FT: US Auto Industry To Lose $5bn Due To Iran War

Because of rising fuel prices and component problems.

Major U.S. automakers General Motors (GM), Ford and Chrysler, which is part of the Stellantis international auto alliance, believe that due to rising fuel prices and component problems caused by the war with Iran, their profits could fall by a total of $5 billion, according to Financial Times.

"The war in Iran has increased our costs, and the duration of the war remains uncertain," GM CEO Mary Barra said last week. She added that the company is already having to cut costs to counter rising oil and other commodity prices. GM has estimated that higher commodity prices, including logistics problems, as well as higher chip costs, could reduce operating profit by $2 billion this year. Ford also warned of higher operating costs, which could translate into a $2 billion cut in profits.Stellantis forecast that the damage from higher fuel and other commodity prices could be €1 billion this year.

According to analysts, the companies may have to cut vehicle discounts and raise prices if the conflict drags on for more than six months because of low profit margins. Ford Chief Financial Officer Sherry House told investors that even before the conflict with Iran, "we were already seeing shortages of industrial components. And then came the Middle East.

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