The United Auto Workers union strike in Detroit, if protracted, would affect supply and prices, but the repercussions would be gradual and across just part of the industry, unlike during the pandemic, Cox Automotive predicts.
Thousands of union members went on strike after negotiations failed Thursday between the UAW and Ford, General Motors and Stellantis. They’re targeting select plants of each brand.
The big three automakers represent 64% of U.S. vehicle franchises, so if the event extends beyond a few weeks, it would have an impact across the country, Cox Chief Economist Jonathan Smoke said in his analysis.
The trio of brands have done more discounting this year as supply and demand have been more balanced, but their prices are also higher than industrywide because of their outsize big-truck lines, said Smoke, who predicts that an extended strike would result in reduced discounting and incentives.
The Detroit automakers also do more fleet sales, which could also be negatively impacted by a long strike, Smoke said, affecting year-end deliveries and forcing rental-car companies to seek more used models as they did during the pandemic, thereby pushing up those prices anew.
Of the three, General Motors is probably the most vulnerable, he said, as its sales have been higher and its supply therefore tighter.
Originally posted on Auto Dealer Today