The recent United Auto Workers (UAW) strike has captured headlines and left many wondering about the potential impact on car prices. As negotiations continue between the UAW and major automakers, the question looms: will this labor strike ultimately lead to higher car prices for consumers?
The UAW strike, which began in mid-September 2023, involved thousands of auto workers across various manufacturers, including General Motors (GM), Ford, and Stellantis (formerly Fiat Chrysler). The strike primarily revolves around contract negotiations, with labor unions seeking improved wages, benefits and working conditions. The negotiations are emblematic of the ongoing tug-of-war between labor unions and automakers, where both parties seek to safeguard their interests while striking a fair and equitable deal.
As the strike progresses, it has raised concerns about its potential ripple effects on the automotive industry, including the possibility of car prices increasing for consumers. To gain a better understanding of this complex issue, we turned to expert opinions and analyses.
Expert Take No. 1: Inevitably Yes, Car Prices Will Rise
Various experts are signaling that car prices will certainly rise. One prevailing expert opinion suggests car prices are likely to rise as a result of the UAW strike. Ivan Drury, Edmunds’ Director of Insights, expressed this viewpoint to CNBC. Drury explained, “If you are thinking of making a purchase in October or November, you might as well do it now,” Drury said, noting that added pressure from the strike will likely lead dealers to pull back on incentives. “You are not going to find better deals later,” he concluded.
While many car dealers have an existing stock of vehicles for sale, that supply will dwindle in the coming weeks. Consequently, consumers could find themselves paying more for vehicles in the near future. Additionally, the potential price increases could extend beyond the initial purchase price of the car. Auto loan interest rates remain stubbornly high, and consumers will see a larger monthly loan payment if the cost of new vehicles rises.
Expert Take No. 2: There’s No Need To Worry
Some experts are also emphasizing that consumers shouldn’t be too concerned about the price of cars — at least, at this point.
Mark Stewart, CEO for North America at Stellantis, weighed in on the issue to USA Today. He said his company has contingency plans to limit the impact on consumers, though he declined to give details about them. “We really want to encourage customers: Don’t be afraid,” Stewart said, while suggesting they see the deals available at dealerships.
It’s clear that automakers are reacting and gearing up for the possible effects of the UAW strike, including allaying consumer fear. Automakers with sound financial footing may be better equipped to absorb some of the incremental labor costs that arise from negotiations with the UAW. Conversely, financially challenged automakers may face a cost dilemma. Even with “contingency plans” in place, some automakers will likely need to pass on higher costs to their customers should the UAW strike persist.
Expert Take No. 3: Dealers Are Prepared To Handle Demand For Cars
While the strike’s immediate impact may lead to temporary disruptions, some experts believe dealers are better equipped to handle shortages these days.
Scott Kunes, CEO of Kunes Auto and RV Group — which owns more than 40 dealerships in the Midwest — was quoted by CNN, saying, “The auto manufacturing crises of recent years have left auto dealers better prepared to deal with disruptions. We already started to take some action a few weeks ago, when it looked like the strike was pretty imminent.”
“We started to stock up on used vehicle inventory, especially in the domestic makes, and some of the hotter models,” Kunes continued. He also said his dealers took steps to get more new vehicles onto their lots.
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Kunes’ perspective underscores that while consumers may experience long-term challenges, the automotive industry has faced shortages before and has historically shown resilience. The potential impact of the UAW strike on car prices is a multifaceted issue influenced by various factors, including the strike’s duration, automakers’ financial positions, and the industry’s ability to adapt. These factors interact and intersect, ultimately shaping the outcome consumers may encounter in the market.
While some experts predict inevitable price increases and others take a different stance, the extent and duration of the strike remain uncertain. Consumers navigating the car market during this period may find it essential to stay informed, closely monitor market developments and consider their individual circumstances when making purchasing decisions.
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This article originally appeared on GOBankingRates.com: Will UAW Strike Make Cars More Expensive? 3 Experts Give Their Best Takes