![]() Worker wages and benefits, Fain argued, make up only about 4% to 5% of a vehicle’s costs and can be easily absorbed by the companies.įord, GM and Stellantis combined posted net income of $24.5 billion during the first nine months of the year. That means that competition for buyers is intensifying as pent-up demand from the pandemic wanes, making it difficult for any automaker to raise prices.ĭuring the contract talks, UAW President Shawn Fain stressed that the Detroit automakers were making billions in profits and needed to share some of the profits with workers, who for years gave up pay raises and other benefits to help the automakers survive the aftermath of the Great Recession. auto dealers have more than 2.4 million vehicles on their lots, the highest supply since the spring of 2021. Discounts, he said, will likely have to come out of the automakers’ profits.ĭetroit’s automakers, Smoke noted, have been jettisoning smaller, lower-cost vehicles for years and instead ramping up production of higher-profit trucks and SUVs that can cover their higher cost of labor.Īt present, he said, U.S. Supplies increased, and by September, prices dropped to just under $48,000, said Smoke, the Cox economist.Īs factories crank back up after the strikes, Smoke foresees pressure on the companies to keep prices affordable, especially with auto loan rates around 10% driving up monthly payments. This year, computer chips started flowing before the strike, and companies were making more vehicles. The average sale price peaked in December of last year at nearly $50,000. “That’s an issue for all of our business and something we are working very, very consciously on to see how do we mitigate those costs.”Įven before the strikes, auto prices were rising as a pandemic-related computer chip shortage hobbled factories and made new vehicles scarce. “You can imagine that is not the end of our activities,” Knight said Tuesday. Natalie Knight, the chief financial officer of Stellantis, the parent company of Chrysler, Jeep and Ram, said her company has already pulled out of two auto shows in the United States to save on expenses. “When the dust settles from this UAW debacle, the Detroit auto stalwarts find themselves with a bigger cost profile with competition increasing,” said Dan Ives, an analyst at Wedbush. But they also face huge capital expenses to develop and build electric vehicles as the world transitions from gasoline to battery power. All three automakers said they have taken steps to pare costs and become more efficient, having known for months that they would have to begin raising worker pay. Less-senior workers and temporary hires will receive much bigger increases.įord estimates that the contract will raise labor costs by $850 to $900 per vehicle. If approved by 146,000 union members, the settlements that ended the strikes mean that automakers will raise top assembly plant worker pay by more than 30% to around $42 an hour by the time new contracts end in April of 2028.
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