Bonus Episode: Iran Conflict Raises Risks for Energy and Auto Supply Chains

Geopolitical tensions are on the rise, and they’re creating ripple effects across energy markets and global supply chains. So, what does that mean for the automotive industry right now? 

In this special bonus episode, we break down how the conflict involving Iran could show up in the market over the near term and what auto leaders should be paying attention to in the weeks ahead:

• Fuel prices and consumer behavior: Disruption to the flow of goods through the Strait of Hormuz pushes oil and gas prices higher, which often changes how consumers think about driving, fueling up, and making near‑term spending decisions.
• Supply chains and cost pressure: Automotive’s global footprint means shipping lanes and petrochemical supply matter. Extended instability could impact logistics, materials like plastics and synthetic rubber, and overall input costs for automakers and suppliers.
• Interest in EVs vs. actual purchases: History shows fuel price spikes tend to drive short‑term interest in hybrids and EVs, but that interest doesn’t always turn into immediate sales, especially in an uncertain economy.
• More layers of uncertainty: Add in tariffs and broader policy questions, and automakers and dealers are navigating an increasingly complex planning environment that calls for flexibility and scenario thinking.

The Auto Market Brief delivers timely data, clear context, and practical insight to help industry leaders make smarter decisions—what’s happening now, and what’s coming next.

The Auto Market Brief is powered by Cox Automotive. For more industry insights and expert perspectives, visit our Insights Hub at https://www.coxautoinc.com/insights.

Creators and Guests

Host

Erin Keating

Erin Keating is an Executive Analyst and Senior Director of Economic and Industry Insights at Cox Automotive. She brings 30 years of professional experience, including 14 years in the automotive industry, providing analysis on market conditions, automaker performance, and consumer demand shaping the economics of the new-vehicle market. Erin spent 10 years with Audi of America, including leading Audi Motorsport North America, informing her perspective on both commercial strategy and competitive dynamics.

What is The Auto Market Brief?

The Auto Market Brief, powered by Cox Automotive, breaks down the latest trends and forecasts shaping the automotive industry. The show is hosted by Cox Automotive Executive Analyst Erin Keating, coupling years of experience translating data and trends with the data and industry insights of the largest automotive services and technology provider.

Joined by other Cox Automotive experts and outside guests, you’ll get data-driven insights and industry outlooks from some of the industry’s leading voices.​

Erin Keating: 00:03

Welcome to The Auto Market Brief from Cox Automotive. Each episode, our experts and special guests break down the latest trends, insights, and news shaping the automotive market. We'll give you the information that truly matters so you can make smarter decisions and drive your business forward.

Erin Keating: 00:23

Hello, and welcome back to The Auto Market Brief Podcast. I am your host Erin Keating and we are releasing this quick bonus episode to give a little bit of an update given how much is happening in the news right now. We have a conflict in Iran and there are a lot of questions for what the ramifications to the auto market are. So we wanted to jump in quickly and hit on some macro issues that may be coming out as a result of that for our consumers and for our our internal stakeholders to make sure that everyone's sort of level set on what's going on here. So let's talk about the high level Iran related issues.

Erin Keating: 00:54

We do know that energy and material choke points exist in the Strait Of Hormuz. Literally just minutes ago, we heard that the head of state for Iran, Khomeini's son, who has now taken over, has said very forcefully they want to keep the Strait Of Hormuz shut down. And this is what's going to impact most things right now. There's a lot of price volatility coming out of that because it is impacting critical global shipping lanes. And that really will impact the bigger, broader world from a manufacturing perspective, from an oil perspective, etcetera, before it will necessarily be something that we're feeling directly here in The United States.

Erin Keating: 01:34

Now there's a lot of news about gas prices going up, and that always brings a little bit of hysteria to how people are thinking about their vehicles. In the immediate near term, it usually means that people are thinking more constructively about how they're driving their vehicles, what they're doing with their vehicles, where they're filling up, are they taking a lot longer to find less expensive gas stations. Certainly that is something that is just immediate in consumer behavior. The long tail of that might be that maybe some people who were already in the market for a vehicle have chosen that this is the time to start taking a look at a hybrid vehicle or an electric vehicle but we won't necessarily see actual outcomes in purchase behavior near term. That would still technically be a longer term tail that we might see over the next coming months.

Erin Keating: 02:17

And luckily, us over here at Auto Trader and Kelley Blue Book are monitoring that to see what are we seeing in shopper behavior differences and what do we ultimately see in purchase decision behaviors as we move along. You know, back in 2022, there was a spike in gas prices and we did see in a short term that there was increased shopping behavior for hybrids and for electric vehicles. But ultimately, as gas prices continue to go up, we know that consumer sentiment tends to also have an inverse relationship with that and goes down, and therefore, we didn't necessarily see that translate into sales. There was also a different inflection point in 2022 when that news hit in the electric vehicle space. We had a lot of new releases of new vehicles coming to the market.

Erin Keating: 02:58

Vehicles were still incentivized with federal tax credits, etcetera, etcetera. So we're not necessarily saying that this is some shining moment where electric vehicles are to fly off the shelves because of this gas price hike here in The United States, but it's certainly something that we're going to monitor to see how our consumers reacting to this kind of news. Again, just to go back to the consumer sentiment relationship to gas prices, we have typically seen an inverse relationship there. So as gas prices rise, consumer sentiment tends to decrease. So what we're really feeling a lot right now in the news is more uncertainty, more challenges with people feeling that there is confidence in how and when this war might end, what it ultimately will do to the economy, how it might impact our lives beyond that.

Erin Keating: 03:44

And so you're gonna see a lot of volatility in quote unquote, the mood of the economy over the next couple of weeks. And we'll be monitoring that carefully with you and as we normally do, Jeremy will join us on a full episode to bring us up to speed with where some of those macro conditions show up. For the immediate concerns and for information on how this might be impacting the automotive industry, we need to just remember that the automotive industry obviously is a very global industry. And we have a lot of players that sell into The United States that also have primary sales forces out there in The Middle East, which is a significantly big growth area for a lot of global manufacturers, as well as other areas of the globe that are really close to that Strait Of Hormuz where they're needing to actually get access to those shipping arteries to be able to move finished vehicles. Aside from that, there is also a lot of petrochemicals and additional offshoot materials that come out of chemicals that are shipped through The Strait Of Hormuz, which now might be tangling up supply chains.

Erin Keating: 04:42

And that's where we're going to probably feel the pain the worst upfront and it's where all automakers and suppliers are immediately reacting to this. They're all getting ready once again to sort of deal with the supply chain crisis that might happen. Maybe not all of them are feeling it quite just yet, but it is a critical choke point. And again, especially for petrochemicals and refined products that are used in plastics and synthetic rubber and resins and coatings and so forth. So any prolonged disruption here is going to pressure the input cost for high content vehicles and commercial models, etcetera, which will create some margin headwinds that are harder to offset.

Erin Keating: 05:19

So the longer this disruption persists, the more likely this is going to affect and extend from logistics. So again, we know that there is a conflict going on in Iran right now. There are some key things that we absolutely need to keep aware of that we need to be thinking about that we are making sure we're watching not just from that global automotive perspective, but how might this downstream impact dealers and consumers for now on the ground in The US? We assume that the biggest impact will be going towards that consumer behavior of how do you use your car right now, where do you fuel up, are you avoiding fueling up, and or how is the price of that that fuel up affecting and impacting the rest of your wallet for the rest of the month and what you can actually afford. So that's going to be the most immediate feeling that everyone in The US is having.

Erin Keating: 06:08

Outside of that, again, there might be some near term shopping and searching behavior on electrified vehicles or more fuel efficient models, but we don't anticipate that that's going to turn over into real impact in the near term. Never mind the fact that we are sitting generally in a very uncertain environment. We do still have the tariff issue that's outstanding. So we know that the IEPA tariffs have been turned down. Those aren't necessarily correlated directly to the automotive market because those are actually section two thirty two tariffs, but we know that the uncertainty of how are those tariffs going to move forward, are the trade packs that have been negotiated going to go away, are there going to be refunds, etcetera.

Erin Keating: 06:47

Any large business, especially automotive manufacturers and the system around them are absolutely taking all of these things into consideration as is our business. And that does create some uncertainty but everybody is well equipped to look at these situations independently together and figure out exactly how is that going to impact any of our supply chain, is it going to impact our pricing, is it going to impact our logistics, etc. So again, we love to come to you in the audience with up to the minute news. These podcasts are typically stretched out over two weeks and so sometimes things are going to pop up in the national news that mean a lot to you and mean a lot to us and we wanted to bring you just a quick episode to keep you posted on what we're seeing and what we're thinking. Most importantly in this situation, what we're looking for.

Erin Keating: 07:33

So you will hear from Jeremy and I in our next episode. I'll be excited for Jeremy to join us and just tell us a little bit more about how he's seeing it in the data, what's been impacted so far from a macroeconomics perspective. And if I have any updates for you for how it might be directly impacting the automotive market, I will be bringing that to you in our next episode. But for now, let's keep an eye on those gas prices, be safe, make good decisions about how you're spending your money on on the daily basis, certainly investigate hybrids and electrified vehicles. These are smart decisions regardless of what kind of conflicts are going on.

Erin Keating: 08:07

But for right now, we're just gonna keep an eye on the overall climate of the the policy and the war and etcetera, etcetera, and be praying for our soldiers and sailors.

Erin Keating: 08:18

Thanks for joining us on this episode of The Auto Market Brief. To stay up to date with all the latest news and perspectives from our team of experts, be sure to visit our insights hub at coxautoinc.com.