The pandemic created an age of easy money where U.S. consumers were flush with cash.
But now that the nation is facing serious problems like inflation and job losses, things are starting to shift in the other direction.
And now these major automakers are bracing themselves for a rough autumn.
The “Big Three” face massive strikes
Ford, General Motors (GM), and Stellantis, known as the “Big Three” automakers in the United States, are in serious trouble.
They only have a few days left to reach new contractual agreements with the United Auto Workers (UAW) and avoid a strike.
In the meantime, car dealers across the country are bracing themselves for what could be a serious impact on their bottom line.
Kunes Auto Group operates over 40 dealerships in the Midwest and COO Scott Kunes said they’ve been preparing for the strike “for a little while now.”
Meanwhile, UAW President Shawn Fain has promised to keep the negotiations going around the clock.
But according to Kunes, “we do have to prepare for all three to be striking at the end of this week.”
If the strike occurs, the production lines will stop rolling, potentially causing new car prices to rise even higher.
Many dealers throughout the country are already asking over MSRP for certain models and tightening an already precarious car market.
And even though some of the most crucial supply chain problems due to COVID-19 have eased, Kunes said production levels aren’t close to what the industry witnessed before the pandemic hit.
If the inventory dries up, it could be harmful to dealerships, local communities, and consumers.
Kunes said “nothing happens until we sell a car” and added that most dealerships “rely heavily on the sales departments.”
He explained how dealerships have some fixed operations for service and parts, but said these departments are mostly kept in operation thanks to return customers who come in after they purchase a vehicle.
Kunes noted that losing that aspect of the dealership “is a scary proposition.”
After the 2019 strike against GM, the manufacturer was never able to fully recover and catch up with lagging inventory.
Kunes said that the previous strike is largely why Toyota overtook GM as the leading auto manufacturer in the country.
Major losses ahead
If the union workers go on strike, it could potentially cost the big three automakers an eye-watering $5 billion every 10 days.
“It’s a massive thing not just for car dealers and automakers, but for the U.S. economy in general,” he continued.
Unions like the UAW are looking carefully at other groups like the Teamsters, who had major success after recent negotiations with UPS.
The UPS negotiations have set a huge precedent for larger unions moving forward.
Kunes said that the big question is “which one has the bigger chip stack?”
Of course, only time will tell.
But these companies have clearly allowed unions to gain the upper hand, which in turn makes all Americans pay the consequences.
Patriot Political will keep you up-to-date on any developments to this ongoing story.
