3 weeks after GM strike, dealers await 2020 models, cut back hours
Detroit — General Motors Co. dealers are still dealing with the aftereffects of a six-week strike by the United Auto Workers.
Three weeks after the walkout ended, dealers have begun getting some of the parts needed for service departments and body shops. And though the inventory of new cars and trucks remained fairly robust during the shutdown, some dealers are concerned about a lag in new deliveries as production gets back up to speed and car-haulers make their way to showrooms.
The UAW's national strike against GM shut down 55 facilities across the U.S., stopping production of parts and an estimated 300,000 new vehicles, costing GM nearly $3 billion. GM dealers say they took hits to their bottom lines on both the sales and service sides.
At Motor City Buick GMC in Bakersfield, Calif., new-vehicle sales were down 8% in October and are expected to be off 8% this month.
"We are hopeful we can make up some of that due to pent-up demand in December, but December is always a big month, so it’s kind of hard to set a new benchmark on top of an old benchmark," said John Pitre, chief operating officer at the dealership.
But three weeks after the strike ended, Motor City Buick GMC is feeling the pinch even more than it did during much of the walkout.
"We didn’t feel it for the first three weeks of the strike because our pipeline is about two to three weeks long," Pitre said. "We are feeling it much more now than we did in October."
Motor City Buick GMC was thin on 2019s because it was transitioning to the 2020s. Pitre was hoping the dealership would be fully engaged in the new model year by now, but it isn't because there's a wait on getting more 2020 models.
As a result, some of the dealership's new-vehicle salespeople were moved to used sales. Pitre's business purchased 2019 rental cars it usually doesn't keep in stock to sell used. Overtime hours were reduced and part-time employees had their shifts cut. The advertising budget was cut by six figures for the fourth quarter.
At Matthew-Hargreaves Chevrolet in Royal Oak, general manager Walt Tutak expects to see the sales side of the business feel a delayed strike impact as they await new models that normally would already be on the lot.
Ideally, Tutak likes to have 500 vehicles — a two-month supply — on the ground, with another 250 coming in for delivery during the month to make up for the 250 that will be sold. When this process gets interrupted, he said, "You're going to have a shortage."
GM still had an ample 81-day supply of cars, trucks and SUVs two weeks into the strike, above the industry's average of 66 days, according to Cox Automotive. That cushioned the impact.
"GM loaded up their dealers with inventory prior to the strike and so they had surplus inventory," said Brad Korner, general manager of Cox Automotive Rates and Incentives. "They didn’t take their foot off the gas at all."
But analysts do think the inventory is under pressure somewhat now. Cox didn't have more recent inventory figures available Thursday.
Tutak hasn't had a shortage of vehicles yet, but if he does, he predicts it will be Chevrolet Silverados, even though he tries to keep a four-month supply of the pickup on the Royal Oak lot.
"We may have fewer sales in the Silverados, but we will make it up in the other areas where we have other inventory," he said. "So what we will do is push what we have."
The dealership's sales did not suffer during the actual strike, which surprised Tutak because Matthew-Hargreaves Chevrolet is in a GM town, and out-of-work strikers weren't expected to buy new vehicles.
The work stoppage still hurt profitability at the Royal Oak dealership because of the hit to body and service shops. Business in those departments is off roughly 25%, Tutak said.
"It affects the bottom line because we are used to having customers come in and we repair their vehicles and they pay for them," he said. "Now these vehicles are just sitting."
The parts most needed are engines, transmissions, fenders and bumpers. When the UAW ratified a new contract with GM on Oct. 25 and ended the strike, GM sent a note to dealers stating that a top priority was to restore the parts distribution network.
GM spokesman Jim Cain said of the parts distribution: "We are still working to recover and make progress every day."
Pitre said this week he was still waiting on about $250,000 worth of parts for about 80 vehicles waiting to be repaired.
There have been a lot of rentals for customers waiting for repairs, he said. "I’ve seen more $1,000 rental car bills in the last six weeks than I have probably seen in the last five years."