Yesterday, we reported that contract negotiations between the United Auto Workers union and General Motors showed signs of progress as committees ceded to the top bargainers from both groups amid the ongoing UAW strike. However, if a recent Bloomberg report is to be believed, the automaker may have already lost a significant chunk of cash.
Citing analysts at IHS Markit, the Bloomberg report states that the UAW strike has resulted in lost output of more than 8,000 vehicles.
“With each vehicle averaging about $8,000 in earnings before interest and taxes, and the walkout affecting nearly nine production days, GM has missed out on as much as $544 million in profit, based on calculations Credit Suisse analyst Dan Levy made in a report last week,” the Bloomberg report states. “The total would reach $700 million by Sunday if no settlement is reached.”
Of course, it bears mentioning that the numbers Bloomberg reports don’t really tell the whole story – nor are they all that accurate.
For starters, the only way GM would lose money is if it wasn’t selling cars, and right now, dealers still have cars to sell. Prior to the UAW strike, we reported that GM was stockpiling vehicles ahead of the expiration of the UAW’s contract, with dealers shoring up a 77-day supply of vehicles, two weeks more than the industry average of 61 days.
Subsequent reports indicated that as the UAW strike stretched into its second week, dealers still had plenty of vehicles to sell. While some popular models (like the Cadillac XT5) showed signs that availability was running a little low, there is no way that would impact GM to the tune of half a billion dollars.
All told, this seems like a pretty significant oversimplification. But we’ll explain that in further detail in a follow-up post later.
Until then, make sure to subscribe to GM Authority for more GM-related UAW news and around-the-clock GM news coverage.
Source: Bloomberg
Comments
And if GM makes a poor deal it will cost them billions for years.
Bloomberg news is up there with fake news. It could be said that gm is earning free money as they stockpiled cars and are selling Currently without paying for labor during the strike. While that isn’t fully accurate either, it’s more true than what Bloomberg says.
just to be clear. the half billion number did not come from bloomberg. it came from a credit suisse analyst. bloomberg is just reporting what he said.
Causing your employer to lose 500 million dollars probably isn’t good for your job in the long run.
So all the talk about over production, too many cars sitting on lots for too long (longer then industry average).
With all the assembly line workers loving the overtime in plants that are not running three shifts!
The auto industry is changing, those who do not take action will be left behind. It looks as if “Machete Marry” has clairvoyance, she saw these things coming long ago.
Good for her!
Good for GM!