GM, Stellantis dealers, customers face increasingly scarce parts as UAW strike expands

Sep 23 (Reuters) – U.S. auto workers They extended their strike on Friday with a clear target of distress: dealerships that sell and service GM and Stellantis vehicles.

The sale and installation of parts is one of the most profitable parts of the automotive business, but it is also one of the most vulnerable, because the industry depends on just-in-time shipments. The strategy of blocking the delivery of parts increases problems for some dealers who say it had already been difficult to obtain some components.

“It’s going to be almost impossible to get a lot of these parts,” said Richard Fasulo, a diagnostic technician from Wappinger, New York, who works for a Cadillac franchise and used car dealerships. The broader strike, which targets 38 parts distribution centers owned by GM and Stellantis, “will cause these shops to tell their customers, ‘We don’t know when we’ll be able to repair your vehicle. It could be indefinitely.'”

Selling parts and service returns is the key to many dealerships’ profits, generating gross profit margins of 40% or more for large auto retail chains like AutoNation. (ANA) and lithia (LAD.N).

“If your car doesn’t work, you’re just stuck. It’s just cruel, don’t you think?” said Howard Drake, owner of a California-based GM dealership, describing the difficult situation for customers in need of repairs. “I thought the punishment would be in the form of adverse selection for clients with limited options. I didn’t think that would be my luck.” full of cars that I can’t fix because they don’t have a parts distribution center,” he said.

National Automobile Dealers Association President and CEO Mike Stanton said, “Dealers don’t want to see anything that limits our potential to serve customers, so we certainly hope that automakers and the UAW can reach an agreement quickly and amicably.

The UAW was expected to expand its strike by closing plants that made the highest-profit vehicles, such as pickup trucks. But automakers have built up vehicle inventories and for many dealers problems with repairs will begin soon.

“It’s definitely going to affect customers,” said Thomas Morris, 60, who went on strike Friday at a General Motors parts distribution center in suburban Philadelphia.

The center serves GM dealers from Pennsylvania to Maine and moves about 30,000 auto repair parts each day, workers said.

GM said in a statement that the company has “contingency plans for several scenarios,” while Stellantis said it was awaiting a response from the UAW to its “competitive offer” on Thursday and expected a “productive engagement.”

Arthur Wheaton, director of labor studies at Cornell’s School of Industrial and Labor Relations, said the UAW had made a smart decision.

“I think it’s a great strategy to go after distribution centers,” he added. Services are big business, she said. “That’s how they make a lot of money.”

Brad Sowers, CEO of Jim Butler Auto Group, owner of the largest Chevrolet dealership in St. Louis, Missouri, said if a deal isn’t signed in 60 days he will be upset, even though he had the foresight to load up on parts. in anticipation of the strike.

“I just want them to get together and get it done,” he said.

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