How the United Auto Workers strike could impact vehicle prices in the near future
COLUMBIA, Mo. (KMIZ)
As the United Auto Workers union strike moves into day three and discussions between CEOs and workers continue, consumers and car dealers could start to see impacts on car prices in the future.
Popular vehicles that are already in limited supply such as the Chevrolet Silverado, Tahoe, Ford F-Series pickup trucks, GMC Sierra could be the first to indicate a shortage.
The thought of these models becoming more difficult to purchase has consumers turning to panic-buying, which would also increase vehicle prices.
Currently the companies have enough stock to last them a few weeks.
While analysts believe it will take a few weeks for the impact to be seen at car dealerships, dealers are still concerned for their business as they will remain open during the strike.
"I will definitely admit that I'm nervous," said Ken Thomas, partner at Northland Chrysler Dodge Jeep Ram based in Detroit, Michigan. "We've got about 30 to 45 days of supply on our new car inventory and about the same on parts. Both of those things really rely on manufacturers to get it to us in time for us to deliver it to the next customer."
Dealers could also likely lose incentives they receive from manufacturers to boost sales by cutting vehicle prices.
If Ford, GM and Stellantis cars become more difficult to get, consumers may turn to other non-union competitors like Honda, Tesla and Toyota for their vehicles, which could end up costing more than expected.
The currently average price for a new vehicle shot up to about $48,000, which is a 22% increase since 2020.
According to the Federal Reserve Bank of New York, rejection rates for auto loans has increased to 14.2% this month, making it the highest rejection rate since it began tracking these numbers in 2013. That rate was 9.1% six months ago.
On Saturday Stellantis, formerly Fiat Chrysler, offered a 21% raise in hourly pay for workers, which is still 15% under the union's asking price.
The UAW is asking the Big Three (GM, Ford and Stellantis) for a 36% pay raise over the course of four years, reinstating pension benefits and increases, more paid time off, and the introduction of a four day work week and still receiving 40 hours of pay for only working 32 hours a week.
They are also asking to dismiss the two-tier wage system.
The CEO's of the Big Three had pay raises of 40% over the past four years while workers only received a raise of 6% since their last contract negotiation in 2019.
Ford and the UAW also had a "reasonably productive discussion" on Saturday regarding new deals and contracts. No details on that meetings outcome has been released.
Currently there are three locations on strike. A General Motors assembly plant in Wentzville, a Ford factory in Wayne, Michigan and a Stellantis Jeep plant in Toledo Ohio in total have about 13,000 workers on strike.
GM announced Friday it will have to lay off about 2,000 UAW members at the Fairfax assembly plant in Kansas City at some point early next week depending on the impact of the strike in Wentzville, which they get materials from.
600 workers at the Michigan assembly plant were told to not report to work due to not having the manpower or materials to do their jobs.
