Dealers brace for impact from UAW strike at parts distribution centers

The UAW's decision to expand its week-old strike to include workers at all General Motors and Stellantis parts distribution centers in the U.S. is the latest challenge that will have an impact at dealerships nationwide.

UAW President Shawn Fain said 38 parts distribution centers in 20 states are joining the strike. The GM sites employ roughly 3,400 workers, including 1,600 near Flint, Mich. The Stellantis sites employ about 2,100 workers.

The locations joining the strike on Friday package and ship parts used to repair customers' vehicles. Prior to the strike beginning last week, dealers across the country were stockpiling vehicle inventory and boosting parts supply across the Detroit 3 brands.

Ben Keating, owner of Keating Auto Group, which includes two GM dealerships and five Chrysler-Dodge-Jeep-Ram stores in Texas, said the decision to strike at the parts distribution centers is the wrong move.

"If I were the UAW, you're wanting to try to put pressure on the manufacturers to give in to your demands," Keating told Automotive News. "By striking at a parts distribution warehouse, I don't think that puts pressure on the manufacturers as much as it does the retail customer and not being able to get their vehicle fixed. If they choose to do that, it sounds to me like they are going to become a national villain to the retail customer or the retail public, which I think is not something they want to do."

Stephanie Brinley, associate director, Automotive Intelligence at S&P Global Mobility, also wonders about how the union's latest tactic will play out with the public.

"Along with the specter of ongoing low inventory and some vehicles perhaps being in even shorter supply as a result, the situation also creates potential challenges for dealers and customers — if repair parts become difficult to source," she said in a statement. "But UAW leadership believes it has public support. In announcing this move, the UAW said automakers and dealers could ensure customers aren't hurt if they avoid 'price gouging.' It is unclear how much patience an average consumer will have if they cannot get a vehicle serviced."

Kunes Auto Group, of Delavan, Wis., owns more than 25 franchised dealerships throughout Wisconsin, Illinois and Iowa.

With Friday’s expanded strike, Kunes Auto COO Scott Kunes said the group began proactively reaching out to customers who may need service work or repairs.
 
“We just don't want to leave anybody hanging out there,” Kunes said. “With this new round of strikes, we are nervous that that people that may have been putting off unnecessary repairs may see issues.”

Kunes said the group had an idea that the strike could disrupt parts distribution, so they aimed the last month to extend a 60-day supply of new vehicles and a 45-day supply of used vehicles by 30 days, as well as increasing parts supplies by 50 percent.

LaFontaine Automotive Group of Highland, Mich., which has both GM and Stellantis dealerships, has built up an arsenal of parts to prepare for the strike, spokesman Max Muncey said.

He said they have about a 90-day supply on more common, fast-moving parts that make up a majority of its business and they have a good stash of specialty parts.

In fact, Muncey said, from a stocking standpoint, the group has exceeded capacity of two Michigan buildings and have turned to “off-site, shipping containers, pods and rental facilities that we’re using just to house the influx of parts.”
 
That influx represents an increase of about $6 million more in parts inventory than what LaFontaine normally carries, Muncey said.
 
“Last year, we’d normally keep about $18 to $19 million worth of parts on hand at any given time,” Muncey said. “As of this morning, we’re up to just over $25 million in parts.”

Fowler Holding Co. President Jonathan Fowler said Friday he is still assessing how the UAW's expansion of the strike could impact his Norman, Okla., dealership group's business.

"I very much expect there will be more communication coming from the manufacturers to the dealers about what this means to us, specifically," Fowler said.

Ahead of the strike, Fowler Holding Co. looked at its top 75 to 150 fastest-moving parts numbers that account for substantial portions of its service business, Fowler said. To stay ahead of the curve, it preemptively increased those inventories by an extra 60 to 90 days, he said.

Keating said his group will feel the impact of a parts distribution center strike quickly and that it will mostly affect warranty work.

"All dealerships across the country have got a shop full of customers' cars that need to be repaired," he said.

Keating said he thinks his group will feel the strike's impact more in terms of dealing with upset customers wanting their vehicles fixed.

"If I am Shawn Fain running the UAW, that's not a position I want to be in," Keating said. "I want public support. I don't want everybody hating me."

C.J. Moore contributed to this report.