Shares of Detroit-based automotive companies General Motors (GM.US) and Ford (F.US), as well as Italian conglomerate Stellantis (STLAM.IT), some of whose factories are located in the U.S. are trading at elevated volatility today due to the strike. Investors are assessing the impact of a possible extension of the companies' 4-year contract with the United Auto Workers union (nearly 146,000 workers).
- The unions are 'negotiating hard, they want to commit the companies to a 46% wage increase for 4 years ahead, of which salaries would increase by 20% immediately, although according to recent media comments, the union's expectations are already leaning towards a 35% immediate increase. The union furthermore wants a reduction in weekly working hours to 32h with unchanged wages.
- Meanwhile, representatives of the concerns are proposing increases of several percent. So there is still quite a rift visible, which could end up in a prolonged conflict. The situation is tense due to the importance of this market in the US economy.
- Recently, quite a few manufacturers including Tesla (TSLA.US) have been declaring car price cuts to stimulate demand. Exorbitant wage expectations could put the auto industry under pressure, projecting lower margins and higher costs. The question is - will companies be able to make up for it with higher sales or pass the costs on to consumers;
- Some analysts and auto dealers are counting optimistically by how much this could raise vehicle prices. Of course, dealers aren't complaining, because - even smaller discounts - would mean better margins for them. Perhaps, as is often the case, the solution will be found at the last minute.
- According to an August report by the Anderson Economic Group, a 10-day strike against all three automakers would result in a total economic loss of $5.6 billion. We'll learn more details at 10:00 pm BST today, when the UAW chairman will present the trade unionists' strike strategy on the YouTube platform;
Despite the possible strikes, shares of individual US-listed auto companies are gaining in value. Chinese companies are doing much worse. Source: XTB Research
Shares of General Motors (GM.US) are holding near their lows and have reacted with increases several times after reaching support at $30 per share. Source: xStation5
