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| Reuters |
U.S. auto workers expanded their strike on Friday with a clear target for distress: dealers who sell and service GM and Stellantis vehicles.
Selling and installing parts is one of the most profitable parts of the auto business, but it is also one of the most vulnerable, because the industry relies on just-in-time shipments. The strategy of choking parts delivery increases problems for some dealers who say it already had been difficult to source some components.
"It's going to become near impossible to get a lot of these parts," said Richard Fasulo, a diagnostic technician from Wappinger, New York, who works for a Cadillac franchise dealer and used car dealers. The broader strike, which targets 38 parts distribution centers owned by GM and Stellantis, "is going to have these shops telling their customers 'We don't know when we can fix your vehicle. It might be indefinitely.'"
Selling repair parts and service returns is the key to many dealers' profits, and returns 40% or better gross profit margins for big auto retail chains such as AutoNation (AN.N) and Lithia (LAD.N).
