Benzinga - by Aaron Bry, Benzinga Editor.
The United Auto Workers (UAW) president Shawn Fain told media Thursday night that the union will strike against the “big three” major U.S. auto manufacturers for the first time ever.
The association is demanding pay increases of about 36% over the next four years, as well as shorter work weeks and hours.
An elongated strike could end up having an impact on the value of your car. If the supply of new vehicles is limited due to a halt in production, used car prices should rise. Used car prices shot up significantly after the COVID-19 pandemic slowed down production and created widespread supply-chain issues.
Read Also: UAW Launches Historic Simultaneous Strike - GM, Ford And Stellantis Plants To Face Picket Lines
Used car stocks, like Carvana Co (NYSE: CVNA), may see a tailwind from an increase in used car prices. Others include CarMax, Inc (NYSE: KMX), AutoNation Inc (NYSE: AN), Vroom Inc (NASDAQ: VRM).
Morgan Stanley analyst Adam Jonas told CNBC that the firm was still buying stocks in the auto industry leading up to the strike. He said that labor cost increases would only make up about 4% of the total global revenue from the big three auto companies.
Jonas also said that the strike could be “relatively good” for car rental companies like Avis Budget Group Inc (NASDAQ: CAR) and Hertz Global Holdings Inc (NASDAQ: HTZ). Jonas added that the “big three” companies themselves, Ford, GM Motors and Stellantis, may have to focus more on capital discipline following labor negotiations in a way that ends up being beneficial to investors.
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