© 2024 KUAF
NPR Affiliate since 1985
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations
Affected by May 26 tornadoes? Find relief resources here.

How the UAW strikes could impact car shoppers

UAW workers picket outside of the Stellantis Mopar parts facility in Naperville, Ill., on Sept. 22, 2023. The UAW strike against Big Three automakers may not have much of an impact on car shoppers, though that could change.
Scott Olson
/
Getty Images
UAW workers picket outside of the Stellantis Mopar parts facility in Naperville, Ill., on Sept. 22, 2023. The UAW strike against Big Three automakers may not have much of an impact on car shoppers, though that could change.

The United Auto Workers strike against three Detroit-based automakers is making history — but for car shoppers the impact may not amount to much, at least not yet.

Analysts say there is a risk that the strike could eventually push supplies down and prices up, but that would take a long time to materialize.

Parts shortages, on the other hand, could be felt much sooner and make repairs take longer for owners of certain vehicles.

Here's what you need to know about how the strikes are (and aren't) affecting drivers.

Stellantis and GM dealers may struggle to find parts

On Friday, the UAW announced a major shift in the strikes.

It expanded the strikes to 38 parts distribution centers for Stellantis and GM across 20 states – but not Ford, citing progress in talks.

These centers are essentially warehouses that ship out parts to dealerships. That means that although these new strikes won't cause much disruption to vehicle manufacturing, they could relatively quickly start to interfere with vehicle repairs.

Pete DeVito is with the United Service Workers Union, which represents workers at car dealerships. He says this is a major escalation by the UAW, especially from a car owner's perspective.

It could mean cars that need repairs are stuck at dealerships or body shops "for two months, for three months, when it should be there for two or three weeks, because they can't get a part," he says. "Now, in some cases, dealers – like with cars – have been stockpiling as many parts as they can get their hands on ... but that can only last so long."

Cars are displayed on the sales lot at a CarMax dealership in Santa Rosa, Calif., April 11, 2023. Although the union surprised the auto industry by striking against all three companies at once, its plan is to gradually increase the plants or facilities impacted.
Justin Sullivan / Getty Images
/
Getty Images
Cars are displayed on the sales lot at a CarMax dealership in Santa Rosa, Calif., April 11, 2023. Although the union surprised the auto industry by striking against all three companies at once, its plan is to gradually increase the plants or facilities impacted.

The industry had recent experience with this, he notes. In 2019, the UAW's 40-day strike against GM disrupted parts shipments, with lingering effects. "It doesn't just snap back into place," DeVito says. "This takes months to handle the shortages that are about to be created."

GM and Stellantis have options to try to reduce the impact — like sending white-collar workers to try to run the parts facilities.

But DeVito is skeptical that that will be enough to avoid disruptions in repairs. Popular vehicles affected would include GM's Chevrolet, GMC, Buick and Cadillac brands, Stellantis brands Jeep, Chrysler, Ram and Dodge.

Rising inventories provide a buffer against price hikes

The strike might be felt in the auto shop soon. But at the sales desk, it should be business as usual for now.

The number of vehicles that are already built and ready to be sold, a closely watched metric in the auto industry, just crossed 2 million for the first time in two years.

That's still not high by historical levels. And some of the vehicles targeted by the strike – like the Ford Bronco, for instance – were in short supply to begin with. But overall, America simply isn't on the brink of a car shortage like it was just a couple of years ago.

"With the current inventory levels in place, we don't expect a short-lived strike to impact consumer prices in any meaningful way, at least in the near term," Rebecca Rydzewski, research manager at Cox Automotive, wrote last week.

The strike is also targeted, reducing the impact on supply

The nature of the strike also should reduce the impact on Big Three supply chains for now.

Although the union surprised the auto industry by striking against all three companies at once, its plan is to start with reduced locations and gradually ramp up if the automakers don't make enough concessions.

The UAW is also strategically choosing targets with relatively limited ripple effects.

Instead of shutting down the Big 3's operations entirely by stopping engine production, for instance, the union has focused on a few assembly plants and warehouses that supply dealerships, not plants.

Tony Hanes, a self-employed mechanic, works to pick used car parts from a salvage automobile at Pull-A-Part in Louisville, Kentucky, on Jan. 13, 2022. The UAW is expanding its strike against GM and Stellantis, targeting their
Jon Cherry / Getty Images
/
Getty Images
Tony Hanes, a self-employed mechanic, works to pick used car parts from a salvage automobile at Pull-A-Part in Louisville, Kentucky, on Jan. 13, 2022. The UAW is expanding its strike against GM and Stellantis, targeting their

Even factoring in the knock-on effects, which resulted in a few thousand temporary layoffs, the vast majority of production facilities are still running.

The F-150, Silverado and Ram pickup trucks that drive the Big Three's profits, notably, are being produced without interruption.

The Big 3 just aren't as big as they used to be

Decades ago, Ford, GM and Chrysler made up 90% of the domestic auto market. But that's ancient history today, when Toyota, Honda and Hyundai are also market leaders and the Big Three are just 39% of the market.

That means the union has less power than in its heyday. It also makes this strike very different from the massive, industry-wide supply disruption sparked by the pandemic.

Unlike the COVID shock, Cox Automotive Chief Economist Jonathan Smoke notes, the UAW strike "will only impact a portion of the retail business, and the impact will be slow coming."

The likeliest impact: No holiday discounts

Analysts tell NPR that aside from shortages of specific models, the likeliest impact on consumers will be the absence of incentives at the Big Three automakers – the zero-down-payment, 0% interest loans and cash-back offers that have slowly been coming back to dealership ads.

Ed Kim, an analyst at AutoPacific, says a strike "could help prevent the Big Three from doing their traditional thing of piling on incentives at the end of the year to move all this metal out."

On the other hand, he says, car shoppers who have grown used to this brutal car market might not be expecting discounts to begin with.

A prolonged strike could be a different story

If the strike grows big enough and lasts long enough, there could be more significant effects on vehicle supplies and prices.

"We just don't know at this point," Jessica Caldwell, executive director of insights at the automotive data company Edmunds, told NPR on the sidelines of the Detroit Auto Show last week. "If it does drag on, that is definitely a risk."

Rival companies like Toyota could see this as an opportunity to seize market share, which could mute the price impacts, she notes. But only if they can actually increase production enough to take advantage of their moment.

And it all depends on which plants are struck, and for how long.

Labor costs haven't been the driving force behind prices

What about when the strike ends? A contract with big wins for the union, should that happen, will increase the cost of building a car.

But right now, automakers are selling cars and trucks – especially their biggest, most lucrative models – for much more than it costs to make them. And the union is well aware of that.

"The prices of cars have been going up for several years now because of greedy corporate price gouging, and our wages have not gone up to match that," said Kyle Bendert, from a picket line outside the Ford assembly plant in Wayne, Michigan. "If the car prices do go up, they're going up because corporate wants more money to offset what they're giving us. But they don't need to do that."

Or to put that in economic-ese, "a rise in productivity over the past 20 years provides a buffer against the need to increase vehicle prices," S&P Global Market Intelligence wrote in a note. A 46% raise for workers, for instance, would increase companies' costs 2% over 4 years, they calculated.

The automakers argue that these comparisons don't factor in the cost of the union's demanded retirement perks, which automakers say carry a hefty price tag. But it also doesn't factor in ways the companies could cut costs (including moving jobs out of the U.S.) to reduce those impacts.

And it's absolutely dwarfed by recent price increases.

Over the last four years, car prices rose an astonishing 30% before leveling off at an average of $49,000 for all vehicles and $65,000 for trucks, according to Kelley Blue Book.

The driving forces? Supply chain disruptions, lower production and a shift to fancier vehicles – not wages.

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.