Automaker earnings revved post-pandemic, setting the stage for the UAW strike
In the aftermath of the pandemic, the earnings power of the auto industry climbed to new heights.
Why it matters: It's part of what's driving the United Auto Workers' unprecedented simultaneous strike against the big three U.S. carmakers — workers want to get a larger share of those profits.
Catch up fast: The last few years have upended the U.S. auto industry.
- The old system was built around overproducing, and then discounting prices to move units off dealer lots.
- Then came COVID: Demand for cars soared, and production stalled as the pandemic shut plants. Inventories collapsed, and prices exploded.
- As of August, new car prices are 23% higher than they were in December 2019.
The impact: In producing fewer cars but selling them at higher prices the auto industry was pretty profitable. Now employees want a bigger piece of that action.
What they're saying: Autoworkers say in the past, they've made concessions to help the big car companies limp through hard times like the financial crisis and deep recession that started in 2008.
- Now that times are relatively good, they argue, it's time for them to reclaim some of the pay and benefits they gave up.
- Executives say they are offering workers concessions such as pay increases but that they can't meet all the UAW's demands, in part because they face a looming wave of costs and disruptions as the industry shifts to electric vehicles.
- They say they can't afford significantly higher labor costs while simultaneously investing for that transition.