United Auto Workers members went on strike at the Ford Michigan Assembly Plant and other plants, [+]
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Forecasters anticipate a significant surge in U.S. auto sales in September compared to the same month last year.
Beyond September, the course of auto sales in the fourth quarter will undoubtedly be influenced by the extent and duration of the current UAW strike against major automakers including Ford, General Motors, and Stellantis.
An analysis by Cox Automotive predicts September sales of approximately 1.3 million automobiles, a nearly 14% increase compared to September 2023.
In a similar vein, S&P Global Mobility also projects a 15% increase in September auto sales.
During a webinar on September 26, Jonathan Smoke, chief economist for Cox Automotive, stated that the strike has had minimal impact on dealer inventory and pricing thus far. However, he expects a more pronounced effect from October onward if the strike persists.
The UAW strike was initiated on September 15, employing a strategic approach of initially targeting selected plants and gradually escalating the stoppages to intensify pressure during contract negotiations.
If the strike continues, it is likely to result in reduced inventory for the affected brands and higher transaction prices, assuming demand outstrips supply, according to Cox Automotive.
Smoke noted that the U.S. auto industry had been gradually increasing production and new-vehicle inventory at dealerships throughout the year, but the strike could reverse those gains. Additionally, high interest rates are dampening consumer demand for vehicles.
“When the strike started, the industry had 800,000 more units in inventory than the previous year,” Smoke stated. He further explained that the Detroit 3 brands account for approximately 40% of U.S. auto sales and a much higher percentage of large pickups and SUVs.
According to Cox Automotive, most domestic brands currently maintain above-average new-vehicle inventory, with Ram trucks, Lincoln, Chrysler, and Dodge having a days-supply of over 100 days. In contrast, Honda, Kia, and Toyota have fewer than 30 days of supply.
In ordinary market conditions, a days-supply exceeding 100 days would be considered excessive and indicate a need for higher incentives. However, in a prolonged strike, a high inventory could become a lifeline.
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