An extended strike could potentially affect the value of your car. If there is a shortage of new vehicles due to production halts, used car prices are likely to rise. We saw a significant increase in used car prices after the COVID-19 pandemic caused production slowdowns and supply chain disruptions.
Companies that deal in used cars, such as Carvana Co (CVNA), CarMax, Inc (KMX), AutoNation Inc (AN), and Vroom Inc (VRM), may benefit from higher used car prices.
According to Morgan Stanley analyst Adam Jonas, the firm was still buying stocks in the auto industry leading up to the strike. Jonas believes that labor cost increases will only make up about 4% of the total global revenue generated by the big three auto companies.
Jonas also mentioned that the strike could be favorable for car rental companies like Avis Budget Group Inc (CAR) and Hertz Global Holdings Inc (HTZ). He suggested that the “big three” auto companies themselves, Ford, GM Motors, and Stellantis, may need to prioritize capital discipline after labor negotiations, which could be beneficial for investors.
Overall, the ongoing auto workers strike is expected to have implications for car values and the stocks of companies involved in the used car market and car rentals.