The United Auto Workers (UAW) union claims more than 400,000 active members. They build cars. They appear likely to go on strike later this week, potentially stopping production of most cars built by the Big Three domestic automakers.
That, you might expect, could drive up new car prices. It could also, analysts warn, push up daily driving costs for millions of Americans with no plan to buy a new car anytime soon.
Related: Car Insurance Costs Jumped 14% Last Year
A strike would shut down factories producing many replacement parts. That could drive up the cost of car repairs. It could also choke off the supply of new cars, further limiting the nationwide used car supply already missing all the cars that weren’t sold during the pandemic.
A UAW strike could also impact car insurance costs. J.P. Morgan analyst Jimmy Bhullar told Reuters, “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.”
Related: Cars Keep Getting More Expensive to Repair
The brokerage warned investors last week that Allstate and Progressive are particularly exposed to a potential strike. Progressive missed analysts earnings estimates last quarter, while Reuters explains that Allstate is “more susceptible due to its weaker capital position.”
Insurance costs have risen in most states compared to last summer’s prices, with rates in Florida increasing as much as 88% in one year even without the added pressure of an auto industry strike.
