UAW strike to benefit Hyundai, Kia in cutthroat U.S. auto market

Home > Business > Industry

UAW strike to benefit Hyundai, Kia in cutthroat U.S. auto market

Published: 18 Sep. 2023, 17:48

SARAH CHEA
chea.sarah@joongang.co.kr

United Auto Workers President Shawn Fain, center, marches with UAW members through downtown Detroit, Michigan after a rally in support of UAW members as they strike against General Motors, Ford and Stellantis on Sept. 15. [AFP/YONHAP]

With the United Auto Workers (UAW) strike against Detroit’s three automakers showing no immediate resolution on the horizon, Korean automakers see a glimmer of hope for a sales increase in the highly competitive U.S. auto market.

Production of various popular high-margin cars from the big three — General Motors, Ford Motor and Stellantis — has been halted including GM’s Colorado pickups and Ford Bronco SUVs, which could be a chance for Hyundai Motor and Kia who have lineups ready for the high-demand segment.

Around 12,700 UAW workers went on strike on Sept. 15 in three factories of the companies as the three automakers did not accept their demand for a 40 percent price hike.

It marks the most significant U.S. industrial labor action in decades as it was the first time the UAW union had gone on strike simultaneously against all three automakers.

[NEWS IN FOCUS] UAW demands pose threat to Korean battery makers

President Shawn Fain recently rejected Stellantis’ 21 percent wage increase offer, hinting at an extension in the strike action and the possibility of it expanding to the companies’ other factories.

“A broad and long-duration strike lasting more than a month will likely materially show up in stores across the country,” said Jonathan Smoke, a chief economist at Cox Automotive, in a recent report.

United Auto Workers members attend a solidarity rally as the UAW strikes against General Motors, Ford and Stellantis on Sept. 15 in Wayne, Michigan. [AFP/YONHAP]

Consulting firm Anderson Economic Group predicted that if the strike lasts for 10 days, it will cost the three companies a combined $1.8 billion.

“With the simultaneous strikes, rival automakers from Korea, Japan and Germany will likely benefit,” said Lee Jae-il, a researcher from Eugene Investment & Securities.

In Oct. 2019, when GM workers went on strike, Hyundai’s monthly sales rose 8 percent to 57,094 units.

Kia’s Telluride, a North America-dedicated model, is currently seeing a boom in sales, with a total of 99,891 units sold last year, up 70 percent compared to 2019.

Hyundai sold more than 66,500 Santa Cruz pickups in the U.S. market in less than two years of their introduction.

However, experts warn that Hyundai and Kia should be highly alert of UAW’s movements in case it extends its action to impact the Korean companies.

“The UAW, representing 400,000 workers in the auto space, is a very powerful union that can even exercise their influence in presidential elections,” said Kim Pil-soo, an automotive engineering professor at Daelim University.

“This is where Hyundai and Kia, even some Korean battery makers, should keep a close watch if they want to expand their manufacturing sites in the United States.”

Hyundai Motor currently operates a plant in Alabama, while Kia runs a plant in Georgia. Hyundai is also building a $5.5 billion EV-dedicated plant in Georgia, with the operation scheduled for 2025.

BY SARAH CHEA [chea.sarah@joongang.co.kr]