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UAW
is currently in talks with the Detroit Three automakers - Ford
Motor, Chrysler parent company Stellantis and General Motors -
ahead of the expiration on Sept. 14 of the current four-year
labor agreements covering 146,000 workers.
The automakers "represent about 40% of light vehicle auto sales
(by units) in the U.S., and IHS Markit estimates that a strike
would disrupt North American vehicle production by roughly 75%,"
J.P.Morgan said.
Higher used-car prices increase coverage limits on auto
insurance, making claims more expensive, so insurers are
obligated to pay the fair market value of a car if it is deemed
destroyed, JPM lead analyst Jimmy Bhullar said.
The brokerage identifies Allstate Corp and Progressive Corp as
the insurers with the most exposure to a potential UAW strike,
with Allstate more susceptible due to its weaker capital
position.
Used-car prices have had the most impact on auto margins in
recent years compared to other factors such as higher spare part
costs, labor costs, increased litigation, and severe accidents,
the brokerage added.
A UAW strike that shuts down the Detroit Three automakers could
cost the manufacturers, workers, suppliers and dealers more than
$5 billion according to a study by Michigan-based Anderson
Economic Group, a consulting firm.
(Reporting by Reshma Rockie George in Bengaluru, Editing by
Tasim Zahid)
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