
New economic data released shows the significant impact that the specialty equipment aftermarket has on America’s economy – and just what it means for people across the country.
Amid the ongoing United Auto Workers strike at the big three car manufacturers, the report provides compelling data that the specialty automotive aftermarket is robust, despite the challenging economic environment.
The Specialty Equipment Market Association (SEMA) commissioned the research, which was conducted by John Dunham & Associates and based on 2023 U.S. economy data. SEMA represents more than 7,000 member businesses, the vast majority being small businesses, across the U.S. The industry manufactures, sells and distributes aftermarket performance and accessory parts for passenger cars, trucks and 4-wheel off-road vehicles.
The SEMA Economic Impact Report shows the financial output and support to the U.S. economy of the specialty equipment market.
There are several key findings in the report:
These businesses employ more than twice the number of people as the U.S. aircraft industry and more people than the entire motion picture and video production industry. The aftermarket industry helps small businesses to grow, create new jobs and hire more workers, and builds partnerships that expand local economies across the U.S.
This economic impact study complements the industry’s annual market report on consumer trends. Consumers spent $52 billion on specialty automotive aftermarket products in 2022. “We’re extremely proud that our industry represents such a key part of America’s economy, affecting any motorist who has upgraded their vehicle for a host of needs,” said Mike Spagnola, SEMA’s president and CEO. “SEMA’s 7,000 plus members which are primarily small businesses and the more than one million workers in the specialty aftermarket are extraordinary contributors to making the U.S. and local economies stronger across the country.”
The Federal Open Market Committee announced it would not raise the federal funds rate at this time.
Officials reported that “indicators suggest that economic activity is expanding at a solid pace.”
Job gains remain strong and unemployment has remained low, the FOMC stated. However, inflation remains elevated.
The Fed’s Sept. 20 statement added in part:
“The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The committee remains highly attentive to inflation risks.
“The committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. In support of these goals, the committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2%. The committee will continue to assess additional information and its implications for monetary policy.”
Detroit, Mi.- For the first time in its 88-year history, the United Auto Workers has launched targeted strikes against Detroit's Big Three automakers simultaneously. Around 13,000 union workers, 5,800 at Stellantis, 3,600 at GM and 3,300 at Ford, have walked off the line at three plants across three states. The facilities are GM’s midsize truck and full-size van plant in Wentzville, Missouri; Ford’s Ranger midsize pickup and Bronco SUV plant in Wayne, Michigan; and Stellantis’ Jeep plant in Toledo, Ohio. The selected plants produce highly profitable vehicles for the automakers that are in high-demand. “The UAW Stand Up Strike begins at all three of the Big Three,” the union said in a post on X, just after midnight Friday.
Ford, Stellantis and General Motors had all upped their wage proposals in the final days and hours of negotiations before the contract expired late Thursday night. The automakers say they have been negotiating in good faith to reach an agreement. General Motors CEO Mary Barra called the companies' just-under-the-wire proposal on Thursday afternoon a “compelling and unprecedented economic package," in a statement about GM's latest offer, which would raise wages by 20% over the length of the contract. ”It addresses what you've told us is most important to you, in spite of the heated rhetoric from UAW leadership,” she told the workers.
In a statement late Thursday night, Ford said the UAW had presented its “first substantive counterproposal” to four of the company’s offers, but it “showed little movement from the union’s initial demands.” Ford added, “If implemented, the (UAW) proposal would more than double Ford’s current UAW-related labor costs, which are already significantly higher than the labor costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilize non-union-represented labor.”
“We got to do what we got to do to get our share of economic and social justice in this strike,” UAW president Shawn Fain said outside the Ford facility in Wayne. “We’re going to be out here until we get our share of economic justice. And it doesn’t matter how long it takes.”
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the August 2023 Survey of Consumer Expectations, which shows that inflation expectations were largely stable, rising slightly at the short- and longer-term horizons, and falling slightly at the medium-term horizon.
The main findings from the survey are:
Inflation
Labor Market
Household Finances
Total nonfarm payroll employment increased by 187,000 in August, but the unemployment rate rose to 3.8%, the U.S. Bureau of Labor Statistics reported Sept. 8. Employment continued to trend up in health care, leisure and hospitality, social assistance, and construction. Employment in transportation and warehousing declined.
The unemployment rate rose by 0.3 percentage point in August, and the number of unemployed persons increased by 514,000 to 6.4 million. Both measures are little different from a year earlier, when the unemployment rate was 3.7 % and the number of unemployed persons was 6.0 million.
Among the major worker groups, the unemployment rates for adult men (3.7%), Whites (3.4%), and Asians (3.1%) rose in August. The jobless rates for adult women (3.2%), teenagers (12.2%), Blacks (5.3%), and Hispanics (4.9%) showed little change over the month.
Among the unemployed, the number of job losers and persons who completed temporary jobs increased by 294,000 to 2.9 million in August, offsetting a decrease of 280,000 in July. In August, the number of new entrants edged up to 597,000.
In August, the labor force participation rate rose by 0.2 percentage point to 62.8%, after being flat since March. The employment-population ratio was unchanged over the month at 60.4%.
The number of persons employed part time for economic reasons, at 4.2 million, changed little in August. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
Hyundai Motor America reported total August sales of 65,046 units, a 1% increase compared with August 2022. Hyundai set total sales records in August for IONIQ 5 (+136%), Santa Fe HEV (+72%), Santa Fe PHEV (+55%), Kona EV (+653%) Tucson HEV (+41%), Tucson PHEV (+150%) and Santa Cruz (+6%). SUVs represented 75% of the sales mix. Hyundai fleet sales were 11.5% of the total volume for the month.
“Hyundai’s commitment to providing consumers with a multitude of eco-friendly products has once again delivered positive results with August total sales compared to last year,” said Randy Parker, CEO of Hyundai Motor America. “Consumer demand for our eco-friendly lineup remains strong and saw growth of 80% year-over-year.”
A 46% pay raise. A 32-hour week and a return to traditional pension structures are among the demands UAW leaders are asking for in contract talks with Detroits Big Three automakers, General Motors, Stellantis and Ford.
UAW President Shawn Fain spoke on UAW demands and contract talks at Detroit’s annual Labor Day Parade on Monday Sept. 4. The parade returned with a bang after a three year hiatus due to the pandemic with large crowds of supporters wearing red for solidarity, holding signs and cheering. Crowds gathered at 9am at Michigian and Sixth ave and made their way to Corktown where Fain gave a fiery speech reiterating the point that if the Big Three don’t negotiate in good faith for a fair contract, “come Sept. 14, we’re going to take action to get it by any means necessary.” Fain also said that it’s not their intent to strike. “Our intent is to get a fair agreement,” he said. There are still three contracts to iron out and 10 days left to do it. “The goal is a fair and equitable agreement for our members. At the end of the day, if we are not there, there will be a strike.”
Later in the day at a Philadelphia Labor Day event, President Biden told reporters that he doesn't expect the UAW to strike any of the Detroit Three auto companies. Fain said he was “shocked by that reaction.”
Detroit’s Big have enjoyed record profit collectively posting a net income of $164 billion over the past decade, $20 billion of it this year.
The current contracts expires at 11:59 p.m. on Sept. 14.
Total nonfarm payroll employment increased by 187,000 in August, and the unemployment rate rose to 3.8%, the U.S. Bureau of Labor Statistics reported. Employment continued to trend up in health care, leisure and hospitality, social assistance, and construction. Employment in transportation and warehousing declined.
The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry.
The unemployment rate rose by 0.3% to 3.8 % in August, and the number of unemployed persons increased by 514,000 to 6.4 million. Both measures are little different from a year earlier, when the unemployment rate was 3.7% and the number of unemployed persons was 6.0 million.
Among the major worker groups, the unemployment rates for adult men (3.7%), Whites (3%), and Asians (3.1%) rose in August. The jobless rates for adult women (3.2%), teenagers (12%), Blacks (5.3%), and Hispanics (4.9%) showed little change over the month.
Among the unemployed, the number of job losers and persons who completed temporary jobs increased by 294,000 to 2.9 million in August, offsetting a decrease of 280,000 in July. In August, the number of new entrants edged up to 597,000.
In August, the labor force participation rate rose by 0.2 percentage point to 62.8 percent, after being flat since March. The employment-population ratio was unchanged over the month at 60.4%.
The Conference Board Consumer Confidence Index declined in August to 106.1 (1985=100), from a downwardly revised 114.0 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell to 144.8 (1985=100) from 153.0. The Expectations Index— based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 80.2 (1985=100) in August, reversing July’s sharp uptick to 88.0. Expectations were a hair above 80—the level that historically signals a recession within the next year. Although consumer fears of an impending recession continued to recede, we still anticipate one is likely before yearend.
“Consumer confidence fell in August 2023, erasing back-to-back increases in June and July,” said Dana Peterson, chief economist at The Conference Board.”
August’s disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular. The pullback in consumer confidence was evident across all age groups—and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000. Confidence held relatively steady for consumers with incomes between $50,000 and $99,999.”
Hard data confirm that employment gains have slowed, overall wage increases are less generous compared to a year ago, and the average number of weeks of unemployment is ticking upward. Business conditions in August were little changed from July, but still somewhat lower than in June.
“Expectations for the next six months tumbled back near the recession threshold of 80, reflecting less confidence about future business conditions, job availability, and incomes,” Peterson added. “Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive. Notably, expectations for interest rates jumped in August after falling two months ago. Also, the outlook for stock prices fell and average 12-month inflation expectations ticked up. The measure of expected family financial situation, six months hence (not included in the Expectations Index) softened further.”
LOUISVILLE, Ky. – UAW President Shawn Fain announced that the union’s strike authorization vote passed with near universal approval from the 150,000 union workers at Ford, General Motors and Stellantis. Final votes are still being tabulated, but the current combined average across the Big Three was 97% in favor of strike authorization. The vote does not guarantee a strike will be called, only that the union has the right to call a strike if the Big Three refuse to reach a fair deal.
“Our union’s membership is clearly fed up with living paycheck-to-paycheck while the corporate elite and billionaire class continue to make out like bandits,” said UAW President Fain. “The Big Three have been breaking the bank while we have been breaking our backs.”
UAW President Fain was elected to office in the union’s first ever direct election and has broken with tradition by refusing to shake hands with Big Three CEOs prior to bargaining and refusing to bargain the UAW’s core economic demands in secret, choosing instead to publicly announce them to the membership and to provide ongoing bargaining updates over social media.
The union’s demands include the elimination of tiered wages and benefits, wage increases to offset inflation and match the generous salary increases of company executives over the last four years, the re-establishment of cost-of-living allowances and defined benefit pensions and retiree healthcare, the right to strike over plant closures, significant increases to current retiree benefits, and more paid time off to be with family.
“Our members’ expectations are high because Big Three profits are so high. The Big Three made a combined $21 billion in profits in just the first six months of this year. That’s on top of the quarter-trillion dollars in North American profits they made over the last decade. While Big Three executives and shareholders got rich, UAW members got left behind. Our message to the Big Three is simple: record profits mean record contracts.”
The strike authorization vote at General Motors passed by 96%. The following is a statement from UAW Vice President Mike Booth, director of the UAW-General Motors Department:
“The highest authority is the membership, and this is definitively outlined within our UAW Constitution. Today the 46,000 UAW represented members at General Motors clearly spoke with a unified voice when the strike authorization passed by 96%,” said UAW Vice President Mike Booth, director of the UAW-General Motors Department. “General Motors has made insane record profits in the past few years and the UAW membership is only demanding their fair share. Today, the members put the company on notice.”
The strike authorization vote at Ford passed by 98% for hourly represented workers and 99% by salaried represented workers. The following is a statement from UAW Vice President Chuck Browning, director of the UAW-Ford Department:
“I’m proud of the 59,000 Ford workers who have stood together to send a clear and united message to the company,” said UAW Vice President Chuck Browning, director of the UAW-Ford Department. “Ford earned $76 billion in North American profits between 2013 and 2022 and their profits are once again surging in the first half of this year. This resounding strike authorization vote by our Ford members shows that they are ready to go the distance and do what is necessary to claim their fair share of Ford’s success.”
The strike authorization vote at Stellantis passed by 95%. The following is a statement from UAW Vice President Rich Boyer, director of the UAW-Stellantis Department:
“The 44,000 UAW members at Stellantis have said with one voice that they are demanding an end to tiers, COLA, and big wage increases like the Stellantis executives have enjoyed,” said UAW Vice President Rich Boyer, director of the UAW-Stellantis Department. “Stellantis has made astronomical profits over the last decade and recently announced they made a record $12 billion in profits in the first half of this year. This strike vote is a warning to Stellantis: we know the company can afford our demands and we are united and willing to do what it takes to win them.”
New-vehicle sales, when announced next week by automakers, are expected to show big gains once again over last year but a slight decline in the sales pace from last month. A key reason for the volume gain is new-vehicle inventory hitting its highest level in more than two years. Stronger fleet sales are also expected to support higher sales volumes.
The August seasonally adjusted annual rate, or SAAR, is expected to finish near 15.4 million. This is a mild decrease in sales pace from July’s 15.7 million level. Although the pace is expected to dip slightly from last month, much of this decline can be attributed to statistical adjustments as this month has one more selling day than August 2022 and two more than last month.
Compared to August 2022, August’s sales volume is expected to show nearly a 19% gain over last year’s supply-limited market. In addition, new-vehicle sales are expected to rise more than 3% from last month. Pent-up demand from consumers and businesses – especially in the form of rental fleet sales – continues to be fulfilled as new-vehicle supply and pricing improves.
According to Charlie Chesbrough, senior economist at Cox Automotive: “The supply recovery continues to improve across the country, and this is leading to the market’s sales gains this year. In addition, the return of supply is also bringing back more discounting from manufacturers. But rising interest rates, and their impact on affordability, remain strong headwinds against a more robust vehicle market.”
The new-vehicle market has seen improving or stable affordability and sales strength so far this year. However, high interest rates and still-high prices will likely create some slowdown in the second half of the year. In addition, while some pent-up demand has been fulfilled, higher incentives and more fleet sales should continue to provide support.
In Q2, new-vehicle sales increased in the United States, especially sales of electric vehicles, according to AutoIMS Industry View report.
The wholesale used car market, however, has started to soften. High prices, high interest rates and high inflation continue to be a theme leading to a slight market slowdown that may continue through the year end.
AutoIMS data showed average damage estimates stand out with a 20% increase compared to last year. Inflation may account for some of this increase. It’s also possible that vehicles with more damage are now less likely to sell upstream; buyers can be a bit pickier in this market. With an increase in damage, it’s not surprising that AutoIMS also sees a corresponding increase in average auction charges.
The data also indicates it’s taking slightly longer to get vehicles delivered to auction and slightly longer to sell once at auction. The road ahead may be challenging for auto remarketers, AutoIMS data show.
The Federal Reserve Bank of New York’s Center for Microeconomic Data on Aug. 21 released the July 2023 SCE Labor Market Survey, which shows a decline in the proportion of job seekers, compared to a year ago.
Satisfaction with wage compensation as well as with nonwage benefits and promotion opportunities at respondents’ current jobs improved. Regarding expectations, the average expected likelihood of receiving an offer in the next four months declined and the average expected likelihood of becoming unemployed in the next four months increased, compared to a year ago. The average expected wage offer (conditional on receiving one) as well as the average reservation wage (the lowest wage at which respondents would be willing to accept a new job) increased year-over-year and reached series highs.
Among those who were employed four months ago, 91.4% were still employed, slightly down from 91.8% in July 2022. The rate of transitioning to a different employer increased to 5.3% from 4.1% in July 2022. This increase was driven by men and by respondents above age 45.
A new analysis by consulting firm Anderson Economic Group estimates that a strike on all three automakers by 143,000 United Auto Workers members could result in a total economic loss of more than $5 billion after 10 full days.
The UAW and Detroit’s Big Three automakers (Ford, General Motors and Stellantis) continue negotiations to head off a strike. AEG has calculated the total economic loss by estimating potential losses to UAW workers, the manufacturers, and to the auto industry more broadly if those negotiations are not successful before the current contract expires in September.
UAW leadership has repeatedly stated that it’s prepared to strike against all three automakers. If that were to happen, a 10-day strike would result in total wage losses of $859 million and manufacturer losses of $989 million. If only one automaker suffered a strike-related shutdown (Ford, for example), it could cause $665 million in losses during that period. In this scenario, AEG estimates a $341 million loss in direct wages and $325 million in company-wide losses.
“When the UAW went on strike against GM in 2019, Michigan experienced a single quarter recession,” stated Patrick Anderson, AEG’s principal and CEO. That strike, which involved 48,000 workers at more than 50 plants, lasted six weeks. In 2023, there is the potential that a strike could involve more manufacturers, more workers, and more plants. “If that happens, even a short strike would impact economies throughout Michigan and across the nation,” said Anderson.
Vehicle inventory, which was at record lows during the pandemic, has been slowly trending upward to reach 162,000 units in June. However, it is still well below September 2019’s 649,000 units. “Consumer and dealer losses are typically somewhat insulated in the event of a very short strike,” said Tyler Theile, vice president at AEG. “However, with current inventories hovering around only 55 days, the industry looks different than it did in during the last UAW strike.” She added that automakers now have “about one-fifth of the inventory that was on-hand in 2019, so a strike in current conditions would likely affect dealers and customers much sooner.”