UAW Strike's Impact On Ford, GM, Stellantis Prices: A $5,000 Surge Or Just $500? Analysts Weigh In

Zinger Key Points

Wedbush analyst Dan Ives estimated potential price increases of $3,000 to $5,000 for electric vehicles from these automakers.
Wells Fargo analyst Colin Langan calculated a smaller difference between initial UAW offers and automaker counteroffers.
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The ongoing United Auto Workers‘ battle with Detroit’s Big Three — Ford Motor Co F, General Motors GM, and Stellantis N.V. STLA — has raised concerns about potential car price hikes. While Initially staggering, analysts suggest the actual impact might be less alarming — or perhaps it might be.

What’s The Blow-Up Like? As the UAW strike expanded, Wedbush analyst Dan Ives estimated potential price increases of $3,000 to $5,000 for electric vehicles (EVs) from these automakers, as per a Barron’s report. Ives focused solely on EVs and assumed the need for profitable production, suggesting this range is partly an allocation issue.

Ford CEO Jim Farley didn’t dismiss the “worst case” estimate outright, according to Barron’s, noting it was based on initial demands, including substantial wage hikes, improved retirement benefits, and a 32-hour work week with full pay.

In contrast, Wells Fargo analyst Colin Langan calculated a smaller difference between initial UAW offers and automaker counteroffers, roughly $1.9 billion annually, or approximately $300 per North American vehicle sold. The total increase relative to the previous contract might be $500 per car, roughly 1% of the average U.S. new car transaction price.

What The Math Means: A $5,000 increase per vehicle collectively translates to around $35 billion for the Big Three, considering their approximately seven million vehicles sold in North America in 2022. Divided among 145,000 UAW members at the Big Three, this amounts to roughly $243,000 per person annually, atop the average $140,000 per UAW member, as per the report. That signifies a nearly 175% jump over the current contract.

In Langan’s scenario, the collective increase for Ford, GM, and Stellantis amounts to about $2.1 billion, or a 10.1% raise over the current average worker contract.

Analyst	Price Hike Est Per Car	Collective Cost Increase for Big 3	Additional compensation per UAW member
Dan Ives	$3,000-$5,000	Approx. $35 billion	$243,000
Colin Langan	$300-$500	Approx. $2.1 billion	$14,480

Why It Matters: It’s worth noting that Ford and GM have shifted production away from many North American sedans due to labor costs, focusing more on larger, pricier vehicles. While the impact of a new labor deal on EV prices may be less significant than initially feared, American automakers remain concerned about competitiveness. Over the past 30 years, they have lost considerable market share to foreign automakers.

Barron’s reports that Toyota, the world’s largest automaker, pays $10-$15 less than the Big Three for their UAW workers, which could ultimately make a significant difference.

The Detroit automakers have average labor costs of $66 per hour, while Tesla, which is not unionized, has labor costs of $45 per hour. Asian automakers like Toyota maintain labor costs at $55 per hour, as reported by the Wall Street Journal. Meeting the UAW’s initial demands would push Detroit companies’ average labor costs to $136 per hour, per Wells Fargo’s estimate.

Market Impact: Ford and GM shares have declined by over 17% and 15% since labor issues began in July, while Stellantis stock has risen by 7%, thanks to its global presence and lower valuation.