Tesla, Honda, Ford most exposed to U.S. wage inflation, says Nomura

After the UAW auto union officially went on strike against GM (GM), Ford (F), and Stellantis (STLA), Nomura noted that the union’s proposals “revealed a wide gulf of expectations to be bridged” with the Detroit Three, or D3. The firm, which explains that its base case is for D3 union wages to be about 26% higher in 2027 than in 2023, estimates that this would result in labor-related costs for U.S.-assembled vehicles rising by about $2,100 per vehicle in four years and does not think that automakers would be able to fully pass on these higher costs to consumers. The profitability of Tesla (TSLA) – which would also have to increase pay for their workers – along with Honda (HMC) and Ford are most at risk from labor-related cost inflation in the U.S. in the next four years, while “already low-cost producers” Mitsubishi (MMTOF), Mazda (MZDAY) and Subaru (FUJHY) can “further widen the cost competitiveness of their North American business during this time,” the analyst tells investors.