Could the United Auto Workers strike affect car prices? 'Inevitably yes,' expert says

Members of the United Auto Workers (UAW) union maintain a follow picket in entrance of Stellantis headquarters in Auburn Hills, Michigan, on September 20, 2023. 

Bill Pugliano | Getty Images

Regardless of the result, the United Auto Workers strike threatens to trigger already excessive automotive costs to escalate.

After the Big Three automakers — Ford, GM and Stellantis — failed to achieve a deal on a brand new contract with the union, UAW-represented staff walked out of a number of meeting vegetation in Missouri, Michigan and Ohio and warned it is going to strike further vegetation at some, if not all, of the automakers at midday Friday.

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Up till this level, the strikes focused solely sure fashions, like Ford’s midsize Ranger and the Jeep Gladiator, that are additionally not thought-about the best-selling automobiles, based on Ivan Drury, Edmunds’ director of insights.

“It’s a ‘chess, not checkers’ mentality,” he stated.

However, if the strike expands, or, alternatively, if the hanging autoworkers’ calls for are met for a 40% pay elevate together with different advantages, that would put stress on automakers, sellers and, in the end, automotive consumers.

“It’s kind of a toss-up what’s going to happen,” Drury stated.

Either manner, shoppers pays extra down the street, he added. “Inevitably yes, no matter what.”

Car consumers will not see a right away influence

Buying a automotive was already costly. Not solely are new car costs close to an all-time excessive, however the rate of interest to finance a purchase order has additionally jumped dramatically.

For new vehicles, the common transaction worth was $47,941 in August, close to an all-time excessive, based on Edmunds.

For now, anybody looking for a automotive will not see a right away influence from the strike, Drury stated.

“There’s enough inventory on dealers’ lots,” he stated.

Heading into the autumn, car provide had almost stabilized, based on Cox Automotive, a supply of auto business data, though it’s nonetheless low by historic requirements.

The three automakers grew their inventories in August in anticipation of a possible standoff. They have about 50 to 60 days’ value of stock readily available, Cox Automotive stated, up roughly 80% from a 12 months in the past.

This buffer might forestall sellers from feeling a big influence, no less than initially, based on separate knowledge from Lotlinx, a dealership stock administration agency.

‘Dealers might see shortages inside weeks’

In the long term, “work stoppages ultimately lead to fewer vehicles built and lower inventory,” Cox Automotive Chief Economist Jonathan Smoke wrote in a weblog publish final week.

Discounts might decline consequently, relying on the mannequin, Smoke famous.

“Ford only has 18 days’ supply of the popular Maverick pickup and 47 days of Broncos. Jeep only has 62 days of Grand Cherokees, and Chevy dealers are likely worried about their 28 days of Tahoes,” he wrote.

“If production of one of those products is disrupted, dealers could see shortages within weeks,” Smoke added.

With that in thoughts, shoppers out there for a automotive will possible discover higher offers now than later this fall.

“If you are thinking of making a purchase in October or November you might as well do it now,” Drury stated. With the added stress from the strike, sellers are prone to pull again on incentives, together with reductions on financing, he additionally famous.

“You are not going to find better deals later,” Drury defined.

Used automotive costs could also be subsequent to rise

Instead of getting a brand new automotive, consumers on a price range might discover extra worth in buying a used automotive, specialists typically say. However, costs of wholesale used automobiles might have bottomed for the 12 months, analysis exhibits.

“With potential new car production slowing, used car values have nowhere to go but up,” Drury stated.

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