GM’s $1,600/car Health Tax

A recent episode of This American Life uses the story of NUMMI, a joint-venture auto plant between GM and Toyota in 1984, to help tell the larger story of why the American auto industry produced such poor quality cars for so many years.

Though it was peripheral to the main point of the story (how GM failed to learn from Toyota, despite amble opportunity), this quote stood out to me:

“Over the years General Motors negotiated contracts with the UAW with such generous health care coverage that by 2007 it amounted to more than $1,600 for each vehicle GM produced in North America.”

Emphasis mine.


3 thoughts on “GM’s $1,600/car Health Tax

  1. I found a PDF from a UAW Local (dated 2005) that reports the cost of health care at the time as over $1500 per car, so those 2007 numbers sound reasonable.

    More significantly, the PDF says that health care cost more per car than steel. Wow.

  2. That is an astounding number, but I can believe it. It would be interesting to see what the cost-per-car is for all the other perks are for UAW memebers such as pensions.

  3. Here’s the thing: I’d be willing to pay $1600 extra for an American car that was of equivalent quality to its lower-priced Japanese competition. But that’s just not possible. I don’t know if price pressures have pushed down quality or what, but what’s killing GM for *ME* is their crappy, uninspiring cars.

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