In this week's Tuesday Ticker, the broader automotive sector faces pressure after a joint U.S.-Israeli military actions against Iran pushed oil prices to record highs and driving down stock values for the world's OEMs, aftermarket parts and automotive coatings manufacturers.
Energy markets reacted quickly as the conflict raised the risk of disruptions to oil production and shipping in the Persian Gulf. The Strait of Hormuz, a narrow waterway between Iran and Oman, normally carries roughly 20% of global oil shipments, making the region one of the world’s most critical energy transit corridors.
Government officials and energy-market authorities warned that the conflict could have significant economic consequences if disruptions continue.
In remarks published by the U.K. government on March 5, Prime Minister Keir Starmer said Iran was “trying to inflict economic pain around the world” through attacks affecting Gulf energy infrastructure and shipping routes.
The International Energy Agency also warned that global oil markets are facing increasing risks. In a March 9 statement following meetings with G7 finance ministers, IEA executive director Fatih Birol said market conditions “have deteriorated in recent days,” adding that “a substantial amount of oil production has been curtailed,” creating “significant and growing risks for the market.”
Higher oil prices can quickly ripple through the automotive industry because petroleum-based materials are widely used in vehicle manufacturing and repair.
Paint manufacturers were among the companies affected because coatings rely heavily on petrochemical feedstocks used to produce resins, solvents and additives in automotive coatings and refinish paint used by vehicle manufacturers and collision repair facilities.
PPG Industries Inc., a Pittsburgh, Pennsylvania-based producer of automotive OEM and refinish coatings used by automakers and bodyshops worldwide, declined to about US$152.84 ($206.34), down roughly US$1.67 ($2.25), or about 1.1%, from about US$154.51 ($208.59).
Axalta Coating Systems Ltd., a Philadelphia-based manufacturer of automotive refinish coatings and OEM paint systems supplied to automakers and collision repair facilities worldwide, declined to about US$31.00 ($41.85), down roughly US$1.00 ($1.35), or about 3.1%, from about US$32.00 ($43.20).
Akzo Nobel N.V., an Amsterdam-based coatings manufacturer producing automotive refinish brands including Sikkens and Lesonal, declined to about €67.00 (about $98.65), down roughly €2.00 (about $2.95), or about 2.9%, from about €69.00 (about $101.60).
BASF SE, a Ludwigshafen, Germany-based chemical manufacturer whose coatings division supplies automotive OEM and refinish paint products, declined to about €46.50 (about $68.55), down roughly €1.50 (about $2.21), or about 3.1%, from about €48.00 (about $70.77).
Sherwin-Williams Co., a Cleveland, Ohio-based coatings manufacturer with a large automotive refinish business, declined to about US$315.00 ($425.25), down roughly US$5.00 ($6.75), or about 1.6%, from about US$320.00 ($432.00).
Automotive parts suppliers also saw share prices fall during the same period as investors assessed the potential for higher materials costs and weaker vehicle demand.
Magna International Inc., an Aurora, Ontario-based manufacturer of vehicle structures, electronics and powertrain components supplied to automakers worldwide, declined to about US$52.34 ($70.66), down about US$1.12 ($1.51), or about 2.1%, from about US$53.46 ($72.17).
Dana Inc., a Maumee, Ohio-based manufacturer of driveline and propulsion systems supplied to vehicle manufacturers and the automotive aftermarket, declined to about US$33.67 ($45.45), down about US$0.99 ($1.34), or about 2.9%, from about US$34.66 ($46.79).
AutoZone Inc., a Memphis, Tennessee-based retailer and distributor of automotive replacement parts used by repair facilities and do-it-yourself consumers, declined to about US$3,637.17 ($4,910.18), down about US$245.30 ($331.16), or about 6.3%, from about US$3,882.47 ($5,241.34).
Vehicle manufacturers also experienced declines as investors weighed the potential impact of higher fuel prices on consumer demand.
Ford Motor Co., a Dearborn, Michigan-based manufacturer of passenger vehicles and light trucks, declined about 5.6% to roughly US$13.39. General Motors Co., a Detroit-based automaker producing brands including Chevrolet, GMC and Cadillac, declined about 2.9% to roughly US$77.76. Stellantis N.V., an Amsterdam-based manufacturer whose brands include Chrysler, Jeep, Ram and Dodge, declined about 6.1% to roughly US$7.63.
