MONEY & BUSINESS: Car prices could surge 10% or more as UAW strike enters second week
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.
Rob Handfield, a business professor at North Carolina State University, told CBS that he predicts a month-long strike could lead to a roughly 10% increase in vehicle prices with hikes depending on the make and model.
“If it goes for two months, we probably won’t see any cars on lots, which means dealers will raise prices on the inventory they have,” Handfield told the outlet.
Tom Maoli, a Ford dealership owner in New Jersey, told CBS News that he expects to raise his prices by 20% once the strike continues for two weeks.
“Inventories on lots of dealerships will start drying up as they get sold and there won’t be enough cars to go around,” Maoli said, noting that car parts will actually be the “biggest issue.”
“That means tires, breaks, anything you need to change and keep your car running,” he told CBS.
The Big Three automakers — Ford, GM and Jeep-maker Stellantis — 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.
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 predicted in a note shared with The Post that “auto production would likely fall sharply — we assume to roughly zero — at any company impacted by a strike.”
A halt in operations at this scale would also affect quarterly annualized growth by as much 0.1% each week the strike lasts, according to Goldman.
At GM and Ford, that percentage equates to a $100 million to $125 million weekly loss in revenue for each company.
GM’s Fairfax, Kan., plant could also be forced to idle “as soon as next week,” Goldman said, as the production site sources some materials from the automaker’s Wentzville plant.
The bank’s calculations are based on weekly revenue estimates at the GM and Ford plants affected by the ongoing strike, as well as the car models produced at each site.
GM’s Wentzville, Mo., plant makes the GMC Canyon and Colorado, while Ford’s Wayne, Mich., production site pumps out its Bronco and Ranger models.
Though unionized Stellantis workers are also on the picket lines, the Jeep-maker was not included in the forecast.
A GM spokesperson told The Post that the company will address the strike’s impacts during its next earnings call, on Oct. 24.
“Suffice to say, strikes hurt everyone and not just the company,” the GM spokesperson said.
A representative for Ford also declined to speculate on the impact of the strike, adding that the company “continues to negotiate with the UAW, and our focus is on reaching a deal that rewards our employees, allows for the continuation of Ford’s unique position as the most American automaker and enables Ford to invest and grow. We’re working for a win-win.”
Representatives at Stellantis did not immediately respond to The Post’s request for comment.
“Over the last two — past decade, auto companies have seen record profits, including the last few years, because of the extraordinary skill and sacrifices of the UAW workers,” the 80-year-old President said at the White House Friday, hours after the strike began.
“Those record profits have not been shared fairly, in my view, with those workers.”
Biden did not specifically recommend terms for a deal, but said Ford, General Motors and Stellantis “should go further to ensure record corporate profits mean record contracts.”
UAW president Shawn Fain did just that, pressuring the Big Three Detroit automakers to write up new contracts that take the union’s demands into account as early as noon on Friday, he said in a YouTube video posted late Monday.
In the clip, Fain urged GM, Ford and Stellantis to add job protections to its worker contracts as the industry moves towards a fully-electric future.
Fain did not say which other plants would be targeted if the already-historic strike widened, which is the first time the 88-year-old union staged simultaneous walkouts at all three Big Three automakers.
The UAW represents 150,000 workers across the Big Three — only about 13,000 of which are currently striking.
“This is a potential nightmare situation for GM and Ford as both 313 stalwarts are in the early stages of a massive EV transformation path for the next decade that will define future success,” Ives said, referencing Detroit’s “313” area code.