Industry Trend Analysis - Quick View: GM CAMI Strike An Opportunity For Mexico? - DEC 2017

The Latest: Negotiations between General Motors Canada (GM) and the Unifor union, representing staff at the GM CAMI plant in Ontario, have reached a stalemate as the previous labour agreement came to an end on September 17. Workers at the plant, which produces the Chevrolet Equinox crossover, are now on strike, with Unifor Local 88 President Dan Borthwick stating GM would not move on the union's demand for a long-term commitment to the plant. As we noted when negotiations began, long-term job security is the union's main goal of this current round of talks ( see ' RRI Highlights Issues Facing GM CAMI Plant ' , August 11).

Implications: The Equinox is a strategically important model to GM, competing in the highly popular SUV/crossover segment, which is outperforming an otherwise lacklustre market in the US, particularly since the launch of the latest version in Q117. Sales of the model accounted for 9.7% of GM's total US light vehicle sales in 8M17 and 8.3% of sales in Canada, resulting in 9.5% of the company's US and Canadian sales combined. Moreover, sales of the model have been growing rapidly - up 40.0% y-o-y in Canada for the year to August and up 16.9% y-o-y in the US. According to an Automotive News report, this growth has eaten into GM's inventory, leaving dealers with an average inventory of 53 days as of September 1, compared with the average Chevrolet inventory of 82 days. Any significant disruption to output will, therefore, have a serious impact on GM's North American sales.

What ' s Next: Without knowing how long strike action or talks will last, it is not possible to immediately gauge the impact on production or sales of the model. Reports claim that after the two sides were too far apart for a contract agreement to be possible the day before the deadline, progress had been made as the contract expired on September 17. This means it is more hopeful that talks can continue and strike action will be limited.

Equinox An Outperformer
US And Canada Equinox Sales And Total Market Sales (% chg y-o-y)
GM, DesRosiers, MotorIntelligence

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