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Why American Car Buyers Are Downsizing full transcript and summary - episode of podcast WSJ What’s News

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Episode: Why American Car Buyers Are Downsizing​

Why American Car Buyers Are Downsizing

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Dec. 27 Edition. WSJ reporter Ben Glickman explains how affordability concerns are leading U.S. drivers to pivot away from the larger, roomier vehicles in vogue over the last decade. Plus, Finland gets tough after the latest apparent act of sabotage targeting its undersea cables. And Netflix scores big on its

NFL debut. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Full Transcript​

00:00:00 Speaker_00
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00:00:18 Speaker_03
Finland gets tough after the latest apparent act of sabotage targeting undersea cables.

00:00:24 Speaker_02
This really turns a new page in the way NATO countries are handling this.

00:00:30 Speaker_02
And obviously in the future, any captain of a ship that might cut a cable deliberately or otherwise will know that they can contend with helicopters full of heavily armed Finns dropping onto the deck.

00:00:44 Speaker_03
Plus, American car buyers start thinking smaller, and Netflix scores big on its NFL debut. It's Friday, December 27th.

00:00:55 Speaker_03
I'm Luke Vargas for The Wall Street Journal, and here is today's edition of What's News, the top headlines and business stories moving your world today.

00:01:03 Speaker_03
Elite Finnish border units and police raided a tanker carrying Russian oil in the Baltic Sea overnight, a vessel that Finland says may have severed undersea power and data cables on Christmas Day.

00:01:16 Speaker_03
Finland's prime minister defended the unusual move, saying it aimed to end a recent wave of incidents targeting critical undersea infrastructure belonging to countries in the NATO alliance.

00:01:27 Speaker_03
Bojan Panczewski is the journal's chief European political correspondent in Berlin. Bojan, this raid overnight sounds pretty dramatic and a far cry from the quite patient, can we say, response that we've seen to past incidents.

00:01:41 Speaker_03
What might that tell us?

00:01:42 Speaker_02
Absolutely. It is unprecedented in the context of the past couple of years since the war in Ukraine started and this kind of wave of sabotage was initiated. Basically, the message coming out from Finland is no more Mr. Nice Guy.

00:01:58 Speaker_02
They've had Finnish cables cut twice now in over a month. And they've decided enough is enough. They deployed special units from Border Guard, which has a kind of a paramilitary special force.

00:02:13 Speaker_02
And they deployed the special force of the police known as the Bear Squad. They were heavily armed with submachine guns. They didn't encounter any resistance, but had they encountered, they would have shot at people.

00:02:24 Speaker_02
So it's a pretty serious thing that happened.

00:02:26 Speaker_03
You said earlier, no more Mr. Nice Guy was the message here. Just remind us sort of what Nice Guy looked like, because typically ships like this aren't typically boarded in this fashion, to say the least.

00:02:37 Speaker_02
Oh, absolutely. First of all, when a ship is in international waters, it's considered territory of the country it's registered in. In this particular case they guided the ship into Finnish territorial waters before they raided it.

00:02:52 Speaker_02
But just to compare, last month there was another ship that actually cut one of the cables that connects Finland with Germany and that cable was cut last month by a Chinese ship

00:03:04 Speaker_02
The ship was kind of detained by the Danish Coastal Guard with the explicit permission of China, but nobody dared board the ship until China gave its permission and even then China was leading the investigation.

00:03:18 Speaker_02
So it was handled very diplomatically, unlike this particular case. This really turns a new page in the way NATO countries are handling this.

00:03:29 Speaker_03
I guess the bigger question here is, is there any way to truly stop these incidents? You can't patrol every bit of ocean where there's a critical cable underneath.

00:03:39 Speaker_02
Indeed, this wave of sabotage and weird accidents and incidents that was triggered by the war in Ukraine and by the Western aid to Ukraine has basically exposed how vulnerable critical infrastructure really is, especially in the West.

00:03:55 Speaker_02
And now, after this latest incidents, the NATO chief Mark Rutte has pledged to provide more patrol ships from NATO countries for the Baltic. They're talking about drone surveillance.

00:04:07 Speaker_02
They are definitely stepping up efforts, but to secure all that infrastructure is pretty much impossible.

00:04:14 Speaker_03
Bojan Pacevski is The Wall Street Journal's chief European political correspondent in Berlin. Bojan, thanks so much for the update. Thanks for having me on.

00:04:25 Speaker_03
Missiles are now the leading cause of commercial aviation deaths, a trend that runs counter to an otherwise improving safety picture in air travel. That is according to a tally by the Flight Safety Foundation's Aviation Safety Network.

00:04:39 Speaker_03
Those findings come as a preliminary Azeri investigation into Wednesday's crash of an Azerbaijan Airways jetliner in Kazakhstan indicated that it was hit by a Russian anti-aircraft missile or shrapnel from it.

00:04:54 Speaker_03
If confirmed, it would be the third fatal downing of a passenger jet in the last decade. That risk has led to recent clashes between pilots and airlines.

00:05:04 Speaker_03
According to letters reviewed by The Wall Street Journal, crews have expressed concerns about being asked to fly to destinations in the Middle East and use flight routes over areas like Iraq.

00:05:17 Speaker_03
Pilots have also requested an update to life insurance policies, many of which don't pay out in the case of accidental downing while operating over war zones.

00:05:27 Speaker_03
Less than two weeks after the impeachment of South Korea's president, the country's legislature voted today to impeach his replacement, acting president Han Deok-su.

00:05:38 Speaker_03
Han had declined to make judicial appointments needed to advance the impeachment of his predecessor, Yoon Seok-yool, who had imposed a short-lived martial law that kicked off South Korea's political upheaval.

00:05:51 Speaker_03
After today's move, the role of acting president has been handed to Minister of Economy and Finance Choi Song-mak, who'd earlier warned that impeaching Han would increase political uncertainty and damage South Korea's economy.

00:06:05 Speaker_03
The country's KOSPI stock index fell 1% today, taking its year-to-date losses above 9%. And in markets news, with the exception of South Korea's KOSPI index, stocks in Asia ended the day mostly higher.

00:06:24 Speaker_03
European stocks, which had been closed yesterday, gained modestly. And U.S. indexes are slipping, putting stocks on course to end the Christmas week on a downbeat note. Coming up, after going big for years, American car buyers are downsizing.

00:06:40 Speaker_03
We've got that story and more after the break. Netflix's NFL streaming debut saw an average of around 24 million people in the U.S. tune in for each of its two Christmas Day games, according to preliminary Nielsen data.

00:07:03 Speaker_03
The games, in which Netflix avoided technical glitches that marred its coverage of a prominent boxing match last month, marked an important step in the company's bid to establish itself as a live event platform and boost its ad business.

00:07:21 Speaker_03
Throughout the year, we've talked repeatedly about struggles facing a number of carmakers that doubled down on EVs only to be met with weak demand in many markets.

00:07:32 Speaker_03
Hybrid cars have also proven unexpectedly popular, a trend that has rewarded the likes of Toyota at the expense of others left trying to play catch up. And as we close out the year, U.S.

00:07:43 Speaker_03
car shoppers appear to be dealing yet another surprise as they opt for smaller car models after years of gravitating toward larger, roomier vehicles.

00:07:53 Speaker_03
According to research firm Motor Intelligence, entry-level models such as the Honda Civic and Nissan Sentra have taken off this year, rising 23% or more through November, while sales of large pickup trucks and midsize SUVs have fallen.

00:08:10 Speaker_03
Our capable event spoke to journal reporter Ben Glickman about what's causing Americans to downsize.

00:08:16 Speaker_04
Well, to start, a lot of these smaller offerings are just cheaper overall. And it's been an ongoing trend in the car industry over the last year or so that consumers are really under pressure for affordability.

00:08:29 Speaker_04
So during the pandemic, car prices went up significantly. There were a lot of supply chain shortages that led to limited supply. Prices skyrocketed. And that hasn't really come down.

00:08:41 Speaker_04
Other expenses like repair costs, insurance, those have also gone up significantly. So overall, people, I think, are looking to save. And these models tend to be cheaper.

00:08:51 Speaker_01
Ben, Americans have gravitated towards bigger cars for years. What does this shift mean for automakers?

00:09:00 Speaker_04
It puts a lot of pressure on this model that they've developed in the last couple of years where car makers like GM, Ford, they've really put focus on their larger vehicles, which tend to be much more profitable.

00:09:13 Speaker_04
So discontinuing some of their smaller car lines hasn't really had a significant effect on the bottom line. What we're seeing now is that that clearly has some drawbacks in times when Americans want those kinds of offerings.

00:09:27 Speaker_01
So with that in mind, which car makers are set to benefit from what's going on?

00:09:32 Speaker_04
So the likes of Toyota, Honda, Nissan, these companies have really had their small car offerings throughout and that's now proving to be quite beneficial just in the sales numbers.

00:09:45 Speaker_04
I would say the other major beneficiary would be companies who have really pivoted into

00:10:00 Speaker_04
This kind of new ish segment of subcompact SUV so these are like relatively small cars that have some of these SUV like features for real drive so that. Segment the chevy tracks and in particular which is a relatively new revamp from chevy it's been selling super well this year it's a very clear payoff of investing in those. super compact but still SUV vehicles.

00:10:15 Speaker_04
So the automakers that were a little bit more hedging their bets with keeping those small offerings around, I think, are the ones who are standing to gain right now.

00:10:23 Speaker_01
Does this play into the wider challenges automakers are facing when it comes to the production of EVs?

00:10:30 Speaker_04
These larger trucks and SUVs that are doing relatively poorly this year compared to some of these small offerings were largely for the Detroit automakers at the very least, seen as sort of the funding for some of these big EV pushes.

00:10:46 Speaker_04
And if those super profitable cars aren't selling as well with Americans, it puts even more pressure on these companies as they've got to invest. retooling plants, bringing new EV lines to market. All these things tend to be extremely expensive.

00:11:00 Speaker_04
So the less profit they're raking in from big cars and trucks, the less they're going to be able to comfortably support these new EV efforts, especially as sales and demand for those EVs is not exactly what they had hoped it would be.

00:11:13 Speaker_04
This last year has not been a kind one for the EV market. And I would say that this is just a little bit like insult to injury for car makers like GM and Ford.

00:11:22 Speaker_01
That was journal reporter Ben Glickman. Ben, thanks so much.

00:11:26 Speaker_03
Thanks for having me. And that's What's News for this week. Tomorrow, there will be no episode of our weekly markets wrap-up, What's News in Markets.

00:11:38 Speaker_03
On Sunday, though, we will be discussing what crypto fans and executives are hoping for from the next US administration. That's in What's News Sunday. And we'll be back with our regular show on Monday morning.

00:11:49 Speaker_03
Today's show was produced by Charlotte Gartenberg with supervising producer Michael Kosmidis. Michael LaValle wrote our theme music. Aisha al-Muslim is our development producer. Scott Salloway and Chris Zinsley are our deputy editors.

00:12:03 Speaker_03
And Philana Patterson is The Wall Street Journal's head of news audio. And I'm Luke Vargas for The Wall Street Journal. Have a great weekend. Thanks for listening.