General Motors inks a Ford-like tentative agreement with UAW

General Motors Co (NYSE: GM) has reached a tentative agreement with the United Auto Workers. Its shares are still down 1.0% at writing.

Here’s what GM agreed to offer

On Monday, the automaker agreed to restore cost-of-living adjustments and a 25% wage increase among other benefits – similar to what Ford Motor Co offered the union last week.

The preliminary agreement will likely put an end to the strike that started on September 15^th. It still needs to be ratified by its UAW members first, though.  

Bloomberg was the first one to report that GM and the United Auto Workers have reached a tentative agreement on Monday.

Last week, General Motors removed its full-year guidance citing uncertainty related to the ongoing strike. Its shares are down 35% versus their year-to-date high.

GM will now see higher labour costs

In just over a month, the UAW strike cost General Motors close to $1.0 billion.

Its rival Ford recently said that the tentative agreement, if ratified, will lift labour costs by up to $900 per produced vehicle. According to Deutsche Bank, a potential deal could result in a $7.2 billion increase in overall cost at GM over the term of the agreement.

Note that the preliminary deal between General Motors and the UAW will boost top wage to over $40 per hour and increase starting wages by a whopping 68% to $28 per hour.

Wall Street currently has a consensus “overweight” rating on shares of the car manufacturer that last week abandoned plans of building affordable EVs with Honda (read more).