By Lauren Fix
Car prices could surge 10% and more as the United Auto Workers threatens additional walkouts, according to experts — even as the bitter standoff threatens GM and Ford with punishing losses as high as $125 million a week.
The strike means certain vehicles will not be produced. Common sense tells us a month-long strike could lead to a roughly 10% increase in vehicle prices with hikes depending on the make and model. Basic supply and demand will cause a price increase.
As inventories reduce from dealers’ lots, and manufacturers sells dealers what they had produced prior to the strike, fewer cars will be available and, on the lot, you’re likely to see prices go up quickly. Some dealers are already saying that they will increase prices each week the strike continues. Tom Maoli, a Ford dealership owner in New Jersey, expects to raise his prices by 20% once the strike continues for two weeks. Workers walked off the job last Friday.
The UAW is pushing car manufacturers to negotiate to a higher wage and benefits. The UAW is planning to continue to target strike plants that have the most expensive vehicles, most popular vehicles and that means trucks and the SUVs plants are the main focus. Customers may look at other brands but full-size work truck come from the big 3 automakers of GM, Ford and Ram.
Maybe you are not buying a new car, this strike will impact others who just need tires, brakes, anything you need to change and keep your car running. This is all UAW employees or members.
Car manufacturers knew a strike was possible, they grew their inventories in August in anticipation of this strike, which has affected three major assembly plants: a GM factory in Wentzville, Mo., a Ford plant in Wayne, Mich., and a Stellantis Jeep plant in Toledo, Ohio. One week later, the UAW plans to add more plants in their targeting strikes.
The impact is real for the economy. Collectively, GM, Ford and Stellantis “produce almost half of domestically assembled cars,” according to Goldman Sachs — 14,000 of which are produced weekly at the targeted plants. The investment bank predicts that “auto production would likely fall sharply impacted by a strike.
The impact to the economy is huge, a 10-day strike equals $5.6B in economic loss, that cannot be recovered.
The GM’s Wentzville, MO, plant makes the GMC Canyon and Colorado mid-sized pickup trucks, while Ford’s Wayne, Mich., production site produces the Bronco and Ranger models. The Stellantis plant in Toledo, OH produces the Jeep Gladiator and other Jeep vehicles.
The impact of the strike of these plants also impacts the suppliers from independent companies. GM stopped building the Chevy Malibu and Cadillac XT4 on last Wednesday after running short of stampings made at a Missouri plant that’s on strike. Stellantis said it was laying off workers at an Ohio machining plant and expected to make more layoffs in Indiana.
There are some companies that are benefitting because of the strike.
The last time the UAW struck, they targeted General Motors in 2019 in a strike that lasted a month and a half, the longest such action since 1970. In the end, UAW members received an $11,000 signing bonus as well as performance bonuses, two 3% annual raises and two 4% lump sum payments. GM also closed a few plants that were slated for closure permanently. This contract structure was then used to reach similar agreements with Ford and Stellantis. This sounded like a good deal for the UAW members at the time. However, soon after the Covid pandemic struck, and plants closed during the nationwide lockdowns. Extreme supply issues affected the industry significantly throughout 2021 to early 2023.
Inflation has risen over 17% since the beginning of 2021, eroding all the wage gains and some from the UAW’s previous contract. It is easier to understand the bold UAW membership demands in this context. There is no easy answer to resolve this strike. The longer this strike lasts, the impact to workers, the manufacturers and the economy is not good. It is good for other brands that have vehicles to sell and not impacted by the union strike.
Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.
Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on ABC.com with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak.
Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum and Juror / President for the North American Car, Utility & Truck of the Year Awards.
Check her out on Twitter and Instagram @LaurenFix.