S&P fell short of expectations regarding the UAW strike and its implications. They say
- Warns that if the UAW strike continues for more than a week and expands, it could result in significant reductions in profits and liquidity in the U.S. auto sector for 2023.
- He predicts a slowdown in the dynamics of the US automotive sector in the second half of 2023 and expects volumes to remain stable in 2024.
- He expects a quick resolution to the UAW strike is unlikely.
- He expects automakers’ ratings to remain stable, which factors industry volatility into their financial risk assessments.
- He believes the Detroit 3 automakers have a modest inventory cushion compared to the industry average.
- Estimates that as of September 1, GM and Ford had sufficient vehicle inventories to avoid any significant ongoing profit or loss of market share.
- He notes that GM appears to be about two weeks short of inventory in the SUV segment compared to the industry average.
- As of September 1, Stellantis may have proactively overstocked some high-volume models.
- This suggests that the UAW strike may temporarily increase new vehicle gross profits for dealers, but that the GPU is expected to decline to more normalized levels in the coming year.
- Warns that if the UAW strike lasts more than 8 weeks, dealers could begin to run out of parts, which would negatively impact them.
- States that a UAW strike will not have a significant impact on the majority of auto suppliers from a ratings perspective.