3 Ways the War in Iran Affects Car Prices

How the War in Iran Could Impact Car Prices

Host Meredith Reynolds, a former teacher and an owner of Reynolds Automotive in Kansas City, explains how the war in Iran could affect car prices and the car market through three factors: oil prices, access to semiconductor chips, and interest rates. She says higher oil and gas prices raise shipping costs for vehicles and parts and can increase repair costs as fuel and jet fuel prices rise, eventually pushing up consumer prices. She also warns supply disruptions of key inputs like helium from the Middle East could trigger another semiconductor chip shortage, impacting car and technology production. In her “Cars I Love” segment, she recommends the Toyota Hybrid Highlander for its fuel economy, features, and safety ratings.

00:00 Welcome and Mission

01:00 Why Iran War Impacts Cars

01:24 Oil and Shipping Costs

03:31 Parts and Repair Price Ripple

04:45 Chip Supply Risk Returns

07:40 Cars I Love Hybrid Highlander

10:47 Interest Rates and Loans

11:41 Wrap Up and Call to Action

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Transcript

0:04

You are listening to women buying cars, and I'm your host Meredith Reynolds. I'm a former teacher turned used car dealer and I'm here to teach and empower you to walk into a car dealership with confidence and walk out with the car that's right for you.

Meredith 0:22

Hello and welcome to Women Buying Cars. I'm your host, Meredith Reynolds. Thank you so much for joining me. It is a pleasure to share what I know with my listeners. The teacher in me will never die, so I have to have an outlet, and this is it. So thank you so much for coming here and hearing what I have to say. I am an owner of Reynolds Automotive in Kansas City. If you are in need of a car or know someone in Kansas City in need of a car, please send them my way. I would be so happy to help them find the right car. Today we're gonna talk about how the war in Iran can affect car prices and the overall car market. There are really three main reasons the car market will be affected by the war in Iran. One is the price of oil two. Access to semiconductor chips and three interest rates. So let's start with a one that is most front of mind for everyone and that is oil prices, which of course means gas prices. Okay, so as the Strait of Horus is cut off and oil is not moving out of the Middle East, gas prices are affected. Even though the United States relies on itself quite heavily for oil, we're still affected at the pump anyway. So as gas prices go up. Individual consumers, of course, are affected, but so are the companies that ship cars when we. Purchase a car from an auction out of Texas, for example, because we shop at online auctions so that we can get enough cars. We could not just rely on the Kansas City market. We are shipping a car from Texas and that big car hauler, you've seen them where they're driving down the interstate with multiple cars positioned like a game of jingga. I don't know about you, but when I see those trucks, I try to hurry up and get around them because it just looks like a car could fall off at any moment and I would be absolute toast. So those call haulers are getting, I don't know, five or 10 miles per gallon driving from out of state to us. They're burning a ton of gasoline and they're going to pass that along to us in shipping costs. Our dealership can't eat that cost, at least not entirely. So that is going to lead to higher prices. If you think about a new car dealership and how many cars are on their lot. If they were coming from Michigan to Kansas, for example, that's quite a distance and it's gonna take several of those trailers to get new cars on the lot. So they'll be paying more as well. You also have to think about car parts. When we get a car from auction, it always has something that needs to be fixed and we factor that into what we're willing to pay for the car at auction. 'cause we know we'll be putting some money into it. So if it needs new shocks, if it needs new tires, those came to our local mechanic from somewhere else they were shipped. Whether they were shipped from overseas, whether they were shipped from within the United States. They were put on a plane, or they were put on a truck or both, and gasoline was used to get it to us if it came from overseas. I heard yesterday that jet fuel is up 100%. And of course a lot of our parts come from Asia. That's just reality. So eventually the shockwave will go from the manufacturer to the shipper, to the mechanic to us. And our cost for parts will go up and we'll have to try to recoup at least some of that from the customer. So we're looking at higher prices, not today necessarily, but as the shockwaves make their way out, especially if it goes on any longer. Okay. The second way that car prices and availability can be affected is something I've only read about a little bit. So you may not have heard a lot about this. If you recall, during the pandemic. There was a chip shortage, semiconductor chips, and that caused the production of cars to be halted. So cars were on the factory floor, nearly finished, yet they couldn't be completely finished and shipped out because there was a lact of semiconductor chips. Those chips go in cars as well as your laptop, your phone, healthcare equipment, and they're used power ai. So tech giants are scooping up a lot of the available chips as it is. Because they have the money to do that, and they have the need in order to make the chips. You need aluminum, helium, and bromeen among many other things, But a large percentage of those elements come out of the Middle East. Helium is a natural byproduct of natural gas processing. Qatar has huge natural gas facilities which have been targeted by Iran.

6:10

If those natural elements can't get out of the Middle East because the strait of MOUs is shut down, or because the factories that produce them are no longer in operation, then we could potentially be seeing another semiconductor chip shortage. This could affect car production because all modern cars require them. Smartphone production laptops. Scientific research space, travel machines used in the healthcare industry and AI data centers. No love loss for me. If AI data centers went out of existence, but unlikely to happen, more likely that the tech giants are able to buy up the semiconductor chips because they have an ungodly amount of money. Currently 200 containers of helium are stuck in the strait of ous as we speak. So it isn't just your balloons that will be affected. It is pretty much all modern technology. The United States doesn't rely on the Middle East for natural gas, but Europe and Asia do, and Europe and Asia supply us with imported vehicles and imported car parts. They run those factories. With the help of natural gas, if those prices go up, it makes sense that potentially the cars and the parts will go up as well. Let's turn to some happy news. I'm gonna bring you my segment now called Cars I Love. The car I love Today is the Toyota Hybrid Highlander. I was told recently by an enthusiast that those in the know call it a high, high. For hybrid Highlander. He's the only person I've ever heard say that, so I don't know, maybe he just made it up. Anyway, this is a three row SUV that comes standard as all-wheel drive. It is a hybrid, so you are burning gas, but less of it. The battery portion does not need to be plugged in. You just drive like normal and when you apply the brakes. It sends energy back to the battery, so that's how it charges back up. As a result, you get better gas mileage in the city than you do on the highway in a 2019. I just picked 2019 because we currently have one on our lot. You can expect about 30 miles per gallon in the city and 28 on the highway, even though it's a V six, so you're gonna have a lot of power looking at a brand new one. 2026 model, you would be getting about 35 miles per gallon and it said in both the city and the highway. I'm not sure how that works, but better gas mileage, really exceptionally good gas mileage for a large SUV. It holds seven or eight, depending on if you have two bench seats in the back or one bench seat, and two captain's chairs. My personal preference It has very high safety ratings, five star safety ratings, at least on the 19 and the 26, depending on the trim level, you can get some really great luxury features. Heated and air conditioned seats, heated back seats, panoramic sunroof, heated steering wheel. Again, that's trim level dependent. A downfall is that that third row, like many third row SUVs, It is a little cramped in the leg room department. Compared to the Kia Sorento hybrid and the Hyundai Santa Fe hybrid. It has less leg room in the third row. If you would love a Highlander but need more space, they make a grand hybrid Highlander that will give you more leg room in the third row and more cargo space. Currently, I said we have one. It is black and the interior is saddle brown, which is my favorite. This is a medium brown, often referred to as saddle it's not dark like chocolate, and it's not beige., It just looks like a great pair of leather boots. It's really beautiful. So if you need three rows and you're tired of paying high gas prices, consider an electric car or a hybrid. And in this case, I recommend the Toyota Hybrid Highlander. Now let's get back to the show. The third way that car consumers can be affected by the war is through increased or at least not decreased interest rates. Someone's getting a loan on a car. The interest rate has a major impact on how much they pay for that car in the long run. At the end of 2025, it was projected that interest rates would be coming down in 2026. However economic uncertainty and the possibility of inflation will cause those rates to freeze or possibly go up. That greatly affects our business because consumers are more likely to say, let's hold off on a car until interest rates are lower. Same with home sales, of course. So we want interest rates to come down and it is very unlikely they will as long as we are at war with Iran. Thank you so much for listening. I really appreciate it. If you could please give me a five star Review that would greatly help me grow the show, and please share this with someone you know. If you live in Kansas City, please come see me at Reynolds Automotive. I'd be happy to help. Thanks again and happy driving.