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UAW strike ends — What does it all mean for the Detroit 3

Headwinds in the EV segment appear to have prodded the Detroit 3 to decelerate their medium-term EV target

Ontario—DBRS Morningstar has stated it expects the UAW and automakers’ new labor contracts to follow through without incident.

While the new labor contracts result in higher labor costs for the Detroit 3, DBRS Morningstar noted in a recent report that these are likely manageable through offset/countermeasures that would include a combination of efficiency gains and/or higher pricing. However, regarding electric vehicles (EVs), the higher labor costs, in addition to other headwinds in the EV segment, notably increasing pricing pressure and stalling growth rates, appear to have prodded the Detroit 3 to decelerate their medium-term EV targets.

The National United Auto Workers Councils of Ford Motor Company — rated BBB (low) with a Stable trend), General Motors Company, rated BBB (high) with a Stable trend, and Stellantis N.V., rated BBB (high) with a Stable trend — and the Detroit 3 approved the new labor contracts, which is now over pending formal ratification of the new four-and-a-half-year contracts by UAW membership. .

“As we previously indicated, no rating actions were taken against the Detroit 3 as a function of the strike or the revised labor agreements, reflective of their sound financial profiles and robust liquidity positions,” said Robert Streda, Senior Vice President, Diversified Industries.

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