On September 15, 2023, the United Auto Workers (UAW) launched strike action targeted at General Motors, Ford, and Stellantis (formerly Fiat Chrysler). The UAW and automakers failed to renew their contract, which expired at midnight on September 14, as the automakers and the UAW could not agree on terms regarding wages, cost of living adjustments, a shorter workweek, as well as other benefits changes relative to pensions and retiree health care for its 150,000 members.

This is the first strike action in history that will simultaneously affect all three of the U.S. major auto manufacturers. While the strike action currently targets a limited number of factories at each automaker, its duration and scope are unclear. A prolonged and more widespread strike action, by reducing new production levels, would lead to lower new vehicle inventory, and likely increase new and used vehicle prices. Total inventory as of September 4 was approximately 2.1 million units and the days of supply was 58 days, up 46% from a year ago, according to Cox Automotive.

Despite vehicle prices declining from late 2022 through 2023, price levels remain elevated. The strike action could temper this trend and pressure vehicle affordability. Conversely, higher vehicle prices may have a positive impact on auto loan recovery rates.

KBRA will continue to monitor developments of the strike action and its potential to affect the performance of its rated universe of 170 auto ABS transactions.

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