Operating income at select automakers
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.