The UAW, or United Auto Workers, is a prominent labor union in the United States that primarily represents workers in the automotive and related industries. Founded in 1935, the UAW is one of the largest labor unions in the country and has nearly one million members. Since its inception, the union has played a significant role in the labor movement and the automotive industry’s history.
Potential Strike for “The Big Three”
A central function of the UAW is to negotiate collective bargaining agreements with employers on behalf of its members. To achieve higher pay for union members, the UAW has a history of implementing strikes and other labor actions to achieve its goals, including work stoppages, picket lines, and protests to pressure employers to meet the union’s standards.
Currently, the UAW is threatening the largest coordinated strike in its history against “The Big Three” automakers in the US, which includes Chrysler-parent Stellantis (STLA), Ford Motor (F), and General Motors (GM). The strike will come into play if no agreement is reached by 10 PM EST tonight, September 14th.
(Potential) Winners & Losers
Winner #1
Non-unionized Automakers
Tesla (TSLA), already the most dominant EV-maker in the country, stands to benefit dramatically should the strike take place. Elon Musk’s EV juggernaut is far ahead of its competitors in terms of pricing power and margins because it is not unionized. TSLA boasts healthy profit margins of 10.84, more than double that of competitors such as GM and Ford.
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Winner #2
Used Car Dealers
Should no labor agreement be reached, ~146,000 US auto workers are set to go on strike. A strike of such magnitude means fewer vehicles will be produced, thus, leading to higher used car prices. Should the strike occur, large used car dealers such as Carmax (KMX), AutoNation (AN), CarGurus (CARG), and Carvana (CVNA) will benefit dramatically. Carvana has the strongest price action of the bunch and is breaking out of a robust technical pattern today on massive volume – a sign of demand.
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Loser #1
"The Big Three"
The obvious losers will be the “Big Three”. Already, the three automakers are well behind Tesla in the race for EV supremacy.
Loser #2
Car Insurers
Elevated used car prices squeeze car insurers like Progressive (PGR) and Allstate (ALL) because should a car be destroyed, insurers must pay fair market value, which will be much higher should the strike occur.
Bottom Line
The UAW is at the tipping point of triggering one of the largest labor strikes in history. Companies like Carvana and Tesla should benefit dramatically If no agreement is reached.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
