A strike by approximately 13,000 auto workers from Ford, General Motors, and Stellantis has the potential to disrupt the car market and lead to price increases for both new and used vehicles. The strike comes after the expiration of the workers’ UAW contract and a failure to reach a new agreement. UAW president Shawn Fain described the strike as a defining moment for their generation.
While the chip shortages that affected the availability of new cars during the pandemic have largely resolved, car buyers still face challenges in the current market. Inflation and rising interest rates have made car loans more expensive, and the cost of cars remains high. According to Kelley Blue Book, the average price of a new car in July was $48,334.
If the strike continues for an extended period, experts predict that new car prices could increase by around 2%. Tyson Jominy, vice president of data and analytics at J.D. Power, stated that there is a real risk of price hikes due to reduced car availability. However, it is worth noting that dealer inventories currently have more cars than they did last year, despite a 68% increase in unsold inventory compared to the previous year.
One potential beneficiary of the strike is Tesla. While domestic car shoppers may not immediately switch to Tesla, the long-term impact could be significant. Tesla’s lack of reliance on traditional internal-combustion engines positions them favorably compared to the Big Three automakers. The strike could potentially hinder the transition to electric vehicles for traditional automakers by limiting their flexibility. If Tesla can leverage lower labor and production costs to lower prices, they may become a more attractive option for consumers.
In addition to the impact on new car prices, the strike could also affect the used car market. If new car prices increase, more people may turn to used cars, potentially driving up prices. However, there are limits to how much used car prices can increase, especially for cars that are less than three years old. Experts suggest that used car prices may experience a shift higher but not to the same extent as during the chip shortage period.
Overall, the strike by auto workers has the potential to disrupt the car market, leading to price increases and impacting market dynamics. It remains to be seen how long the strike will last and what the ultimate effects will be on car prices and consumer choices.
Sources:
– Andrew Keshner, “Strike by 13,000 auto workers at US automakers could further disrupt car market already contending with chip shortages,” MarketWatch