Dealers begin to put UAW strike planning into action

‘Whatever storm’s in front of us’

LaFontaine Automotive Group of Highland, Mich., three months ago formed an internal team made up of people from all departments to address a possible strike, spokesperson Max Muncey told Automotive News.

LaFontaine began stockpiling vehicle inventory over the past 90 days, “literally taking every unit available from the automakers,” Muncey said. The company told automakers’ regional representatives that it would take any vehicle that other dealers were turning down.

In addition to vehicle inventory, LaFontaine has been boosting its parts supply across the Detroit 3 brands.

The group owns a 150,000-square-foot wholesale parts distribution center in Livonia, in Metro Detroit, and a 50,000-square-foot wholesale parts center in Grand Rapids, Mich., on the state’s west side, Muncey said.

So far, he hasn’t heard that the striking plants will disrupt parts coming to LaFontaine.

“Right now what we can control is acquiring as many parts and inventory as possible to make sure we can ride out whatever storm’s in front of us,” Muncey said.

Alan Wildstein, CEO of Alan Jay Automotive Network, said his Sebring, Fla., dealership group has been preparing for the strike by looking to other areas of the country for inventory.

“We have been kind of silently behind the scenes trying to bolster our new-car inventory from buying cars out of the Northeast, just in small amounts because [if] too much inventory gets on my lot and then they resolve the strike quickly, which we hope, then we disrupt our turn-and-earn system with the manufacturer, so we’re not going crazy on that,” Wildstein told Automotive News.

Alan Jay sells Chevrolet, Buick, GMC, Cadillac, Ford, Lincoln, Chrysler, Dodge, Jeep and Ram vehicles.

Wildstein said Alan Jay also is holding onto used cars the group otherwise might have rid themselves of in case the UAW strike lasts awhile and possibly starts a rise in the used-vehicle market.

“It’s kind of two-pronged,” Wildstein said. “We’re trying to carefully increase new-car inventory. We’re letting our used-car inventory age creep a little just to be prepared with used cars because I do think the used-car market could strengthen, but that wouldn’t happen immediately.”

In anticipation of a possible parts shortage, Alan Jay also in the last month started increasing inventory of fast-moving parts for Stellantis, Ford and GM vehicles.

‘Supportive of higher profitability’

Among the six publicly traded new-vehicle retailers, AutoNation Inc. and Asbury Automotive Group Inc. both have the greatest revenue exposure to the Detroit 3, at 28 percent as of the second quarter,according to a Friday investor note from Seaport Research Partners analyst Glenn Chin.

Lithia Motors Inc. is right behind at 27 percent, Group 1 Automotive Inc. at 22 percent, Sonic Automotive Inc. at 15 percent and Penske Automotive Group Inc. at just 1 percent, according to the note.

“Depending on the duration, this work stoppage could be favorable for the auto retailers with exposure to the D3 in that it could further prolong the supply/demand imbalance, which in turn, could further extend their current strong earnings cycle,” Chin wrote.

Chin added that in recent discussions with the auto retailers, “several of them expressed optimism around a potential work stoppage — particularly for STLA [Stellantis] product — as it would help bring somewhat bloated inventory levels back in line, potentially reducing floorplan interest costs and supportive of higher profitability.”