Auto stocks General Motors, Ford and Stellantis were mixed early Monday as the United Auto Workers (UAW) union threatened possible strikes if new contracts are not settled. However, at least one analyst says the UAW drama is a "side show" to other, larger difficulties facing the U.S. auto sector.
Last week, General Motors stock, Ford stock and STLA shares all booked four days of losses. On Friday, a note from Citi analyst Itay Michaeli said an impending strike could be pressuring the shares.
Ford, GM and Stellantis are all in contract negotiations with the UAW over a new collective bargaining agreement. The current deals expire on Sept. 14. The initial ask from the UAW would add about $80 billion in cumulative costs for the three companies over four years.
The UAW is also upping its rhetoric that a strike is on the table if demands are not met.
Michaeli wrote Friday that the risk of a strike appears to be growing. Citi sees a potential two-week strike hitting GM profits by $1.3 billion while Ford could take a $1.6 billion hit to its bottom line.
Meanwhile, Morgan Stanley analyst Adam Jonas on Monday wrote that, while U.S. auto shares "have weakened on UAW strike concerns (high probability)" there are other issues weighing on the auto market.
General Motors Stock: UAW A 'Side Show'
Jonas said that the UAW is a "side show to bigger forces at work" while "softer used prices, softer China and EV frustration represent bigger challenges."
Jonas sees U.S. investors highly focused on the latest developments in China electric vehicles, and says "skepticism of China's stimulus pledge and concerns over geopolitical tensions keep them cautious on China exposure."
General Motors stock, Ford stock and STLA shares all shook off early losses, edging up Monday during market trade. Collectively, the 28 stocks in the IBD auto manufacturers industry group have advanced 45% in 2023. The auto group ranks a strong No. 17 out of the 197 industries tracked by IBD, according to MarketSmith.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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