Nearly 13,000 members of the United Auto Workers union in
Ohio, Michigan and Missouri and went on strike Friday, demanding increased pay,
a return to pension-based retirement benefits new hires and cost-of-living wage
raises. Could the labor action eventually affect rental car companies—and what would
that mean for corporate travel buyers?
That question depends on how long the strike lasts, said
KesselRun VP of client services Krissy Herman. “It probably doesn’t have
an immediate effect, unless it stretches; then it might affect delivery for the
middle of next year,” she said. “The newer models that the car rental
companies are expecting this fall are already on their way.”
If the strike does last long enough to affect future
delivery of new vehicles, then some car rental companies might have to keep
cars longer than usual, Herman added, compromising expectations of some
corporate travelers.
Where the rental companies might see an impact sooner is
with recall and repair, meaning it might take longer to get the parts or
components needed for those. “That might have a more near-term impact if
this starts dragging on two, three, four weeks,” Herman said. At which
point, vehicle availability or maintenance could be impacted.
Union leaders and car manufacturers remained seemingly far apart
in their continued negotiations on Sunday, with the autoworker union president
threatening in an interview with CBS news to “amp this thing up” if manufacturers
didn’t extend better offers. The current walkout has closed three factories but
already has held up work at others that rely on the closed locations for component
parts. The union ultimately represents 150,000 members at more than 40 plants
nationwide and, therefore, has runway to increase pressure on automakers.
Car rental companies, though, make sure they have diverse
fleets from various manufacturers, including those outside the three major U.S.
manufacturers. Some foreign brands like Toyota and even American brands like Tesla
do not employ union workers, Herman noted.
According to Hertz’s 2022 annual report, General Motors,
Stellantis and Ford made up 20 percent, 14 percent and 11 percent of its global
fleet, respectively. In the United States, specifically, General Motors accounted
for 22 percent of the domestic fleet, Ford was at 12 percent and Stellantis was
at 10 percent.
Avis ensured no vehicle manufacturer represented more than
21 percent of its 2022 fleet purchases, according to the company’s 2022 annual
report. For that year, the company primarily purchased vehicles from
Stellantis, Toyota, Hyundai, General Motors, Ford, Volkswagen and
Renault-Nissan-Mitsubishi Alliance, though the exact percentages for each were
not detailed.
President Biden, who has a political stake in autoworkers
and manufacturers coming together, has dispatched aides to Detroit to move negotiations
along and has encouraged manufacturers to come to the table with better offers.
Manufacturers, who are investing heavily in electric vehicles to satisfy the
administration’s push for cleaner vehicles on the road, said they can’t make
those investments and meet worker pay demands.
Would that result in fewer green fleets for car rental
companies just as corporates are putting more attention on emissions reduction?
Only time will tell, and in the meantime, negotiations continue in an effort to
avert expanded strike actions.
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Elizabeth West contributed reporting to this story.
