The automobile workers’ strike in the USA beats the largest US car manufacturer General Motors to book. The Detroit-based company gave up its previous profit target for the full year in a range of $9.3 billion to $10.7 billion. With weekly costs of $200 million due to the loss of production, the management around GM boss Mary Barra (61) explained on Tuesday that costs of $800 million have been incurred since the start of the strike. Barra wrote in a letter to shareholders that the offer currently on the table of the powerful UAW auto union is the highest GM has ever made.
In addition to direct strike costs, the company pointed to rising labor costs due to a new collective agreement and the uncertain economic situation as reasons for foregoing an earnings forecast. Management is concerned that, in addition to rising interest rates, the escalating Middle East conflict could also dampen consumer demand, it said. So far, consumers have not been deterred, as shown by the average price of vehicles sold, which has remained stable at $50,750.
The UAW union is leading the industrial action for higher wages against the three US car manufacturers GM, ford and Stellantis at the same time with increasing intensity since mid-September. A good quarter of employees are now on strike. At GM it affects two plants and regional distribution centers for spare parts.
In the third quarter, GM’s sales climbed 5.4 percent to $44.1 billion compared to the same period last year, while net income fell 7.3 percent to $3.06 billion. Analysts had expected a much steeper drop in profits to $2.5 billion. The shares rose by more than two percent in premarket trading.
The company is also overturning its production target for electric cars
The group also explained that the goal of building 400,000 electric cars by the middle of next year can no longer be achieved. The reason for this is the sluggish demand for electric cars. Even at the US electric car manufacturer Tesla the euphoria is gone. CEO Elon Musk (52) was frightened last week with warnings about falling car demand due to rising financing costs and high inflation on. GM must adapt to the market, it said. By the end of 2025, the aim is to reach the mark of one million electric cars produced and at the same time reach the return targets. GM is targeting low to mid-single-digit operating returns.
Postponing the construction of electric pickup trucks will result in $1.5 billion in savings next year and enable improvements in manufacturing. In the third quarter, costs of $1.5 billion in connection with the comparatively expensive production of electric cars had a negative impact on earnings. The growing robotaxi division Cruise caused a loss of $732 million in the quarter. The traditional car manufacturers in the USA reject the stricter emissions and consumption regulations planned by the US government, which are intended to increase the share of electric cars.