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Analysts warn United Auto Workers strike will drive up car prices if it doesn't end soon

Tim Balk, New York Daily News on

Published in Automotive News

A historic auto workers’ strike at three Midwestern factories entered its second day on Saturday with one major question looming over the U.S. economy: Will the work stoppage drive up car costs and fuel simmering inflation across other industries?

Some 13,000 workers have walked off plants that build some of the most popular American-made cars. The targeted stoppage — the first time the United Auto Workers have launched a simultaneous strike against each of Detroit’s Big Three auto brands — is seen as likely to last and could expand to more plants.

The strike is led by workers bitter that their wages haven’t kept up as car prices climb, all while corporate leadership continue to pocket major raises. It started Friday at plants in Wayne, Michigan; Toledo, Ohio; and Wentzville, Missouri, outside St. Louis.

The longer the stoppage lasts, the more influence it could have on car prices. But Garrett Nelson, a senior analyst for CFRA Research, said the effects on both new and used car prices could happen almost immediately.

“We think dealers will look at the situation, and say: We don’t have much certainty regarding future supply,” Nelson said in an interview Saturday, adding that consumers might rush to dealerships to purchase cars before the strike worsens.

“In the near-term, we think there’s going to be an increase in both pricing and sales volume,” Nelson added. “But we don’t think there’s going to be a resolution any time soon.”

Historically, UAW strikes have not had major effects on auto prices or sales rates, according to an analysis from the Cox Automotive market research firm. But “things are different this time around,” Jonathan Smoke, chief economist at Cox, wrote in the analysis.

Smoke said General Motors, in particular, appears likely to be effected, because its sales have been strong and its supply is smaller. General Motors owns the Wentzville plant.


Sales of Stellantis — which owns Chrysler and Jeep — have been softer recently, and its inventory stronger, so it would likely see slower effects, Smoke said. Stellanis runs the factory in Toledo.

Ford, owner of the Wayne plant, is in between General Motors and Stellanis in terms of sales, Smoke said.

President Joe Biden, who has presented himself as an ally of unions, has voiced strong support for the striking United Auto Workers.

“Record profits have not been shared fairly,” Biden said Friday. “The bottom line is that auto workers helped create America’s middle class. They deserve a contract that sustains them and the middle class.”

According to a Gallup poll conducted last month before the strike was authorized, 75% of Americans supported the auto workers in their contract negotiations.

But even though only about 9% of UAW’s 146,000 workers are currently on strike, it could have growing effects on car prices if the stoppage drags on — or expands. Those effects could potentially leak out into the broader economy, complicating the strike’s political and economic ramifications.

So far in 2023, car prices have roughly been flat year-over-year, according to Kelly Blue Book. Sales volume slumped during the COVID pandemic.

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