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Welcome to episode 600 of the Automotive Troublemaker. Today we dive into how GM seems to be fine after the UAW strike, how dealership values are staying strong, and how Wegmans is trying to change the way we shop for groceries.
General Motors emerges from a costly six-week UAW strike, projecting strong profits for 2023. Despite increased labor costs, GM's strategic planning and stock buyback indicate a robust financial future.
- GM suffered a $1.1 billion hit due to the UAW strike but forecasts a $9.1B-$9.7B net income for 2023.
- The company plans a $10 billion share buyback and a 33% dividend increase, reflecting confidence in its financial health.
- The new contracts with UAW and Unifor are expected to raise GM's North American labor costs by $1.5 billion in 2024.
- GM's stock rose 8.9% in premarket trading, signaling investor optimism.
- “I am confident in our ability to continue generating significant free cash flow as we make the EV transition” stated CEO Mary Barra.
Despite a dip in dealership values in 2023, the market remains robust, with dealership buy-sell activity and profits significantly higher than pre-pandemic levels, as reported by Haig Partners.
- Blue sky values have decreased by 12% since 2022 but are still over double pre-pandemic levels and 2023 is on track to be the third most active year for dealership transactions, fueled by 385 transactions through the end of Q3.
- High demand persists for dealerships in fast growing regions with “pro-business climates”, with the report citing recent record sales in South Florida and pending sales that will set record-high values for their brands.
- Publicly traded dealer groups saw a 92% drop in domestic dealership acquisition spending in Q3, but overall spending remains high.
- Fixed operations continue to drive profits, with a 9% year-over-year increase in gross profit.
- The brand with the most interested buyers is Toyota.
Wegmans has opened a novel hybrid supermarket/food hall in Manhattan, signifying a shift in the grocery industry towards multi-functional, community-oriented spaces.
- The new Astor Place store in NYC features a unique blend of grocery and food hall concepts, offering diverse food options, such as a sushi bar, bakery, fish market sourcing selections directly from Japan, and a pre-made salad area.
- This shift caters to consumer preferences for convenience, with supermarkets offering restaurant meals, meal kits, and ready-to-eat options.
- Consumers often prefer to eat out rather than cook on their shopping days, which has prompted a rise in demand for hot food options in supermarkets, according to Atul Sood, chief business officer at Kitchen United.
Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.
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