![]() It was driven mostly by strong demand for autos, and a limited supply of vehicles due to the shortage of some parts, most notably computer chips. That substantial price increase was not driven by an increase in costs, labor or otherwise. That’s less than $50 below the record average car price set in December of 2022, and it’s up about $10,600, or 28%, from the average price in October 2017. The average transaction price reached $48,760 in October, according to Edmunds’ data. So a few hundred dollars a year in higher labor costs aren’t going to break the companies, or send them back to the massive losses that they experienced in the first decade of this century.Ĭar prices are driven far more by supply and demand than by the cost of the vehicle. Ford reported that it earned about $3,000 before interest and taxes for every gas or hybrid vehicle sold to consumers in the first 9 months of the year. Or about $200 more per year, with less of that increased expense coming in the near term and more at the end of the contract.Īny additional labor costs are more likely to eat into automaker profits than they are to raise prices. But that $950 is the total increased cost from the labor contracts that will be paid over the course of four-and-a-half years of the contract. The labor deal is likely to raise the cost of building vehicles by $950 per car, according to Ford CFO John Lawler. “The automakers will have difficulty passing those costs onto consumers,” said Michelle Krebs, analyst with Cox Automotive.Įven if the labor costs could be passed along in terms of higher prices, it woudn’t be nearly as much as you might think. If the Big Three could simply pass along higher costs, be it raw material, labor other expenses, in the form of higher prices, no automaker would ever lose money. Ford, GM, and Stellantis account for less than half of US vehicle sales.Īnd even though some of those nonunion automakers, such as Toyota, Honda and Hyundai have announced their own pay increases in the wake of the UAW deal, perhaps due to concerns about the threat of the UAW organizing their own employees, though there are still plenty of automakers who are not raising wages. Raw materials, like the steel and aluminum in the bodywork, the rubber in the tires and the dozens of computer chips that control so many aspects of a modern auto, have a much greater impact.īut the fact is that the three unionized automakers still have to compete in the market with nonunion automakers. ![]() ![]() Part of the reason is that labor makes up only about 7% of the overall cost of building a car. The end result is that for the consumers, the labor cost doesn’t mean a lot.” “If wages go up 11%, an overnight change in prices is not realistic. “The labor contracts don’t mean you go to a dealership and the car costs more money,” said Ivan Drury, analyst for sales tracker Edmunds. But it’s not going to make much difference in the prices you have to pay when buying your next car. ![]() It will raise their pay at least 11% immediately, and likely more than 30% over the life of the contract. The new labor contracts between the United Auto Workers union and General Motors, Ford and Stellantis will make a big difference in the paychecks of 145,000 autoworkers.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |