Encouraging news of improving sales and affordability over the third quarter arrived amidst a backdrop of concern over a possible labor strike as the deadline for United Auto Workers leaders and Detroit-Three car manufacturers to negotiate a contract drew steadily closer. Now, 13,000 employees are staging a walkout at Stellantis, General Motors and Ford plants across the country, threatening not only OEM production but dealership revenue as well.
On this episode of Inside Automotive, host Jim Fitzpatrick joins Jonathan Smoke, chief economist at Cox Automotive. Smoke has spent his career laser-focused on the U.S. car market and recently oversaw the creation of his company’s third-quarter Dealership Sentiment Index report, a survey identifying the expectations held by car dealers across the country. Having carefully examined the potential impacts of a United Auto Workers strike, he now joins the show to discuss what dealers are expecting to see in the coming months as events continue to unfold in Detroit.
Key Takeaways
1. Dealer sentiment held steady throughout the third quarter, but franchised dealers were far more likely to express optimistic outlooks than independent retailers.
2. Rising inflation and declining profits contributed heavily to dealership sentiments, although production and supply improvements eased some concerns.
3. The current United Auto Workers strike is unprecedented in that all three Detroit automakers are targets.
4. Both franchised and independent dealers expressed the lowest expectations for electric vehicles since Cox Automotive began tracking sentiments in these areas.
5. Inventory, which held dealers back the most during the COVID pandemic, could be disrupted once more, although Smoke does not expect the United Auto Workers strike to have an immediate effect on the market.
6. Import brands will likely see sales rise as the strike continues, increasing pressure on domestic manufacturers to reach an agreement with the United Auto Workers union.
"I think that [the United Auto Workers strike] won't have an immediate impact on the market. Thankfully we have about 80% more inventory now than we did a year ago." — Jonathan Smoke
