The United Auto Workers union will be holding a strike authorization vote next week to determine if they will walk out from their jobs at the Big Three automakers: Ford (F), General Motors (GM), and Stellantis (STLA). Tom Narayan, RBC Capital Markets Lead Equity Analyst of Global Autos, and David Whiston, Morningstar U.S. Autos Equity Analyst, join Yahoo Finance Live to discuss how a potential strike will impact the auto industry.
On the potential UAW strike, Whiston says this is the fifth round of contract talks he has experienced, but "this is the most worried I’ve been about any of them." Whiston says the UAW's demands are effectively asking for the automakers to "go back to how things were in the 20th century with everyone having a pension and retiree healthcare." "Many of those workers have seen their parents or their grandparents have those benefits, but it’s just not economically feasible anymore," Whiston explains.
Narayan and Whiston also discuss pricing in the auto industry. Narayan says, "the big topic really for the carmakers is pricing and price normalization." Price normalization is "a bigger threat, I think, to the auto industry than this one-time hit that’ll happen with the strike or financial costs raising somewhat," Narayan explains. Narayan notes that with the Inflation Reduction Act, automakers will get more money to produce batteries domestically so "you’re going to see a lot of price deflation actually, I think, on EVs," adding that he thinks ultimately it will be cheaper to buy an EV than a gas-powered car.
