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Despite how the U.S. government classifies it, we are at war with Iran. One of the early repercussions of this conflict is the effective closing of the Strait of Hormuz. It’s not closed altogether, mind you, but it is much more dangerous to ship through there, and businesses might opt out of doing so. That’s kind of a big deal when 20% of the world’s oil travels through there.
The White House has said it will not open the Strategic Petroleum Reserve. Regardless of whether we’re a net exporter of oil these days, added pressure on the global distribution system will affect prices. Early estimates say U.S. gas prices could rise around 40 cents per gallon.
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That’s not enough of a hike to throw the economy into turmoil, though presumably the price will ultimately be determined by how long this war continues. I do believe it’ll have some effect on new car sales, however.
Everything is expensive right now. While new car prices haven’t necessarily gone up due to tariffs, mandatory destination charges have. The Secretary of Health and Human Services is telling people not to worry about the rising price of beef and to buy liver instead (which is only cheaper because people don’t want it). Healthcare costs are up dramatically, while the U.S. lost $300 million worth of aircraft today when Kuwait discovered that the air defense system it paid for works well (at least in a friendly-fire scenario).
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That extra 40 cents per gallon on a Ram 1500 with the Hemi V8 and the standard 26-gallon fuel tank will cost an extra $10.40 per tank to fill up. If you have the optional larger 33-gallon tank (and why wouldn’t you?), it’s $13.20 more per tank to fill up.
If you fill up once per week, that’s another $52.80 per month if you have the bigger tank, or $633.60 per year. That’s probably not enough to get someone to trade in their brand-new truck, but for someone who is already feeling the pressure of everything else, it could push someone to a more fuel-efficient powertrain in said truck, or cause them to look at something smaller, or push someone on the edge to consider a used car instead. For automakers with truck-heavy, big-engine dependent lineups, that’s not a rosy outlook.
Honda
Unless prices go significantly higher, people aren’t going to flock to cheaper cars as they did in the past, but automakers who have more affordable offerings are still going to benefit even with a modest price hike. Rising fuel prices are inflationary, and people who have to buy a car right now likely have all of this on their minds, plus the uncertainty of a brand new war in the Middle East.
Another side effect of higher fuel prices is that the outrageous DC fast-charging prices some places charge (and a reason anti-EV people say you should never get an EV) become much more reasonable. Of course, we had a system in place to reduce our dependence on oil and actually become energy-independent on renewables that’ll last basically forever, but that was “woke.”
I saw a few industry friends say they were glad they had purchased an EV recently, when the first strikes were announced.
There are also excellent non-EV powertrains out there, and automakers with more hybrids and more fuel-efficient vehicles will always come out ahead with consumers (especially when prices rise). I drove Nissan’s newest E-Power, which is coming later this year, for Ars Technica, and the fuel economy I got was great for a vehicle that size, given how cold and snowy it was. I’ve seen others get close to 60 miles per gallon in regular driving when the weather isn’t terrible.
If I were Nissan — and I’m most certainly not — I’d consider offering the Qashqai again in the U.S. because the new one is as nice as a Rogue, with nearly as much space, but will be even more efficient with the new powertrain option.
At the end of the day, the long-term effects this war will have on the car market depend on how long it lasts. Government officials are saying it’ll be a month. Trump has said he will continue bombing Iran until there’s peace in Iran. So, who knows how long it’ll actually last? ¯_(ツ)_/¯