The looming work stoppage by dockworkers at ports throughout the East and Gulf coasts could severely disrupt car dealerships around the country.
An extended port strike would delay the arrival of new car inventory, which would drive up costs for potential buyers. Not only would it be harder and more expensive to buy a car, but the lack of essential parts and materials would hinder maintenance repairs on existing vehicles as well.
The International Longshoremen's Association (ILA) is negotiating on behalf of 45,000 dockworkers at three dozen U.S. ports from Maine to Texas that collectively handle about half of the country's seaborne imports. It warned its members are prepared to strike if they don't have a new contract by the Oct. 1 deadline.
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Tom Maoli, owner of New Jersey-based Celebrity Motor Car Co., said before the pandemic he was used to having three to six months worth of inventory on the lot. Today, the business only has about 30 to 45 days worth of inventory.
That means historically there would be enough inventory to weather the storm, he said. But it's a different story today. If the ports shut down, "we are going to burn through the inventory in one month," Maoli said.
Brian Moody, Autotrader's executive editor, told FOX Business that even if a car is manufactured in the U.S., certain parts, whether that be the transmission or wheels, may come from overseas.
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Even if 95% of the car is manufactured in the U.S., you still have to wait for those parts, he said.
Maoli said auto dealers will likely lean on selling used vehicles due to the lack of availability of new models.
With limited inventory, prices for both new and even used cars are going to skyrocket. However, those who hold off on purchasing a car are going to face an issue too.
The work stoppage is going to make it harder for dealers to get parts needed for repairs.
"The interesting thing about the car business is that if you're holding off on purchasing, you need to repair [your car]. You need tires, you need brakes… you got to keep your vehicle running," Maoli said. "And if the parts aren't available there's nothing you can do."
If the strike is prolonged, customers may be forced to wait between 30 and 90 days to have a part replaced.
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Moody said "even reliable cars have parts that wear out."
"That's not a reliability issue. That's just designed to wear out. The same with the tires, the same with other components in the car," he added.
Maoli is ordering extra parts to boost the inventory at his dealerships, but the issue is that many other dealerships across the country are doing the same thing, "so the supplies are going to drain very quickly."
Moody suggests owners bring their car into the shop immediately if something needs to be replaced or repaired.
"If a person has a repair or a recall or something that they're aware of now, I would make the appointment and get down there today, if possible," he said.
