UBS analyst Joe Spak launched coverage of serval auto parts companies. Trends toward EVs and self-driving cars matter, but so do UAW labor negotiations.
Labor negotiations between the ‘Detroit Three’ auto makers and the United Auto Workers are hanging over the entire sector. A strike is likely. But that doesn’t have to mean bad things for shares of auto parts makers.
Strikes still have impacts. Aptiv lost an estimated $200 million in sales during a 40-day strike against GM in 2019, writes Spak. The company generated about $14.4 billion in 2019 full-year sales. The strike impact was about 0.03% of annual sales lost per day. It’s one reference point for investors. Aptiv also lost about $110 million in 2019 operating profit. That works out to about 0.1% of its full-year total lost each day.
A strike-related stock dip isn’t the only reason Spak likes shares. All three are aligned with key industry trends toward vehicle electrification and self-driving cars. Aptiv provides parts and software addressing both trends. BorgWarner provides powertrain parts for both traditional and electric vehicles. Mobileye provides systems that help cars drive themselves.
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