 2: It's like, you know, Porsche should have like a Bauhaus
Speaker 2: cement box in which they build their machines. It just does.
Speaker 4: They do have a nice museum.
Speaker 2: Yeah, it's nice, but it's like modern architecture, all angles
Speaker 2: and straight lines, and it just doesn't it doesn't seem
Speaker 2: very Bugatti esque.
Speaker 1: Can we pivot a little bit, Chris and ask how
Speaker 1: tariffs are going to affect all of what we've just discussed?
Speaker 1: And maybe this isn't a pivot, it's more of a segue.
Speaker 1: The addition of twenty five percent at this point, twenty
Speaker 1: five percent onut a motive tariffs? Does that change the
Speaker 1: proposition for what Porsia is trying to do and how
Speaker 1: Portia is pivoting? And also within relief to Ferrari, which
Speaker 1: we're calling a competitor, and I know you guys tend
Speaker 1: to when you're analyzing these companies, but is it really
Speaker 1: a competitor. Ferrari just seems to be quite in their own,
Speaker 1: you know, the porch, right, And let's be honest, like
Speaker 1: historically Portia is a very sort of humble, just sporty
Speaker 1: track car. You know, they've never been Ferrari. So sometimes
Speaker 1: when I read about Porsia being a competitor Forra, I'm
Speaker 1: kind of like, well, no, they're not at all. But
Speaker 1: that's not a value judgment. It's just like Ferrari is
Speaker 1: in a whole other echelon and always has been.
Speaker 3: I agree with everything you've just said, but I think
Speaker 3: the thing that's changes is Ferrari has managed to move
Speaker 3: even into it even more of its own lead right
Speaker 3: over the last past couple of years. When it became
Speaker 3: public company, you know it probably about a decade ago now,
Speaker 3: I don't think anybody would have dreamed of the kind
Speaker 3: of stock market value and the kind of profitability that
Speaker 3: they've really managed to generate now. And I think that's obviously, like,
Speaker 3: you know, inspired everybody else in the industry who thinks,
Speaker 3: well we can have a bit of that too. But
Speaker 3: when then you look at the pricing power, I mean, really,
Speaker 3: Ferrari is moving away now average price per vehicle of
Speaker 3: more than four hundred thousand euros, so similar amount of dollars,
Speaker 3: and Porsche down on kind of one hundred and fifteen
Speaker 3: thousand euros. So again like similar amount of dollars. You know,
Speaker 3: it's a huge gap. And so yeah, when Tara happened, Uh,
Speaker 3: they're obviously much more of a problem for portion than
Speaker 3: they are for Ferrari came out straight away, I think,
Speaker 3: within hours and said, okay, this is what we're going
Speaker 3: to do. Well, you know, we're going to honor our
Speaker 3: contracts on your two nine six that you ordered, like
Speaker 3: you know, two years have go. But the new models,
Speaker 3: you know, you're twelve cylindery, you know, the price is
Speaker 3: going to go up by ten percent.
Speaker 4: I think that's what they said.
Speaker 1: I mean, truly, will anybody even blink at that?
Speaker 4: I sit somewhere in the middle of this debate.
Speaker 3: I think that Ferrari is getting close to the point
Speaker 3: where customers will care. And you know, clearly your your
Speaker 3: Ferrari collector who has thirty forty cars, who buys the
Speaker 3: fad not because they love the car, but because they
Speaker 3: want the the SP four. When that comes, you know,
Speaker 3: these people they'll just you know, they take the hit.
Speaker 3: It's not about the money, and they'll be fine. But
Speaker 3: they still have to sell a decent amount of range
Speaker 3: cars every year. And if those vehicles really start to
Speaker 3: depreciate and they are now like if you bought an
Speaker 3: SSF ninety or a two nine six, you're sitting on
Speaker 3: quite the loss and you feel like you've got to
Speaker 3: do that again and again, and then they increase the
Speaker 3: price of the next car.
Speaker 4: You know, then you are starting to hit the limit there.
Speaker 3: And so yeah, we're talking about very privileged people who yeah,
Speaker 3: you know, anybody who can buy a Ferrari is already
Speaker 3: doing fine in life. So, you know, small violence, but
Speaker 3: at the same time it is a threat to the
Speaker 3: business model and very interestingly as well. One thing that
Speaker 3: Ferrari has been doing that again everybody else in the
Speaker 3: industry is trying to do, is personalization.
Speaker 4: And I mentioned it again today.
Speaker 3: You know, you turbinion will cost you for a million dollars,
Speaker 3: but you know, add on another million by the time
Speaker 3: you've spect it, right, And what Ferrari has been saying
Speaker 3: recently is actually these customized options that the twenty five
Speaker 3: thousand dollars paint job. These are the things that when
Speaker 3: you come to sell the vehicle that the secondhand customer
Speaker 3: is not willing to pay for because why would I
Speaker 3: pay that, you know, which is frankly an absurd price
Speaker 3: to pay for a paint job for a secondhand car
Speaker 3: that wasn't you know a color that I chose because
Speaker 3: it matched my you know, yacht or whatever and.
Speaker 4: So, and this is contributing to the depreciation.
Speaker 3: Just to finish the thought that basically, yeah, if Ferrari
Speaker 3: start to depreciate more because people are specting them a lot,
Speaker 3: then that's a bit of a threat to the business model.
Speaker 2: To me, that's a sad fact of buying custom vehicles
Speaker 2: or adding aftermarket accessories. The next buyer is not willing
Speaker 2: to pay for those almost ever. I wonder about the
Speaker 2: the other car makers and how they'll be hit with tariffs.
Speaker 2: We've already heard from Folkswagen today that they're they've got
Speaker 2: cars on boats that they're not going to ship right now,
Speaker 2: they're holding them in port, and that they're going to
Speaker 2: charge an import fee on those cars that do get
Speaker 2: to the US and get the tariff. So do you
Speaker 2: know anything more from other automakers? I mean, how is
Speaker 2: this going to affect the global industry?
Speaker 4: Have you got them?
Speaker 3: Have you got six hours for me to answer that question?
Speaker 3: I mean, yeah, it's it's an absolute nightmare, Like for everybody,
Speaker 3: there's nobody who's not affected. You know that, Yeah, the
Speaker 3: four f one, fifty or whatever, you know, produced in
Speaker 3: America but full of you know, foreign parts, and so,
Speaker 3: you know, is a headache. But of course, you know,
Speaker 3: the German automakers, including Porsche, who bring cars over from Europe,
Speaker 3: are really you know, going to struggle here. And you know,
Speaker 3: the thing that I really bothers me is that, you know,
Speaker 3: American cars in particular were already far too expensive. You know,
Speaker 3: the average price where are you remind me forty five
Speaker 3: fifty thousand dollars something like that.
Speaker 4: And now what's going to.
Speaker 3: Happen is that those affordable models, many of which were
Speaker 3: being brought in from South Korea or from Mexico and
Speaker 3: so forth, relatively smaller cars, very in margins, those are
Speaker 3: the ones that are gonna, you know, suffer and ultimately
Speaker 3: will probably be cut and some of them maybe will
Speaker 3: be able to shift to the United States. But there's
Speaker 3: a reason they weren't being produced in the United States
Speaker 3: because it was too expensive. And so if you you know,
Speaker 3: you stop being able to.
Speaker 4: Provide new vehicles to.
Speaker 3: Middle class, ordinary consumers, then you know, it's not a
Speaker 3: good situation for the industry.
Speaker 4: I think it's really sad.
Speaker 1: Frankly, how soon do you expect that we are going
Speaker 1: to see real effects of this? I mean, aside from
Speaker 1: just when we go down to the dealership and try
Speaker 1: to buy a new car, I'm talking effects in terms
Speaker 1: of the mix on the road of American cars versus
Speaker 1: foreign made cars. I mean, are we going to see
Speaker 1: a change a year from now?
Speaker 3: I mean, I do think it'll take some time to
Speaker 3: feed through. I mean, the tariffs came into force today,
Speaker 3: but we've still got, you know, to wait a bit
Speaker 3: for the can sorry for the part situation. Just in
Speaker 3: the last few minutes, actually, we've had Canada come out
Speaker 3: and say that we're going to do, you know, basically
Speaker 3: the same to the United States that the US has
Speaker 3: done to us, and we'll have to wait and see
Speaker 3: what other kind of retaliation we'll have as a result
Speaker 3: of this as well. So I don't think we've heard
Speaker 3: the last of it. Yeah, but I mean this, yeah,
Speaker 3: to be blunt, is going to be severe, and it's
Speaker 3: going to be really really tough on this industry where
Speaker 3: you know, if the hope is that carmakers are going
Speaker 3: to reach are production, then you want these carmakers to
Speaker 3: be profitable, and instead they're going to take massive hits
Speaker 3: to their earnings, which is earnings that they can't invest.
Speaker 3: And I recognize that, you know, the United States was
Speaker 3: importing a lot of cars.
Speaker 4: Uh you know, roughly half.
Speaker 3: Of the US production was being imported. But at the
Speaker 3: same time, it was you know, considered to be a
Speaker 3: good thing that Mexico, Canada and the United States had
Speaker 3: created this kind of automotive plane where people could could
Speaker 3: could trade and supply chains were set up accordingly. And
Speaker 3: to just overnight say we're not doing that anymore is
Speaker 3: to you know, cause huge problems for the industry.
Speaker 2: I would guess, by the way, Hannah, that the mixed
Speaker 2: shifts in terms of used cars and new cars because
Speaker 2: to Chris's point, you know, the affordable cars that were
Speaker 2: dragging the average price down to forty five or fifty
Speaker 2: thousand dollars, they won't be sold here anymore, or they won't.
Speaker 1: Potentially, I mean, they won't be that cheap. Said that.
Speaker 1: Did you see that piece?
Speaker 2: Yes? But I think the American cars that you would
Speaker 2: think more people would have to buy are just so
Speaker 2: exorbitantly expensive. I was looking yesterday at a Chevy suburban
Speaker 2: and if you want the six point two liters of
Speaker 2: V eight, it starts at eighty six thousand dollars.
Speaker 4: It's a lot of Wow.
Speaker 2: That's like supposed to be a middle class family vehicle, right,
Speaker 2: but it's twice as much as like the average income
Speaker 2: and you know in flyover country. So I just can't
Speaker 2: believe people are going to be able to buy new
Speaker 2: cars anymore, and you won't be able to find the
Speaker 2: little inexpensive ones from Korea.
Speaker 3: We've had this record before too. I mean, this is
Speaker 3: essentially what happened in the pandemic, right The price of
Speaker 3: new vehicles went up, the the supply went down, and
Speaker 3: the users market exploded in prices rose. And I'm sure
Speaker 3: we're going to see a similar thing again where people,
Speaker 3: as you say, forced out of the new market have
Speaker 3: to buy used and that's going to, you know, put
Speaker 3: pressure on prices again. It's going to create inflation, and
Speaker 3: I'm not sure that's what we.
Speaker 1: Want, Chris. Is there any sense that there will be
Speaker 1: like a flip flop, for lack of a better word,
Speaker 1: that a year from now, President Trump and this administration
Speaker 1: are going to say, actually never mind, you know, we're
Speaker 1: going back to what it was before.
Speaker 2: Wait, you doubt the stability of President Trump's policies.
Speaker 1: I mean, just a question next year or next week,
Speaker 1: you know, is there any likelihood of that?
Speaker 3: I wish I had a crystal ball, but I would
Speaker 3: say this, I think Trump has been relatively consistent, not
Speaker 3: just about tariffs, but particularly about the order industry. He's
Speaker 3: always had a bone to pick with, you know, car imports,
Speaker 3: specifically ones for example. This has been a constant, you know.
Speaker 3: And the fact that you know, it didn't we didn't
Speaker 3: have more you know, radical tariffs in the first time,
Speaker 3: I don't think it should blind us to the fact
Speaker 3: that this has been something that he's been wanting to
Speaker 3: do for a while, I think, And so now I
Speaker 3: don't really expect you know, a massive climb down from this,
Speaker 3: you know, as we've seen today. I mean, you've had
Speaker 3: a terrible reaction in the market to you know, Liberation Day, tariffs,
Speaker 3: stocks melting down, the dollar, you know, selling off.
Speaker 4: And you know, I used to think.
Speaker 3: Of Trump as the kind of you know, the president
Speaker 3: of of sort of business in the stock market who
Speaker 3: judged himself by the fact that you know, stocks went up, right,
Speaker 3: and now doesn't seem to care about any of that anymore.
Speaker 3: And you know his hope, of course, I should mention
Speaker 3: this to be fair is to you know, return manufacturing
Speaker 3: to the United States and create jobs and all the
Speaker 3: rest of it. But you know, these people who you
Speaker 3: know working manufacturing plants also need to be able to
Speaker 3: afford cars.
Speaker 2: I just kept thinking. I mean, on the one hand,
Speaker 2: I guess union wages are around eighty dollars an hour,
Speaker 2: which is which is good, But you're still not going
Speaker 2: to be able to buy a suburban. Uh, it's just
Speaker 2: going to be out of their out of their reach.
Speaker 2: So let's bookend this discussion with Aston Martin. I think
Speaker 2: it's great to start with a Portia and Bugatti, stop
Speaker 2: in the middle to talk about middle class cars and tariffs.
Speaker 4: And then affordable car. Now back to election.
Speaker 2: So I just you know, I have heard Laurence Stroll's
Speaker 2: pitch for why Aston Martin should be worth more, and
Speaker 2: I leave there saying like, yeah, man, he's totally right. Uh,
Speaker 2: it should be worth at least, you know, like half
Speaker 2: of a Ferrari valuation. But I think you pointed out
Speaker 2: in uh when you wrote a column about this a
Speaker 2: couple of days ago, that it's only like one percent
Speaker 2: of Ferrari's valuation. And what is the problem with Aston
Speaker 2: Martin Because even if you find flaws here and there
Speaker 2: with their vehicles, they're still like iconic cars that I
Speaker 2: think most people would love to drive or even own.
Speaker 3: I think if you hit the nail on the head,
Speaker 3: I mean, I think there is a lot of passion
Speaker 3: for this brand. I think they do produce very highly
Speaker 3: desirable vehicles, and yet somehow they always contrived to kind
Speaker 3: of get it wrong. And part of that was the thing.
Speaker 3: You know, the original IPO was a little oversold, a
Speaker 3: lot of hype. You know, they went public at a
Speaker 3: kind of four billion valuation, and then they learned that,
Speaker 3: you know, supply and demand. They've always had a bit
Speaker 3: of a job to get that right. They wanted to
Speaker 3: grow stroll for example, how this target you wanted to
Speaker 3: get to ten thousand units a year. I think they
Speaker 3: sold six thousand last year. And you've had these periods
Speaker 3: throughout the asked in history where you get the kind
Speaker 3: of build up of stock on deed of four courts,
Speaker 3: and you know that then causes all kinds of problems,
Speaker 3: you know, to reduce prices or it hits the residual
Speaker 3: values and so forth, and then you have to like
Speaker 3: sort it out again. So the currently they're in the
Speaker 3: process of trying to balance supply and demand again, which
Speaker 3: means reducing wholesales and all the rest of it. And
Speaker 3: you know it contributes to this kind of stop start
Speaker 3: profit warning here there capital rais you know again and
Speaker 3: again and you know, stroll again. You know, he's a
Speaker 3: billionaire many times over from his days in the fashion world.
Speaker 3: But I don't think he probably expected to have to
Speaker 3: put as much money as he's had to put into
Speaker 3: Aston Martin as he's done. I think now his consortium
Speaker 3: is you know, it's about six hundred of million of
Speaker 3: change they put in. Now hopefully that will be the
Speaker 3: end of it, with the fifty million he put in
Speaker 3: this week. But again back to your evaluation point. You know,
Speaker 3: he owns a Formula one team as well, which carries
Speaker 3: the same name, and I mean, look at what's happened
Speaker 3: to F one team valuations.
Speaker 4: Now, I think his Aston Martin.
Speaker 3: Team, which is you know, by no means the most expensive,
Speaker 3: has a one point eight billion pound enterprise value or something,
Speaker 3: which you know, we're talking three times what this car
Speaker 3: company that sells you know, thousands of vehicles a year
Speaker 3: in employees, I don't know how many people. You know,
Speaker 3: there's a huge golf there now and clearly, you know
Speaker 3: that's partly because the economics of F one have changed.
Speaker 3: I mean F one teams now make money they didn't
Speaker 3: before that, the huge trophy assets, you know, the story
Speaker 3: f You know, US fans are bracing all the rest
Speaker 3: of it, whereas the car industry remains capital intensive, you know,
Speaker 3: periods of pricing difficulties, supply demand and all the rest
Speaker 3: of it. And yeah, Aston's had some problems too that
Speaker 3: you know, they haven't always got everything right technically. Coming
Speaker 3: back to our HyperCard discussion, I mean, they produced the
Speaker 3: Valkyrie goodness me. I mean I think one person involved
Speaker 3: in that project that it almost bankrupted the company.
Speaker 2: You know what beauty though that yeah, I mean wow, Yeah.
Speaker 3: If you do things like that, and they really really
Speaker 3: pushed the push the boat on that one, then you
Speaker 3: know you have problems. And clearly that you know, they
Speaker 3: had all kinds of engineering difficulties with that, I think.
Speaker 3: But now the next one is the Valhalla, which is
Speaker 3: kind of like I think they refer to it as
Speaker 3: sort of like a hypercar at supercar price and delivery.
Speaker 2: They call it not nearly as nice.
Speaker 3: There you go, let's just hope that they have an
Speaker 3: easier job producing that vehicle, because that will be a
Speaker 3: real test for the company. Now and they've got this
Speaker 3: sort of very sensible sounding, very reliable CEO now who
Speaker 3: did a great job at Bentley. Bentley was another one
Speaker 3: like never used to make money at Folk Sparden and
Speaker 3: now is making twenty profit margins, which is you know, great,
Speaker 3: and they hope he'll be able to repeat the magic
Speaker 3: at Aston.
Speaker 4: But I don't know.
Speaker 3: People have been burned so many times by this company,
Speaker 3: you know, not just recently and it's you know, stop
Speaker 3: market history, but before that's I think seven times bankrupt
Speaker 3: or whatever.
Speaker 1: While we're on the topic of Adrian, you know, he's
Speaker 1: coming from this very disciplined German ownership company and of
Speaker 1: course very conservative Bentley and everything. You know, a very
Speaker 1: nice guy. Everything I hear about him, and he is
Speaker 1: he's great in a crisis. Does that model will that
Speaker 1: work at Aston Martin? I mean, it's a completely different culture,
Speaker 1: and you know, from what I hear, they really desperately
Speaker 1: do need discipline. So now they've got their discipline Daddy
Speaker 1: and Adrian Hallmark. Is that gonna work well?
Speaker 3: I think it will as long as they let him
Speaker 3: get on with the job. I mean my impression, I
Speaker 3: mean it is a bit unfair, was that, you know,
Speaker 3: Lawrence Strall, he's executive chairman and maybe like to kind
Speaker 3: of get involved quite a lot, and they really just
Speaker 3: need to let Adrian do his thing. I think they
Speaker 3: will now, And I think we had a we had
Speaker 3: a good Bloomberg News feature on the company a couple
Speaker 3: of months ago where they said exactly that that they
Speaker 3: they were going to give the freedom to kind of,
Speaker 3: you know, execute his plan. Now it's is all very straightforward,
Speaker 3: sensible stuff, you know, not like spending a fortune developing
Speaker 3: new vehicles all the time, but you know, trying to
Speaker 3: produce derivatives, trying to push the personalization thing.
Speaker 4: That they're already doing pretty well on.
Speaker 3: By the way, they're at like I think eighteen percent
Speaker 3: of revenue from personalization. Now that's kind of Ferrari levels.
Speaker 3: They're probably not getting the same kind of pricing, but
Speaker 3: do you know what I mean that they're they're well
Speaker 3: advanced down that path, and so they can do that
Speaker 3: and get these programs delivered on time, not have dealers
Speaker 3: clogged with inventory again. They've got a brand new lineup
Speaker 3: of vehicles now, all of them have been refreshed, including
Speaker 3: the DBX, which is their SUV which I've I'm not
Speaker 3: a huge fan of, but they've done a good job
Speaker 3: now out with the refresh I think the interior looks better.
Speaker 1: Good.
Speaker 2: But don't you like about that? We love it.
Speaker 4: You love the DVXSSIV.
Speaker 2: I mean, I think it's really fun to drive. It's uh,
Speaker 2: sounds great, feels great. As you say, the interior has
Speaker 2: been updated and is pretty fantastic, I guess.
Speaker 3: And look, but they're currently only selling I think three
Speaker 3: or four thousand of a year. I mean, I think
Speaker 3: the Benti Yaga, which is also a matter of taste,
Speaker 3: but you know that sells a lot more, and that's
Speaker 3: key to the economics of these companies. You know, that's
Speaker 3: been obviously very very important for all of these companies
Speaker 3: that they have SUVs that sell. And I think Aston
Speaker 3: needs to do more with it's on, hopefully by you know,
Speaker 3: better marketing and so forth, that they can they can
Speaker 3: boost the volumes of that because that was obviously be
Speaker 3: very instrumental in driving a return to profits, which is
Speaker 3: what we need to see. I mean, this is a
Speaker 3: company that just has lost money, but for years, years
Speaker 3: and years he is and they're promising this year and
Speaker 3: this year finally we're going to be profitable and we're
Speaker 3: going to generate cash. If they can do that for
Speaker 3: a few quarters, you know, things could change.
Speaker 1: It's kind of it is kind of like you're in
Speaker 1: this dysfunctional relationship where it's just like, just lie to
Speaker 1: me one more time, and I'll still believe you because
Speaker 1: you're beautiful, because the cars are beautiful, and we all
Speaker 1: want it to succeed, and it's such a known thing
Speaker 1: and we love James Bond and all of these things,
Speaker 1: and we just take it because we want to believe.
Speaker 2: I've dated Aston Martin before and I wanted to break
Speaker 2: up for like years. It took me years to finally
Speaker 2: get the courage to leave her. But yeah, I think,
Speaker 2: first of all, I want to say that the Benega
Speaker 2: like objectively, is fugly right, and the.
Speaker 1: Aid Martin looks far better than Yes, yeah, bar none,
Speaker 1: I mean no comparison three on that.
Speaker 2: Yes, we all agree. I think I also wanted to
Speaker 2: point out just as an aside, there are a couple
Speaker 2: interesting connections between the Bugatti terbillone and the Aston Martin Valkyrie. Right,
Speaker 2: Cosworth makes or at least worked on both of the
Speaker 2: internal combustion engines, and Rimac clearly did both of the
Speaker 2: electric drive trains. So that's pretty cool that we can
Speaker 2: get from one to the other.
Speaker 1: Well, this ties into another sort of bookend question that
Speaker 1: I wanted to ask Chris, was when we're talking about these,
Speaker 1: you know, hypercars that are the halo cars for the brand,
Speaker 1: whether it's the Turbion or the Valkyrie in Valhalla or
Speaker 1: whatever hypercar Portia is or is not making. Obviously the
Speaker 1: fans want those, But to your point Chris and your
Speaker 1: column about Bugatti, those are lost leaders often. So what
Speaker 1: is the rationale at these companies, whether it's Aston Martin
Speaker 1: or Porsche, to make a halo hypercar that they might
Speaker 1: lose money on but then maybe it generates value and
Speaker 1: hype for the brand in other ways. Can you walk
Speaker 1: us through that, because at this point it's like, well,
Speaker 1: if you're losing money, why make them?
Speaker 3: Well I think that's right, Hannah, and I think the
Speaker 3: point is that, like it isn't always the lost leader
Speaker 3: you can make good money. And I was looking, for example,
Speaker 3: look at can exec right, They've managed to really you know,
Speaker 3: turn around the good business now and I think they
Speaker 3: probably have hopes for producing higher volumes that they're even
Speaker 3: making I believe for for Seedar.
Speaker 1: Hyper carnal camera.
Speaker 3: Yes, you know it's not you know, obviously not making billions,
Speaker 3: but like you know, I think they are profitable and
Speaker 3: you know, they've done that on the huge constraints, capital
Speaker 3: constraints in the fact that these vehicles, you know, they
Speaker 3: have to build them and get them homologated, which means
Speaker 3: you know, they've got to pass all the rules and
Speaker 3: regulations surrounding emissions and safety and all the rest of it.
Speaker 3: Really hard nuts crack. But you know, the promises is
Speaker 3: the Ferrari thing, right, if you can industrialize that process
Speaker 3: and you can get people queuing up to buy these cars.
Speaker 3: And now Ferrari have got this e factory where they're
Speaker 3: able to turn out you know, a huge amount of
Speaker 3: space and develop them and not just of course the
Speaker 3: hyper cars. So you know, if you really get the
Speaker 3: business model chraining, then you have a vehicle like the
Speaker 3: the SP three, which is not the height of technology.
Speaker 3: It's not about being like the absolute, you know, best
Speaker 3: of the best, high performance, so you can make huge
Speaker 3: margins on a car like that. Because actually, if I'm honest,
Speaker 3: if you gave me the choice tomorrow, and I hope
Speaker 3: somebody will between an f AD and SP three, I
Speaker 3: would take the SP three and that would have been
Speaker 3: really good back because of course those cars now I
Speaker 3: believe they were like a couple of million new and
Speaker 3: now they're trading up. I was told the other day
Speaker 3: by a dealer like two or three million over.
Speaker 1: This is the dog that everyone it's chasing.
Speaker 4: No, that's what they want.
Speaker 3: And so people are buying the FAD just to get
Speaker 3: the SP four or because they just have to have
Speaker 3: the FAD in their collection. So if you could develop
Speaker 3: a business model, well people buying cars not because they
Speaker 3: love them, because they just feel they have to have them.
Speaker 4: And that's an excellent business mode.
Speaker 3: Now, not everybody can achieve that, but I'm sure that's
Speaker 3: that that's the hope of many of these.
Speaker 2: Come course, I guess that that's the reason why you
Speaker 2: shell out for the F eighty. You're like, yeah, I'll
Speaker 2: take the V six, you know, because I want to
Speaker 2: get awesome. Dude, I'm so glad that you write for us,
Speaker 2: and it was great to be able to work next
Speaker 2: to you for a few a few quick years, a
Speaker 2: few brief years in the Berlin office. But we'll have
Speaker 2: to have you on.
Speaker 4: Again, please do. I love it. Thank you.
Speaker 2: That was Chris Bryant, my old buddy from Berlin.
Speaker 1: So cool, too, enlightning.
Speaker 2: Yeah, to hear from him, and he so thought full
Speaker 2: on these things. And I know because I lived well,
Speaker 2: I didn't live in the office, but I spent a
Speaker 2: lot of time in the office, and he was one
Speaker 2: of the other people that was reliably always in the
Speaker 2: office on freezer plots. I can't believe you've never been
Speaker 2: to Berlin, by the way.
Speaker 1: I know, I know, I know. I find it shocking myself.
Speaker 1: I've been. I feel like I've been to every other
Speaker 1: town in Germany, but I have not been to Berlin.
Speaker 1: And I think that I like it the best.
Speaker 2: Yeah, it's definitely up your alley. I know, like you
Speaker 2: would really appreciate the people and the culture. It's very
Speaker 2: different from the rest of Germany.
Speaker 1: I don't want to I don't want to rain on Stuttgart,
Speaker 1: but I have to imagine that Berlin is a little
Speaker 1: more interesting.
Speaker 2: The mustaches in Berlin are ironic as opposed to those
Speaker 2: in Stuttgart. They're meant very sincerely.
Speaker 1: Ironic and iconic. I love it. Have I ever told
Speaker 1: you my family's from Fulda? The German side of my
Speaker 1: family tell me that, Oh, yes, the Mullenhauer side, the
Speaker 1: German side. The Mullenhauers are from Fulda. So I've been.
Speaker 1: I mean, I truly have been in a lot of
Speaker 1: places in Germany, Hamburg, Frankfurt, you know, Munich, Dusel, Dwarf,
Speaker 1: all all of them. But no Berlin.
Speaker 2: So none of my family is German, but I would
Speaker 2: be there. My brother, my dad all went to boarding
Speaker 2: school on Switzerland, so we all speak German. And I
Speaker 2: have a somewhat of a preference for German cars. I
Speaker 2: just feel I feel like they're so solidly engineered and built.
Speaker 2: Stuff doesn't just fall off of a German car like
Speaker 2: it will with an Italian car or No.
Speaker 1: I just had a really sad thought, what does does
Speaker 1: this mean we're not going to get German cars anymore?
Speaker 2: I hope that's not the case. I hope that's not
Speaker 2: the case. Love, I do love the US product, so I.
Speaker 1: Don't it's not competitive. Oh come on, man, it's not competitive.
Speaker 2: You've got to drive the Escalade IQ.
Speaker 1: Right, I did. And it's funny you mentioned that piece
Speaker 1: will be in the magazine next week.
Speaker 2: All right, So are you still not allowed to tell
Speaker 2: us you're driving Impressions or Oh.
Speaker 1: Well, I certainly can. Maybe we talk about it though
Speaker 1: when it publishes. But in general, I would say best
Speaker 1: of the bunch. I mean best of the bunch.
Speaker 2: I mean, I love obviously, I have a soft spot
Speaker 2: in my heart for the F one fifty and so
Speaker 2: many different variants, and I love the GM trucks and
Speaker 2: especially the SUVs, you know, the Tahoe and the Yukon.
Speaker 1: Just gonna have to drive corvettes, I guess.
Speaker 2: And corvettes obviously. It's a supercar, so I love that
Speaker 2: one too.
Speaker 1: I'm not going to take that, babe.
Speaker 2: By the way, I have coming to me today. I
Speaker 2: am testing out an American and they say it's the
Speaker 2: only American made motorcycle. It's it's a brand that you
Speaker 2: cannot yet by this motorcycle from which you cannot yet
Speaker 2: buy this motorcycle. But Buel is going to drop off
Speaker 2: their new Supercruiser or the prototype of their Supercruiser. You know.
Speaker 2: Buell Motorcycles, I know of them.
Speaker 1: I don't think used to be.
Speaker 2: Used to be owned by Harley Davidson. They made really cool,
Speaker 2: kind of eclectic bikes. Eric Buell was I mean, his
Speaker 2: thought was lower the center of gravity as much as possible,
Speaker 2: So he was like he was one of the first
Speaker 2: or at least of recent bike makers to put the
Speaker 2: exhaust under the motorcycle, you know, and then everybody Ducatti
Speaker 2: started doing with the Panagalis. But Harley, I you know,
Speaker 2: I guess that business somehow failed at Harley Davidson, and
Speaker 2: I think it went bankrupt. So for seven years they
Speaker 2: couldn't really do anything.
Speaker 1: Did you say that they are They claim that they're
Speaker 1: the first American.
Speaker 2: The only American motorcycles. So what they say about Harley Davidson,
Speaker 2: That's exactly what I said.
Speaker 1: I was Harley May.
Speaker 2: I ran into I ran into the CEO and owner
Speaker 2: at uh In Austin, at the Moto GP and one
Speaker 2: of his one of his people, was saying that one
Speaker 2: of his engineers he was working at the buel stand
Speaker 2: and I said, what about Harley? And she said something
Speaker 2: to the extent of less than half of the components,
Speaker 2: you know, Harley Davidson are actually made in America.
Speaker 1: That's royally splitting hairs.
Speaker 2: What about Arch I don't even know if it's true.
Speaker 1: What about Zero? I could list you other brands.
Speaker 2: I hadn't thought about Zero, because I don't think there's
Speaker 2: a motor. Is it that's an electric You're not.
Speaker 1: Gonna call a zero motor motorcycle? Honest on a contingency.
Speaker 2: Maybe, but I would guess they also have componentry that's
Speaker 2: not all made well.
Speaker 1: Everybody has componentry that's not well.
Speaker 2: This is the idea of Buell. The idea is that
Speaker 2: greater than half, like the Lion share. I think they
Speaker 2: say seventy percent of their components are made right here
Speaker 2: in the US of A. And this is something that
Speaker 2: we are paying a lot more attention to right apparently.
Speaker 2: Tesla apparently sixty to eighty percent. I've heard different estimates.
Speaker 2: Sixty to eighty percent of their components are made in
Speaker 2: the US, and obviously the cars for sale here are
Speaker 2: also assembled here. That's far more than any other car maker.
Speaker 2: I think with Ford and GM it's something like fifty
Speaker 2: three percent, but it's more than that with Honda, Honda
Speaker 2: sixty four percent.
Speaker 1: Yeah. And also let's not forget that Mercedes. Companies like
Speaker 1: Mercedes and BMW literally are making cars in America, right,
Speaker 1: So yes, they're.
Speaker 2: Not with foreign parts, right, just order all the parts.
Speaker 2: And by the way, I was having a discussion with
Speaker 2: with a European motorcycle maker this weekend. They're worried about
Speaker 2: the tariffs and they are actually evaluating the idea of
Speaker 2: just sending the motorcycle here in parts and assembling it. Yeah,
Speaker 2: at a US address.
Speaker 1: Of course, because there's it's all shades of gray. There
Speaker 1: is not a single car that only uses and is
Speaker 1: only uses American made parts and is assembled in America
Speaker 1: and sold in I don't think there's a single one, Karma.
Speaker 2: But Tesla is near as damn it to that. I mean,
Speaker 2: they are pretty close to being fully made in America.
Speaker 1: I mean, but Tesla would be on its way out.
Speaker 1: This is the worst of times for Tesla.
Speaker 2: Really seeing more and more bumper stickers that say I
Speaker 2: bought my Tesla before Elon went crazy, yeah, or something
Speaker 2: to that effect.
Speaker 1: I know, and I mean this this is not meant
Speaker 1: to be a political statement, but I've never cared where
Speaker 1: stuff is made. I don't understand why we can't have
Speaker 1: Italian marble, French wine, Swiss chocolate, Italian leather, British tweed.
Speaker 1: American luxury is not enough for me. I need the
Speaker 1: world's fair, you know. I would like Japanese sake and
Speaker 1: Scottish whiskey.
Speaker 2: Yeah.
Speaker 1: This, these are the best of the best. I want
Speaker 1: the best of the world. Why don't you want that too?
Speaker 2: No, I totally do. But I think there's a there
Speaker 2: are a few different issues. One is, you know, obviously
Speaker 2: the populist drive is to give jobs that people that
Speaker 2: live to people that live here, right, And then I
Speaker 2: do care a lot of times where my clothing is
Speaker 2: made really tools Japan. But that's yeah, because I want
Speaker 2: high quality stuff, I know, right, you know, if I
Speaker 2: buy something that's you know, woven, cut and sewn in America,
Speaker 2: it's just or in Japan. Obviously it's just likely to
Speaker 2: be higher quality. Well, you're some eleven year old puts
Speaker 2: it together in Sri Lanka, right, But.
Speaker 1: The fact that you're buying Japanese denim implies that you're
Speaker 1: not satisfied with a denim and you're not wearing Levi's.
Speaker 2: I'm mostly not, but that's because you know, the old
Speaker 2: looms that were made back when American teens were high quality,
Speaker 2: we were sold to the Japanese at World War Two.
Speaker 1: I know, you know what's really wild. I was just
Speaker 1: at Levi's, like special itelier, and they were saying how
Speaker 1: difficult it is to source vintage Levi's because they for
Speaker 1: you know, their VIPs and stuff. Yeah, like it's extremely hard.
Speaker 1: And they were saying exactly what you said, which is,
Speaker 1: we were so stupid to give away all of those
Speaker 1: looms to Japan because now Japan just runs the market
Speaker 1: and they're so smart, and you know, kudos to them
Speaker 1: for that.
Speaker 2: True. And now I have to use chat shept to
Speaker 2: translate all of my uh, all of my letters into Japanese,
Speaker 2: and then I send them to the Flathead and I say,
Speaker 2: please send me these T shirts.
Speaker 1: And I just don't want to. I don't want to.
Speaker 1: I don't want to lose all of these beautiful luck
Speaker 1: uxtory things that we've become accustomed to. We've become accustomed
Speaker 1: to a certain level of lifestyle, and of course, but
Speaker 1: I'm a first world girl.
Speaker 2: I don't want to lose. To Chris's point, also, the affordability, right,
Speaker 2: I mean, I want people in this country to be
Speaker 2: able to get good paying jobs without being you know,
Speaker 2: incredibly gifted, talented, extraordinary people. Right, just go to a job,
Speaker 2: make enough money to raise a family. On the other hand,
Speaker 2: if those products aren't going to be affordable to any
Speaker 2: of those people, what's the point. I guess I was
Speaker 2: thinking yesterday, maybe not everybody gets to drive a car?
Speaker 2: Is that the idea? Like, not everybody needs to have
Speaker 2: access to this.
Speaker 1: I would love it if all ride bicycles everywhere. Honestly,
Speaker 1: I think that would be first of all, for sure
Speaker 1: be a better world if everyone rode motorcycles or bicycles,
Speaker 1: no question about that.
Speaker 2: Yeah, right, for sure. Yeah.
Speaker 1: And second of all, even in other countries, the people
Speaker 1: who are assembling Ferraris and Rolls Royces are not purchasing
Speaker 1: Ferraris and Rolls Royce. Good, there's more thing unusual about that.
Speaker 2: That's a good point. But if you're you.
Speaker 1: Are sewing in Dor's workshops, are not wearing Dor couture.
Speaker 2: If you're assembling, you know, a pickup truck at the rouge,
Speaker 2: you should be able to afford to buy that pickup truck.
Speaker 2: That was the idea with Henry Ford. Right, I'm gonna
Speaker 2: pay them five dollars a day so that they can
Speaker 2: buy the Model Ta or whatever it was.
Speaker 1: I'm more capitalists than that.
Speaker 2: I learn more and more things about you every every day, Hannah,
Speaker 2: you got anything cool coming up?
Speaker 1: I'm driving a Volvo this week. Last week I had
Speaker 1: Have you had cheese car? Yeah? Have you had the
Speaker 1: a MG cle E Mercedes? Speaking of German cars?
Speaker 2: I it's have I have not? But I am a
Speaker 2: huge fan of the cle Yeah, sleeper hit.
Speaker 1: It's a complete completely I was like, what loved it,
Speaker 1: really loved it?
Speaker 2: Which one is it the fifty three or the sixty three?
Speaker 1: Fifty three? I'm looking at the Maroni right now. Actually
Speaker 1: it's the fifty three. The AMG starting price seventy two eight,
Speaker 1: which is cheaper than the Escalade or the whatever sub
Speaker 1: you mentioned. Yeah, it's an inline six four and forty
Speaker 1: three horse power and that's all you need. That's really
Speaker 1: that's really all you need.
Speaker 2: But wait, we're talking about a coup, right, why would
Speaker 2: you compare it to the Escalade?
Speaker 1: Well, because you just mentioned earlier that not an Escalade,
Speaker 1: but whatever, the Silverado or some suburban you are I
Speaker 1: can't remember all the suburban. Yeah, and you mentioned it
Speaker 1: was like eighty six thousand, And I'm saying this with
Speaker 1: the options, this incredible luxury product, AMG. No less starts
Speaker 1: at seventy two. I actually think that's a rather good deal.
Speaker 2: No, it's I mean they are I love They're so
Speaker 2: high there, so luxurious.
Speaker 1: It looked good too, It looks super good.
Speaker 2: To be fair, you can get a suburban with a
Speaker 2: five point three leader, the tried and true V eight
Speaker 2: for much less. But I'm just saying six point two
Speaker 2: a pay up.
Speaker 1: Yeah. Oh. Also, I did have the urus Se, which
Speaker 1: I think we've already talked about. I had that to
Speaker 1: the Lamborghini Uru, the one you did, the one you did,
Speaker 1: which only we don't need to get into it other
Speaker 1: than to say it only confirmed my thought that it's
Speaker 1: the best suv on the market right now period. I'm
Speaker 1: not saying it's my favorite, but I'm saying it's the best.
Speaker 2: Do you feel like when you close the doors there's
Speaker 2: not that solidity that you want from an SUV? I
Speaker 2: feel that well, they made of carbon fiber.
Speaker 1: If you want solidity, you're gonna have to go with
Speaker 1: the g. Let's be honest, I mean, speaking of favorites, agreed,
Speaker 1: What are you doing this weekend?
Speaker 2: All right? Uh, let's see this weekend, I'm just gonna
Speaker 2: be driving this Buele. I'm riding this duel. I'm going
Speaker 2: to I had this buel American made motorcycle like an
Speaker 2: hour north of here to Danbury, Connecticut, where I will
Speaker 2: test drive a road King And we have yet to
Speaker 2: determine how American that is. But I'm going to test
Speaker 2: drive a road King to see if I prefer it
Speaker 2: to the Fat Bob.
Speaker 1: And is this this is one that's for sale specifically, yes,
Speaker 1: that you might be coming home with.
Speaker 2: Yeah, well, I mean I'm pretty sure I want the
Speaker 2: Fat Bob. I rented it with riders Share in Austin
Speaker 2: over the weekend and I had a great experience with that,
Speaker 2: the Turow of motorcycles. Yeah. Yeah, so I'm just I
Speaker 2: have a two wheel weekend ahead of me.
Speaker 1: Wow, you're really I feel like you're riding more bikes
Speaker 1: than ever these days.
Speaker 2: It's well not since I mean before I had kids,
Speaker 2: you know, it was every day, but I get it.
Speaker 2: But now whenever I can awesome. Well that's all for
Speaker 2: this week, I guess We'll see each other back here,
Speaker 2: same time, same place next week.
Speaker 1: I'm Matt Miller and I'm Hannah Elliott, and this is Bloomberg.
Speaker 1: M