This is the first strike action in history that will simultaneously affect all three of the U.S. major auto manufacturers. While the strike action currently targets a limited number of factories at each automaker, its duration and scope are unclear. A prolonged and more widespread strike action, by reducing new production levels, would lead to lower new vehicle inventory, and likely increase new and used vehicle prices. Total inventory as of September 4 was approximately 2.1 million units and the days of supply was 58 days, up 46% from a year ago, according to Cox Automotive.
Despite vehicle prices declining from late 2022 through 2023, price levels remain elevated. The strike action could temper this trend and pressure vehicle affordability. Conversely, higher vehicle prices may have a positive impact on auto loan recovery rates.
KBRA will continue to monitor developments of the strike action and its potential to affect the performance of its rated universe of 170 auto ABS transactions.
KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.
Eric Neglia, Senior Managing Director
Rahel Avigdor, Managing Director
James Yu, Director
Jacob Paulose, Associate Director
Arielle Smelkinson, Senior Director