The Strait of Hormuz closure is disrupting the global auto industry by raising oil, shipping, and parts costs. With about 20% of the world’s oil transiting the strait, halted traffic is driving up energy prices and supply chain delays, squeezing vehicle production and profitability.
The US-Israel war with Iran has brought turmoil and uncertainty to industries and transnational companies dependent on trade and energy since airstrikes began on Feb. 28. The auto sector is no exception. […]
“Though Iran itself isn’t a semiconductor producer, the conflict’s disruption to global shipping will cause chip deliveries to be delayed or stranded at ports in Asia, reducing availability for assembly lines,” Fiorani added. “Given that modern vehicles may contain as many as 3,000 chips each, and the industry hasn’t completely recovered from a number of supply chain issues over the last half decade, another disruption magnifies the ongoing vulnerability.” […]
Beyond shipping, rising oil and natural gas prices are working their way through the broader economy and through the cost of building a car. Steel, aluminum, plastics, resins — virtually every part in a vehicle’s bill of materials has energy embedded in it. […]
“Automotive manufacturers operate on very thin margins compared to many high tech sectors,” he said. “There’s just no room to absorb dramatic changes in input costs such as steel, plastics, and freight, and, ultimately, prices to the consumer rise.” […]
“If only to shield consumers from volatile gas prices, electrified vehicles could be the winner if the buying public does not anticipate a near term resolution.”
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