If UAW Strikes, GM Has Plenty of Inventory for Now

The United Auto Workers union’s contract with General Motors as well as Ford and Fiat Chrysler expires at 11:59 pm Saturday, Sept. 14. The union has chosen GM as its strike target, negotiating a contract with GM as a general pattern before moving onto the other Detroit automakers.

If a strike occurs, GM has enough inventory on the ground so as not to hinder sales in the short run. Strong sales in August helped trim overall industry inventories to the lowest level in three years, according to Cox Automotive data, but GM’s inventories remain healthy and even above industry average.

Cox Automotive calculates that GM has about a 77 days supply of total car, truck and SUVs, above the industry’s 61 days. Car inventory is low at 59 days versus 53 for the industry. That’s by design, in part, as GM eliminated the Chevrolet Cruze and is trimming other car models from its portfolio.

Inventory of trucks and SUVs in total stands at about 80 days, above the industry’s 64 days. Truck inventory tends to be higher than car because trucks come in so many configurations. GM has been in the process of rolling out more versions of its redesigned Chevrolet Silverado and GMC Sierra. The Chevrolet Silverado has a 93 days supply; the GMC Sierra has 84 days.

Vehicles in short supply are the high-profit-margin Chevrolet Tahoe and Suburban, at 57 and 58 days supply, respectively, compared with 64 days for the industry segment. The vehicles are made at GM’s Arlington, TX, plant, which is being retooled to support the launch of a new version of GM’s full-size SUVs. Inventories of GM’s other large SUVs, including the Cadillac Escalade and GMC Yukon are plentiful.

By brand, Buick is bursting with inventory at 98 days; Cadillac is at 89 days, GMC – a truck and SUV only brand – is at 84 days; and Chevrolet is at the lowest at 72 days. Chevrolet has cut car models from its line and trimmed production of the Chevrolet Equinox due to slowing sales and building inventories.

At Saturday’s deadline, GM and the UAW could announce a tentative agreement that would have to be ratified by the rank and file – a scenario that seems unlikely considering how complex and contentious the situation is in light of GM announcing plant closures and the UAW leadership under investigation for corruption. They could extend negotiations beyond the deadline, which often happens. The extension could result in a contract or a strike. Or, the talks could reach an impasse by the deadline, and workers could immediately go on strike. A strike could be a national one or be at a specific plant.

And at that point, for General Motors, inventory levels will be more relevant than ever.

GM Inventory