UAW Strike: How Car Buyers Could Be Affected
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This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash washingtonwise.
Here's your money briefing for Monday, September 18th.
How did the UAW strike begin and why does it matter for car buyers?
I'm J.R. Whelan for The Wall Street Journal. The longer the strike by thousands of United Auto Workers against the big three car makers lasts, the more consumers are likely to feel the pinch when shopping for a new car or bringing their car to the repair shop.
It would likely put pressure on new car prices that surged 34 percent during the pandemic and were at a record of almost $52,000 in August.
We'll talk to Wall Street Journal reporter Rachel Wolf after the break.
The auto industry is bracing for the possibility that the strike by thousands of workers could expand into a broader work stoppage. How is this likely to affect consumers in the market for a new or used car? Wall Street Journal reporter Rachel Wolf joins me. So, Rachel, it seems like the big three automakers were just getting back on their feet after disruptions caused by the pandemic. What's the recovery process been like?
How were automakers' inventories positioned before the UAW contracts expired?
So after three years of surging prices, limited choices, and long waits, the new and used markets were just starting to stabilize. Now, United Auto Workers' strike of General Motors, Ford Motor, and Jeep maker Stellantis is poised to worsen the already tight supply of popular models. So just as things were getting back to a so-called normal, they are likely to get worse again.
What were their inventory levels this year and the days leading up to Thursday's contract expirations with the UAW?
Detroit car companies have been building inventory and have enough to last for nearly two months or more based on the current selling pace. And that's according to industry data. So at the end of August, Stellantis, whose brands include Ram, Chrysler, and Dodge, had 74 days worth of unsold inventory. Ford had 64 days and GM had 50 days. The industry's average was 38 days.
What could happen to new-car prices if the strike lasts for weeks or months?
So these three are above that average, which means that if it's a short strike, it's possible that these automakers will be able to weather it without consumers seeing all that much disruption.
Okay, so there's a cushion there. But what if a strike by workers at the big three were to linger for weeks or months? How could prices of new cars be affected?
A protracted strike is different. It would likely put pressure on new car prices that surged 34% during the pandemic and were at a record of almost $52,000 in August. So if a strike were to last longer than a couple of weeks, like it did at GM back in 2019, consumers could be seeing some much higher prices and lower supply of popular models.
Where might consumers find deals on new cars despite the strike?
Could there also be deals to be had?
There are still deals, surprisingly, especially if you're willing to look past the most popular sellers. So if a vehicle sits on a lot for more than 90 days, some dealerships start to slash prices and offer discounts. So what consumers would want to look for are less sought-after models. Think the Chrysler 300, the Chrysler Pacifica minivan. They might fit the bill. Electric cars, surprisingly, could also be more of a bargain than their gas-powered counterparts. EV inventory is at 78 days on average, and some models are even more than that. So the Ford Mustang Mach-E is at 111 days, the Nissan Leaf is at 112 days, and the Nissan Ariya is at 122 days. So again, the longer a car sits, the more supply there is, the more likely you are to find a deal.
Now how about used cars? How would that market be affected by a widespread work stoppage?
How would a prolonged strike affect the used-car market and demand for popular models?
So just like we saw during the pandemic, when new models are harder to come by and more expensive, people start to look at the used car market. So in the case of a protracted strike, popular used car models could shoot up in price. Again, emphasis on the popular models. You could still potentially find a deal on less popular cars, but just like during the pandemic when demand for used vehicles surged and inventories dwindled nationwide,
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–0:20
2
How did the UAW strike begin and why does it matter for car buyers?
0:20–1:29
3
How were automakers' inventories positioned before the UAW contracts expired?
1:29–2:29
4
What could happen to new-car prices if the strike lasts for weeks or months?
2:29–3:22
5
Where might consumers find deals on new cars despite the strike?
3:22–4:21
6
How would a prolonged strike affect the used-car market and demand for popular models?
4:21–5:40
7
Could the strike cause repair delays or shortages of manufacturer-supplied parts?
5:40–7:35
Speakers
3 identifiedMore from WSJ Your Money Briefing
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