In an unprecedented move, 13,000 workers from Detroit’s “Big Three” – Ford, General Motors, and Chrysler (now part of Stellantis) – have initiated a coordinated strike, the likes of which haven’t been seen in UAW’s 88-year legacy. Led by UAW President Shawn Fain, this strategic “stand-up strike” not only challenges automakers but also poses a pressing question: How might this impact car prices in the coming weeks? Let’s talk about how the UAW union strike could impact car buying, and what the range of possibilities are.
The Scale of the UAW Strike
Is it a car buying apocalypse? You’d think so from some of the headlines this week. However, not everyone sees this as quite such a big deal. Sam Fiorani of Auto Forecast Solutions comments, “This is more of a symbolic strike than an actual damaging one.” But he also warns, if the negotiations fail to progress, a more extensive, damaging strike might just be around the corner.
Yet, the union’s strategy here is clear: by opting for targeted walkouts, the UAW hopes to keep their strike pay costs down, leveraging their $825 million strike fund against the automakers’ multi-billion profit reserves. And while Stellantis might be sitting on a comfortable 90-day Jeep stockpile, they stand to lose more than $380 million in just a week, should the Toledo Jeep plant face shutdowns.
What’s more, new car inventory in the U.S. is already swelling. GM, Ford and Stellantis dealer lots are chock-full, and this trend is expected to continue into October. So, where does that leave car prices? They’re still high, but are trending downward. The real deals are for those who negotiate with data-backed leverage.
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Dealerships Love This…
From a car dealership’s perspective, the strike might be a disguised blessing. Memories of the semiconductor chip shortages of 2021-22 still linger. That period saw many dealerships thriving on the opportunity to invoke ‘market adjustments’, leading to lucrative ‘dealer markups’. Simply put, less supply often equals more demand, enabling dealers to push prices up.
Remember, dealer markups, also known as ‘market adjustments’, are nothing but added profits for the car dealership.
Should Buyers Be Worried About Rising Car Prices?
Here’s the billion-dollar question: Will this strike inflate car prices?
A lot hinges on the strike’s duration. If the UAW strike stretches beyond 14 days, there’s a good chance we’ll see prices start to nudge upwards. However, considering the leverage UAW holds and the possible intervention from the U.S. government, a prolonged strike seems unlikely.
For those marking their calendars for a late 2023 car purchase, our advice is simple: Stay calm and carry on with your car buying preparations. Even with the specter of a UAW strike looming large, our expert Car Coaches are optimistic about end-of-the-year deals.
Car Market Update for Fall 2023: New and Used Car Forecast
Car Buying Help – Final Thoughts
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