What Will the Iran War and the Blockade of the Strait of Hormuz Mean for the Collision Repair Business?
Many observers looking at the current situation in the Middle East would likely point first to the potential impact on the collision repair industry through rising fuel prices. Higher fuel costs typically mean fewer miles driven and a corresponding decline in accident frequency, along with a slight increase in transportation costs for collision parts.
But there are a few other potential impacts worth watching.
While the region is not a major producer of automotive parts, it does supply key resources such as oil, helium, and aluminum. Roughly 20% of the world’s oil passes through the Strait of Hormuz, according to the U.S. Energy Information Administration.
The U.S. imports a significant amount of automotive-grade aluminum, and about 20% of that supply comes from the Gulf region. While that is not the majority of the raw material used domestically, the shortage caused by the blockade will compound existing constraints—especially following the three recent fires at the Novelis smelting and production plant in Oswego, New York.
Additionally, the closure of the Strait of Hormuz by Iran has severely impacted the global semiconductor supply chain by restricting the export of crucial materials, notably helium, sulfur, and aluminum used in semiconductor production. As a key transport route for Middle Eastern resources, disruption in the strait affects semiconductor manufacturing worldwide.
This is particularly significant for chipmakers that rely on Qatar for roughly 40% of the world’s helium supply used in semiconductor production. Helium is an irreplaceable, high-purity inert gas essential to the semiconductor manufacturing process. It is used to cool silicon wafers, create inert atmospheres, and serve as a carrier gas in the etching and deposition processes that form the chips powering modern vehicles.
