Marque Down
The warning signs are already there. What happens when the forces reshaping the car business reach motorsport?
Paul Pfanner has watched an energy shock rewrite the car business before, and watched the old order fall once from a hotel window in Detroit. He sees the pattern forming again. The first in a run of columns on what the paddock would rather not discuss, starting with why a bond market, a Porsche balance sheet, and the price of a barrel are one story.
You didn't want to read about this when I posted a Shift Happens essay titled "Instrument Failure" in the spring of this year. The truth is, I didn't especially want to write it. But the same market signals are stacking up that I saw in early 1974 when I was a shaggy haired kid helping to launch FORMULA magazine out of a race shop during the first energy crisis that led to a deep recession. Since then, I have paid attention to the frequency of the hum in markets beyond racing.
Short version: The car brands you grew up with are being repriced all at once, and the sport that depends on those brands has not gotten the invoice yet.
The first time the fire came through
The 1973 embargo and the 1979 shock did more than cause long lines at the pump and sharply raise the price of a fill-up. They handed the American market to the small, efficient imports and began a slow erosion of Detroit's marques that ran for the better part of two decades. Nobody rang a bell the day it turned. The Big Three looked healthy on paper for years. I was inside the sport while it happened on both occasions, so I know through bitter experience the opening of that story when I see it. I should also point out that I have an uncanny knack for being involved in launches that are perfectly aligned with global economic disruption. That is a bug in my personal destiny programming, not a feature.
The night the old order filed
I have also watched it from up close, and that time I did not read it in time.
OnCars was Bill Sparks's idea, and we built it together, backed by Jay Penske's Mail.com Media (MMC), the company he would grow into today's Penske Media Corp, and by my own money. It was a bet on web video about cars and racing before that was a normal thing to do, mini-documentaries for the carmakers included. That is what I was fighting to keep alive when the financial crisis hit.
This Week On Cars, the weekly news show we produced at OnCars. Our pioneering web video news-update about the car business.
I flew to Detroit to sell our OnCars Studios work to the carmakers. GM filed for bankruptcy that very day, and I landed into it, checking in that night at the hotel inside the Renaissance Center, GM's own headquarters. I could not sleep. Across from me the towers stood half lit past midnight, on the floor across from my room were people who had not gone home. In a conference room, half a dozen of them sat around a table, talking through the night. I have never forgotten it. The next morning I sat in meetings with GM divisions already being wound down, Pontiac and Hummer among them. Roger Penske, the biggest name in American racing and owner of Penske Automotive Group, was trying to buy Saturn out of the same wreckage that month. Even he could not catch a falling brand.
We had just finished a short video series introducing the brand-new Tesla Model S prototype. Made fast and on a tight budget, it argued that an electric car could be a real world every-day car with style plus performance, and not a science project. In every meeting, the moment we mentioned it, no one wanted to see the rest of our work. They wanted to watch that one. The future, playing on a video loop at the old order's funeral.
The Tesla Model S launch video we produced at OnCars in the early 2009, (the original 3-episode series cut into one). This is the future that was playing on a loop at the old order's funeral.
I missed the biggest part until later. The day after GM filed, it agreed to sell Hummer to a Chinese company almost no one had heard of, the first time a Chinese firm would have bought an American car brand. The deal collapsed months on, because Chinese regulators didn't want a gas-guzzler. They had already chosen electric. In that same week, in that same industry, China was choosing the road we were carrying home on a hard drive, and I was too busy keeping my company alive to see it.
What I do now
So now I watch for the shape of it with my teammates Bill Sparks and Bill Long in our Pfanner Advantage consultancy, and when it starts to form I say so early and out loud, to whoever can still act on it. For most of my career the reading was a means to an end, the instinct behind a product launch or a client's next move. Now it is the whole job.
The same fire, still burning
Energy lit this round too. I wrote in the spring that the fire had banked, not gone out. This week it flared again. Brent is back near 95 dollars a barrel after US and Iran strikes resumed, Hormuz is being threatened again, and there is still nothing on the table that ends it. The accelerant is back.
Brent crude, February to now. It fell back to pre-war levels in June, then caught again. This week it flared.
Look at Porsche. A year ago it earned 5.64 billion euros in operating profit. Last year that fell to 413 million, a drop of about 93 percent in a single year.
Porsche's operating profit, one year apart. 5.64 billion euros down to 413 million, a fall of about 93 percent. The most profitable name in the business, repriced in twelve months.
China, the market that carried the brand for a decade, has fallen so far that Porsche now sells fewer cars there than at home in Germany.
For a decade China was Porsche's number one market. In the first half of 2026 it slipped below Germany.
The company is cutting nine thousand jobs, one in five, and it brought in a chief executive from McLaren to run the turnaround. Its expensive all-electric bet is being reversed, gas engines pushed out into the 2030s.
A brand rarely dies in one visible event. It erodes, a little margin and a little more market share each year, until the decline is structural and no one can name the moment it turned. Porsche is in that slide now.
Japan's quiet advantage
Japan is having the opposite year, and this is the part that should worry you more, because it is quieter. The yen fell to lows it had not seen in forty years, and that weakness became a competitive advantage. Toyota sold fewer cars and nearly doubled its profit, close to 9.4 billion dollars in a single quarter, almost all of it on currency and hybrids.
Toyota sold fewer cars and nearly doubled its profit in a single quarter. A weak yen did the work
The patient hybrid strategy everyone doubted is being proven right at the same moment Porsche's electric bet is being punished. Then the tell. In August, Washington and Tokyo intervened together to push the yen back up, partly to blunt that advantage and give American rivals some room. Even the winner here does not fully control its own edge.
The buyers are being priced out
Underneath the brand stories is a harder one, about who can still afford a car at all. In the US the headline looks calm. Cox Automotive expects about 15.8 million new vehicles sold in 2026, down two to three percent from last year, and calls the market stable. But that calm is paid for by the well-off. The average new vehicle now costs more than $49,000, sticker prices have held above $50,000 for most of a year, and the average new-car payment has climbed to a record near $770 a month. New-car loans run over 6 percent, closer to 9 on a sales-weighted basis, and used-car loans sit above 11. The people still buying are the ones those prices and rates don't stop. Everyone else is trading down to used, or keeping what they have and staying out of the showroom.
That is the tell. Fewer new cars, sold at higher prices to a smaller and wealthier group of buyers, an industry defending its margins by narrowing who it sells to. And it is not only here. Global sales are set to slip this year, with China, the largest car market on earth, heading for its first decline since 2022. Europe's totals hold up only on electric and hybrid incentives while gasoline and diesel drop away. The demand for cars has not vanished. It is being sorted, and a growing share of it can no longer meet the new-car price. Whoever wins from here will be whoever can put a car the squeezed buyer can still afford in the driveway.
Who gets to change the rules
Above all of it sits China. The buyer that reached for Hummer in 2009 is not reaching anymore. BYD is winning at home, it launched a small car inside Japan's own market this summer, and it is moving into Formula 1 through Williams. When a company gets that big, it stops following the rules and starts writing them to suit itself. That is its own column, the one I am building toward next. For today, note where this is heading.
Why this is our problem too
During this remarkable period of growth and mainstream appeal, Motorsport leaders have one common worry. The sport does not stand on its own. It sits downstream of the car business. Works teams, engine programs, the small suppliers that provide components for the race teams, the sponsorship budgets that begin inside a carmaker's marketing plan, all of it depends on the health of the manufacturers driven by demand for their vehicles.
Motorsport sits downstream of the car business. When a carmaker weakens, the pressure runs down the line to the teams.
When a carmaker weakens, the teams and suppliers feel it long before the fans do. The money and the machinery the sport runs on leave with the marque.
What comes next
I have kept this on cars (pun intended) and the sport we love, because that is where I can read the signals most clearly. But there is a bigger story underneath all of it. The money now pouring into artificial intelligence is moving at a pace I have never seen before, and it is bending the same bond markets I opened with. That one gets its own column. It is coming soon because AI is reshaping the world as we know it, at a pace that makes everything else look like it is running behind the pace car under caution.
A word about why. It seems that I get the most attention when I write about what the next IndyCar ought to be, or good news out of the paddock, and I will keep writing those essays. But that is not all I see, so I am also going to write about the things that are harder to deal with, on a regular schedule, because spotting the uncomfortable subjects early is the only real edge any of us gets.
These were never separate problems. They are one dark current, and it is running faster than anything I have felt before. I would rather say so now than be proven right later.
Victory travels at the speed of thought. But only if you act decisively.
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