In September 2023, the United Auto Workers (UAW) launched a strike against several major automakers: General Motors, Stellantis, and Ford Motor Company. The strike for better compensation and working conditions involved around 40,000 members of the UAW, whose contract with the automakers expired on September 15th. As of October 31st, the union has reached a tentative agreement with all three automakers¹.
Car dealership owners and vehicle shoppers alike may wonder how the UAW strike will affect them before and after it’s officially over. For dealerships, a major concern is whether the strike will lead to a parts shortage, potentially hurting their parts and services departments. Let’s break down some of the potential impacts of this strike, specifically regarding a possible parts shortage.
Potential Effects of the UAW Strike
In the long term, the auto workers’ strike could increase the prices of both new and used cars. The work stoppages during the strike are estimated to have delayed the production of new vehicles, increasing demand on existing inventory—and this can increase prices in turn². The faster the UAW and the affected automakers can ratify their agreements to end the strike, the less noticeable these price effects will be.
In the short term, a parts shortage is a much more likely effect of the strike. Stellantis and GM dealerships, in particular, may have to worry about finding parts due to a recent shift in the strike strategy. The UAW included 38 Stellanis and GM parts distribution centers in the strike, leaving out Ford³. Since these distribution centers are responsible for shipping parts to dealerships, car dealerships may struggle to get all the parts they need for vehicle repairs.
Preventing and Addressing a Parts Shortage
If a car needs repairs, and the dealership cannot get the necessary parts, that car may be stuck for much longer than usual before the dealership can get it up and running again. Some dealerships anticipated this issue and stockpiled extra parts ahead of the strike—but these stockpiles cannot last forever, and agreements haven’t been finalized.
Without a reliable supply of vehicle parts from the distribution centers, dealerships’ parts and service centers will suffer. Looking ahead to this possibility, some dealerships reached out to customers to let them know about potential repair delays⁴. Keeping customers in the loop, even about possible bad news like delays, is a smart strategy to minimize inconvenience and ensure customers remain loyal.
On the automakers’ side of things, one possible solution is to send white-collar workers to run the parts distribution centers, but this likely won’t be sufficient to keep them running efficiently. Even once the strike ends and work resumes in these distribution centers, parts shortages don’t just go away instantaneously. It will take time to address the shortages and delays that occurred in the meantime before things go back to normal.
In the meantime, dealers can focus on customer communications to help maintain relationships while service teams are operating at a slower pace than usual. Additionally, dealerships can refocus their acquisition strategy to find inventory from manufacturers that were not part of the strike.
Sources:
- Buchwald, E. (31 October 2023). The Big Three are paying a big price to end the UAW strike — but that won’t necessarily jack up car prices. CNN. Retrieved October 31, 2023, from https://www.cnn.com/2023/10/30/business/nightcap-uaw-strike-car-prices/index.html
- Cerullo, M. (18 September 2023). United Auto Workers strike could drive up new and used car prices, cause parts shortage. CBS News. Retrieved October 27, 2023, from https://www.cbsnews.com/news/autoworkers-strike-could-drive-up-new-and-used-car-prices-cause-parts-shortage/
- Domonske, C. (23 September 2023). How the UAW strikes could impact car shoppers. NPR News. Retrieved October 27, 2023, from https://www.npr.org/2023/09/23/1200614584/uaw-strike-big-3-shawn-fain-ford-gm-stellantis-car-prices-repairs-spare-parts
- Walsworth, J. (22 September 2023). Dealers brace for impact from UAW strike at parts distribution centers. Retrieved October 27, 2023, from, https://www.autonews.com/dealers/how-car-dealers-are-handling-uaw-parts-distribution-center-strike
