How a UAW Strike May Impact Companies with Fleets and Consumers

As of September 15th, over 17,000 auto industry workers are striking against unfair treatment by Detroit’s “Big Three” auto companies (Ford, General Motors and Stellantis). The Big Three have been accused of denying wage increases while corporate profits and executive compensation continue to rise. One employee with a 10-year working tenure, for example, reports not getting a single raise in all those years. Long-time industry workers cannot advance their careers and have no say in the changes brought about by new technologies. 

But what will be the strike’s impact on fleets? This United Auto Workers (UAW) strike can potentially disrupt the production and availability of GM, Ford, and Stellantis vehicles. This could inconvenience fleet managers who depend on these manufacturers for new fleet vehicles or replacement parts. Fleet managers should monitor the strike’s progress so they can anticipate the potential impact on vehicle and maintenance availability. Here, we’ll tell you everything you need to know and offer some alternative solutions for managers who are ready to ditch the challenges of fleet management.

What Is the Auto Industry Strike?

The current UAW strike is the first time the United Auto Workers union has protested against all Big Three manufacturers at once. It started when 13,000 employees walked out of a Michigan Ford factory, a Missouri GM plant, and an Ohio Stellantis factory. The strike will force company leadership to figure out how to share the company’s rising profits fairly with employees. 

According to one retired auto employee, the strike is not making new demands but requesting restoration of previous benefits (except the 4-day work week). As part of the strike, the UAW, a union that aims to improve working conditions for its members, is demanding:

• A 46% pay increase to match those given to the CEOs
• A 4-day work week with overtime pay over 32 hours
• Pensions for each employee
• The restoration of cost of living adjustments
• Medical benefits for retirees
• More time off
• Union representation in electric battery plants
• An end to the employment hierarchy and temporary employment that pays some employees less for doing the same job

The Impact of a Potential Agreement 

A solution has not yet been reached, so it’s hard to say what the results will be. But historically, agreements following such strikes have often led to improved working conditions, pay raises and other benefits for auto workers. There have also been direct impacts on the cost structure and availability of vehicles in the market. 

What Have We Seen From Similar Strikes in the Past?

Throughout the 20th century, autoworker strikes have significantly shaped labor rights and economic conditions. For instance:

• 1936-1937: The Flint Sit-Down Strike saw General Motors workers secure wage increases and union recognition. This marked a historic victory for labor. 
• 1945-1946: Similarly, post-World War II strikes demanded pay increases and price controls, which influenced labor relations. 
• 1970: A GM strike forced the company to concede on wages, pensions and retirement rights.
• 2007-2008: This recession-era strike resulted in concessions to avoid bankruptcy during a global recession. 
• 2019: This more recent strike yielded pay raises and commitments to U.S. factory investments. 

These strikes have left a lasting imprint on labor history, securing workers’ rights and influencing broader economic dynamics.

How Could This Impact Your Fleet?

The effects of previous autoworker strikes on fleet businesses have been varied and can depend on your position and market. Broadly, these strikes have interrupted the fleet vehicle supply chain, delaying vehicle deliveries and impacting fleet operations. As a result, fleet managers have been forced to adjust schedules and plans accordingly. Strikes have also resulted in higher vehicle prices as automakers try to recover losses during strikes, which can affect fleet budgets. 

In short, past autoworker strikes have highlighted the importance of fleet managers being flexible and adaptable to supply chain and market disruptions. If you are managing a fleet during a strike and have a fleet vehicle program that requires replacement vehicles or parts, it would be wise to act now to resolve those before the trickle-down effects make it harder to source parts and vehicles.

As a Business With Fleet Vehicles, How Can You Limit a UAW Strike’s Impact on Fleets? 

During a strike, businesses with fleet vehicles should be proactive about reducing disruptions. 

By taking these proactive measures, businesses can handle the strike more effectively and minimize negative impacts on fleet operations. Here are a few additional strategic options to mitigate the impact of auto strikes on operations and maintain business continuity.

Share the Financial Burden With Personal-Use Chargebacks

If you’re not already employing a chargeback program to reimburse your company for employees who use business vehicles for personal use, now is the time to start doing that. Personal-use chargebacks ensure that employees who use their fleet vehicle outside of work share the cost of gas and maintenance, so your business isn’t the only party footing the bill for costlier vehicle service during and after a UAW strike.

That said, while a personal-use chargeback program like Motus Fleet Solutions can benefit both parties and ensure a fair, easy process with digital tracking, fleet alternatives like FAVR and CPM reimbursement provide greater cost control (and certainly fewer strike related headaches). But more on those alternatives later.  

Keep a Close Eye on DVIRs

Especially during a strike, it’s essential to monitor Driver Vehicle Inspection Reports (DVIRs) regularly. These reports identify vehicle issues early to ensure prompt maintenance and reduce the risk of breakdowns during a replacement vehicle shortage.

Follow OEM Guidelines for High Mileage Maintenance Intervals

By adhering to Original Equipment Manufacturer (OEM) guidelines for high mileage maintenance intervals, you can keep fleet vehicles in optimal condition. Proper maintenance minimizes the risk of breakdowns or accidents, especially when replacement vehicles are scarce.

Never Miss a PM Task in Your Fleet Again

Preventative maintenance (PM) reduces downtime during a UAW strike when repair services may be challenging to access. That’s why you should strictly follow scheduled PM (preventative maintenance) routines to keep fleet vehicles in great shape. 

Track TCO to Identify Cost Outliers

Monitoring Total Cost of Ownership (TCO) is critical for identifying cost outliers within the fleet. TCO data helps fleet managers uncover inefficiencies, reduce operating expenses and optimize budgets. Having this information improves financial flexibility during uncertain times like strikes.

Assign Assets Based on Their CPM

Fleet managers should consider the Cost Per Mile (CPM) metric when assigning assets. Assigning vehicles based on their CPM ensures that cost-effective and fuel-efficient options are prioritized. This can lead to a reduction in overall fleet expenses, which is advantageous during supply chain disruptions.

While autoworker strikes can pose business challenges, diligent maintenance, cost monitoring, and efficient asset allocation can limit the impact on fleets.

What Can Fleets Do to Prepare for an Extended Strike?

When bracing for an extended UAW strike, fleet managers can take several proactive measures to ensure uninterrupted operations:

• Diversify Vehicle Suppliers: To keep your supply steady during strikes, explore partnerships with multiple vehicle suppliers to reduce dependency on a single automaker.
• Review Lease Agreements: Examine your lease agreements to understand the terms and conditions related to strikes and vehicle shortages. There should be flexibility and contingency plans in place.
• Optimize Maintenance Schedules: Implement rigorous maintenance schedules to keep fleet vehicles in peak condition and reduce the likelihood of unexpected breakdowns during supply disruptions. It’s also smart to identify nearby repair facilities that can handle maintenance and repairs during the strike.
• Alternative Transportation Options: Establish contracts or agreements with rental car companies or ride-sharing services to secure alternative transportation if your fleet experiences shortages.
• Stockpile Critical Parts: Maintain a stockpile of critical vehicle parts to address minor repairs in-house. This will reduce reliance on external repair services that may be affected by the UAW strike.
• Prepare for Extended Delivery Times and Maintenance Turnarounds: Anticipate delays in receiving new fleet vehicles and parts during a strike. There may also be longer delays when fleet vehicles need maintenance or repairs. 
• Be Flexible: You should regularly reassess your fleet management strategies and consider temporary adjustments to ensure flexibility during the strike. Be sure to communicate openly with drivers about potential changes and expectations.

What Can Fleets Do to Prepare for Future Strikes?

As someone managing a fleet during a strike, consider the following strategies to prepare for potential future strikes: 

• Develop Contingency Plans: Have a plan that outlines the steps to take during a strike. Make sure the plan is clearly communicated with drivers and that there is alternative transportation.
• Supplier Relationships: As a preventative measure, you should cultivate good relationships with vehicle manufacturers and suppliers. Stay informed about labor negotiations and potential strikes to adjust fleet strategies accordingly.
• Read Industry News: Keep up with industry updates and labor developments to anticipate strike threats and proactively adjust.
• Evaluate Vehicle Mix: Assess your fleet’s vehicle mix often. Consider adding more fuel-efficient or hybrid vehicles that won’t be as impacted by fuel shortages during strikes.

Consider Fleet Alternatives to Eliminate Strike-Related Headaches

Companies like Motus make it easier than ever to ditch the hassle of fleet programs and simply reimburse employees for using their personal vehicles. Instead of a fleet manager owning the process of buying, selling, and maintaining business vehicles themselves, employees are reimbursed for the gas and maintenance required to use their personal vehicle for work.

There are a variety of IRS-approved solutions to tackle vehicle reimbursement, all of which are supported by Motus vehicle solutions. These include:

• Fixed and Variable Rate: FAVR programs provide payments for fixed expenses like depreciation, insurance, taxes and fees, along with payments for variable costs for gas and maintenance.
• Cents-per-mile: CPM programs are ideal for low-mileage driving programs, employing a set rate to reimburse employees for each mile tracked via the Motus app.
• Car Allowance: Car allowance programs can reduce tax waste and provide additional income for your employees, though without mileage logs the IRS considers payments taxable income for both employer and employee. 

Vehicle reimbursement may sound complicated, but trust us – with a partner like Motus, you’ll find it’s far easier than managing any fleet program. In this case, the grass is actually greener on the other side.

How Will the Strike Impact Consumers?

The effects of the UAW strike are not limited to businesses and fleet managers; consumers will also experience consequences, particularly when buying and selling vehicles.

Rising Vehicle Prices

One of the primary outcomes consumers can expect from the UAW strike is an increase in vehicle prices. This is partly due to the agreements between the union and automakers, which may involve pay raises for auto workers. Higher labor costs are often reflected in increased vehicle prices for consumers. The supply chain disruptions during strikes also limit the availability of new cars, driving demand higher than the supply.

Impacts on Depreciation

Rising vehicle prices can also affect the dynamics of vehicle depreciation. High prices due to the limited availability of new vehicles can decrease depreciation rates for used cars, which benefits sellers. As new cars become more expensive, used vehicles can retain higher value in the long term. However, the overall impact on vehicle depreciation will depend on market dynamics and consumer demand.

What Can Consumers Do During a UAW Strike? 

Consumers have limited options when it comes to navigating autoworker strikes. Here are a few:

• Delay Vehicle Purchases: If possible, delay new vehicle purchases until the strike resolves to avoid inflated prices.
• Explore the Used Car Market: Consumers can explore the used car market instead of buying new, which may offer more competitive pricing during supply disruptions.
• Consider Selling Used Cars: Those with reliable backup vehicles can consider selling their used cars during a strike when prices for used vehicles rise.

What Comes Next?

The course of autoworker strikes and their impact on fleets and consumers is uncertain. But for now, it’s crucial to stay informed about labor negotiations, industry developments, and evolving market conditions. Being adaptable and flexible is necessary for navigating through these challenging times. Keep an eye on the situation, monitor industry updates, and be prepared to adjust strategies as events unfold.

Of course, you can always leave the woes of fleet management in your rearview mirror by switching to a vehicle reimbursement program. Whether you opt for FAVR, CPM or a car allowance, the Motus all-in-one platform and Motus app make it easy to automate mileage tracking and deliver fair, accurate payments for your employees who use their personal vehicles for work.

Ready to ditch your fleet? Build your program today or tour the Motus platform to see firsthand how we can simplify the challenge of fleet management.

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