by Anna Halloran
The Potential UAW Strike and the Impact on Dealerships
Right now it feels like everyone is going on strike, from UPS, to SAG-Aftra, and now (potentially) the UAW. We’re breaking down the potential UAW strike, it’s impact on dealerships, and how your marketing strategy can potentially combat it.
The UAW’s Influence
The United Auto Workers (UAW) union plays a significant role in shaping the industry’s dynamics, given they are the backbone of automotive manufacturing. As a potential UAW strike looms, we’re breaking down how an event could impact both the automakers and the dealerships that depend on a steady supply of vehicles.
The UAW represents over 400,000 workers across various automakers in the United States, Canada and Puerto Rico, including 150,000 employees who work on domestic brands like Ford, GM, and CDJR. Considered “a voice for all” the UAW is committed to “improve the lives of working men and women […] through vigilant political involvement and coordination with world labor organizations, we […] fight for enforcement of trade agreement provisions on human and worker rights, fair labor standards and a new approach to international trade — one that raises the quality of life for working people worldwide.” Dating all the way back to the 1930s, The UAW has used strikes to secure better wages, benefits, and working conditions for its members. When the UAW takes action, we see a ripple of effects throughout the automotive supply chain.
The BIG Three
The contracts of UAW workers with Ford, GM, and CDJR (Stellantis) are up for renegotiation with a September 14th deadline. If an agreement is not reached by that date, a strike will occur until one is. Below are the demands as laid out by the UAW:
“ELIMINATE TIERS – It’s wrong to make any worker second class. We can’t allow it any longer in the UAW. The Teamsters ended tiers at UPS. We’re going to end tiers at the Big Three.
SUBSTANTIAL WAGE INCREASES – Yes, we’re demanding double-digit pay raises. Big Three CEOs saw their pay spike 40 percent on average over the last four years. We know our members are worth the same and more.
RESTORE COLA – It’s Cost of Living Adjustments (COLA) that made sure working-class communities thrived for decades. Taking that away hammered us and our hometowns. It must be restored.
DEFINED BENEFIT PENSION FOR ALL WORKERS – All workers deserve the retirement security that UAW members had for generations.
RE-ESTABLISH RETIREE MEDICAL BENEFITS – That’s just as essential as a solid pension.
RIGHT TO STRIKE OVER PLANT CLOSURES – The Big Three have closed 65 plants over the last 20 years. That’s been as devastating for our hometowns as it has been for us. We have to have the right to defend our communities from the corporate greed that’s killing so many cities and towns.
WORKING FAMILY PROTECTION PROGRAM – It’s a program that keeps UAW members on the job. If companies try to flee our hometowns, they’ll have to pay UAW members to do community-service work. Companies can still make a healthy profit and it’ll keep our communities healthy, too.
END ABUSE OF TEMP WORKERS – We are going to end the abuse of temps. Our fight at the Big Three is a fight for every worker.
MORE PAID TIME OFF TO BE WITH FAMILIES – Our members are working 60, 70, even 80 hours a week just to make ends meet. That’s not living. It’s barely surviving and it needs to stop.
SIGNIFICANTLY INCREASE RETIREE PAY – We owe our retirees everything. They built these companies and they built our union. We will not forget them in these negotiations.”
The UAW are “thinking big” given the record sales numbers the Big Three have experienced. Given the extent of these demands, it could lead to a long strike and a series of disruptions for domestic dealerships.
Supply Chain Disruptions during strike
A UAW strike could impact the supply chain, affecting the production and delivery of vehicles to dealerships. These disruptions could lead to a shortage of popular models, causing potential buyers to delay their purchases or consider alternatives from other brands. While this does create opportunities for dealership groups with import brands, having the appropriate inventory mix for your buyers could become challenging.
Dealerships rely on a consistent supply of vehicles to maintain their inventories. A UAW strike could impact inventory flow and lead to a shortage of new vehicles, forcing dealerships to lean heavily on their existing inventory and or used vehicles. While this might not be a significant problem for dealerships with ample stock, smaller dealerships who are finally getting back to regular inventory stock may find themselves back to the inventory challenges they faced in 2022.
The financial implications of a UAW strike on dealerships can be substantial. Reduced sales due to inventory shortages can result in lower revenues, impacting profitability. Additionally, dealerships might face higher carrying costs as they hold on to unsold vehicles for longer periods, affecting the bottom line.
Perhaps one of the most critical aspects is how a UAW strike can affect the customer experience. Delayed deliveries and limited choices can lead to frustrated customers and potential damage to a dealership’s reputation. Dealerships will need to navigate these challenges carefully, maintaining open communication with customers and exploring alternative solutions to meet their needs, like custom orders, or certified pre-owned vehicles.
Marketing Opportunities during the UAW strike
You may think I’m insane for saying this, but events like a strike can be an opportunity for your dealership. It would take some patience and dedication before you see the results of your efforts but, the opportunity is there. When a strike occurs, usually a dealerships’ first instinct is to stop marketing all together, and while strategy saves money, it won’t gain you anything. Continuing your marketing efforts when others have retreated earns you the opportunity for greater recognition and market share.
If you are a dealership group with import brands, a domestic strike is a prime opportunity to conquest those buyers who may not be able to upgrade to a new Ford, GM, for CDJR vehicle. Utilizing marketing channels like conquest email campaigns, conquest SEM campaigns, and Social Ads layered with domestic brand buyer data will help boost your sales numbers.
Domestic Brands with Low Inventories
If this pending strike has you nervous, there are things you can do to prep:
- Build up your used vehicle inventory. If you’re low on new vehicles, and there might be a shortage, used vehicles will be your bread and butter.
- Stock Certified Pre-Owned vehicles. It’s the next best thing to new, and people love getting a deal. If you’re not going to have new vehicles in stock, this will keep people coming through the door.
If you don’t have these vehicles in stock, running a campaign offering extra for trades will bolster your inventory. Reaching out to your customer base with late model vehicles or upcoming lease ends will help you build stock of certified pre-owned vehicles.
A potential UAW strike can have far-reaching consequences beyond the manufacturing plants, but that doesn’t mean you should panic. There are ways to adapt and ride the wave at the dealership level. As long as you prioritize the customer experience you should be able to come out the other side pretty easily. As the situation unfolds, we’ll update this blog with additional information and suggestions on marketing strategies.