Will high gas prices change the auto industry again?

WASHINGTON - Gas prices have remained high due to the U.S.-Israeli war with Iran. But are they high enough to alter the business of the American auto industry?

Previous oil shocks driven by conflict in the Middle East have contributed to watershed moments in U.S. automotive history, first setting the table for fuel-efficient foreign competitors to win over buyers in the 1970s and later sinking gas-guzzling, cash-cow SUV sales at a time of deep struggle for Detroit automakers in the late 2000s.

The latest shock, experts said, will be less impactful in the short term thanks to lessons learned and industry changes since those moments. But they also cautioned that a perfect storm of factors - like a growing affordability crisis worsened by woes at the pump - could ripple through Michigan's signature sector in years to come if leaders aren't careful.

"When you combine the forces and the threats that competitive global pressures are bringing on our industry with the political changes that we're having in Michigan, this is a really, really critical time for us to get things right and build for the future," said Glenn Stevens, executive director of MichAuto, the automotive arm of the Detroit Regional Chamber.

"To me, the alternative is just not something I'm going to talk about," he added, "because that's not an option."

How the 2026 oil shock is different from the 1970s

Stevens said his concerns over the Iran war's impact on U.S. autos are more long-term than short-term, thanks to key differences between now and past oil shocks that could help mitigate the impact on automakers and their dealership partners.

He recalled the oil shocks of the 1970s - in 1973 due to the Arab oil embargo on the United States following the Yom Kippur war, and in 1979 amid unrest in Iran - as particularly devastating for consumers and automakers. Both episodes set off a wave of panic-buying that triggered shortages and led to miles-long lines at some stations, quantity limits and assigned days for purchasing based on license plate number.

The 1973 crisis even prompted Congress and then-President Richard Nixon to impose a nationwide speed limit of 55 mph in an attempt to cut fuel usage. "During the real bad times, I remember that we didn't go on family vacations," said Stevens, who grew up in the Upper Peninsula.

He and others cited several reasons why the current oil shock has not and will not cause the same level of disruption.

Gas prices are high, but not close to record levels when adjusted for inflation. The closure of the Strait of Hormuz has strained supply, but there are no shortages causing lines at fill-up stations. And fuel efficiency gains - even among trucks - have insulated drivers more than in past crises.

"The oil shock of the '70s was really about supply. Like, we just didn't have it because OPEC (the Organization of the Petroleum Exporting Countries) was cutting stuff off," said Stephanie Brinley, principal automotive analyst for S&P Global Mobility.

"People just couldn't get fuel. You were standing in line for a day and a half, or whatever it was, to get gas in the car, so it was a completely different scenario," Brinley added.

Since the turn of the century, she and others noted, the United States has boosted domestic fossil fuel production and lessened its reliance on foreign oil. But by then, the damage from the 1970s was done. The collective national panic and frustration with lines and shortages helped spur a shift in consumer preferences that forever changed the U.S. auto industry.

"The gas crisis in the '70s and early '80s caught the U.S. manufacturers off guard," said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions LLC.

"When prices jumped significantly, their gas-guzzling V-8s were not selling as well as the new imports from Japan. It gave Toyota and Honda and Datsun a chance to show what they did - the quality of their products, the fuel economy, the fun-to-drive nature of a small car. That's where the start of the import revolution began," he added.

Those fledgling brands, S&P's Brinley noted, likely would have made eventual inroads in the United States anyway, thanks to their superior fuel efficiency and innovative manufacturing practices. However, the gas crises gave them an opening and helped lay the commercial foundations for their U.S. manufacturing operations.

The Detroit Three automakers of the time - Ford Motor Co., General Motors Corp. and Chrysler Corp. - had a stranglehold over U.S. auto sales until that moment with about 85% of collective market share. The trio fell below that threshold in 1980 and never returned, even as they developed their own more fuel-efficient offerings and oil prices returned to more manageable levels in the 1980s and 90s.

2000s oil shock was part of 'perfect storm'

The next major rise in gas prices came in the 2000s, the result of swirling pressures from the U.S. invasions of Afghanistan and Iraq following the terror attacks of Sept. 11, the fossil fuel-hungry growth in India and China and natural disasters like Hurricane Katrina.

Stevens said gas prices played a role in what became an infamous moment for the American auto industry but were not the main driver of industry-wide struggles eventually headlined by the bankruptcies at GM and Chrysler.

"Gasoline prices were surging," he explained, "but other things were starting to emerge in the early 2000s. The foreign companies continued to gain market share and build plants here, and the pension and health care obligations for the Detroit Three were mounting at the same time that their market share was declining."

"All those things added up to the proverbial perfect storm that was crushing as we headed into 2007 and 2008," Stevens added, referencing the broader financial crisis and collapse of the U.S. housing market.

The jump in gas prices - combined with growing environmentalist backlash to vehicles with poor fuel economy and some hidden signs of an unhealthy economy - was significant enough to slow sales of pickups, SUVs and minivans classified as light-duty trucks. Those models were and still are crucial profit drivers for the Detroit Three.

"In March 2005 crude oil hit a then-record price of $57 a share, and gasoline soared to an average of $2.11 a gallon, 21 percent higher than a year earlier," longtime automotive journalist Paul Ingrassia wrote in his 2011 book "Crash Course" about the turmoil in Detroit. "Little wonder, then, that sales of the full-size SUVs plunged 19 percent in the preceding two months."

"Nonetheless," he added, "GM's single biggest new product initiative that year was a new line of full-size SUVs that would be launched in early 2006."

For reasons far beyond the SUV decline, Brinley noted that the U.S. auto market collapsed after 2008, going from about 17 million new units sold to between 10 million and 11 million for three years. The collapse forced a major reckoning in how Detroit's automakers do business, but it did not bust their reliance on trucks for profits.

"When buyers came back into the market in 2014 and 2015, they bought SUVs and trucks all over again," the analyst said. "They're more efficient than they used to be, and they keep getting more and more efficient, but the type of vehicle that didn't change."

Auto sales stay afloat amid Iran war, but pressures could benefit China

Analysts said the U.S. auto market is not - or at least not yet - showing signs of an industry-altering moment resulting from Iran war-driven spikes in gas prices, citing resilient sales figures, a mixed but not recessionary economy, and a much-improved slate of product offerings since the past oil shocks.

"Things have changed," said Ivan Drury, director of insight at auto information website Edmunds.com Inc. "Like you can actually have a large SUV or a truck that gets freaking damn good fuel economy now, and that's something we could not say in years prior."

He continued: "The F-150 today is made from aluminum, you can get twin turbo motors, you can get a hybrid powertrain if you want," he added. "We've been able to numb some of this pain at the pump through the lessons learned in the past and having more feedback from consumers."

"If those things didn't happen in the '70s and 2000s, would we be where we are today with vehicles? Now they get such good fuel economy and massive power outputs."

Along with their sticky preference for trucks, Drury pointed out that Americans have kept up their driving habits even with elevated fuel prices. The American Automobile Association, better known as AAA, projected last month that 39.1 million Americans would take a road trip of at least 50 miles during the recent Memorial Day holiday weekend - the most ever.

There have been some signals of consumers pivoting to more fuel-efficient options, which could be an indicator of things to come if the war stretches on and gas prices remain high. Traditional gas-electric hybrids reached a record 15.4% share of the U.S. new vehicle market in April, up about 2.5 percentage points from 12.9% a year prior, per data from Wards Auto.

Electric vehicle sales, on the other hand, have not yet rebounded since the Trump administration ended the federal EV tax credit last year. Fully battery-electric vehicles hit their lowest market share in four years in April at 4.7%.

Though the overall business picture has been "relatively steady" since the Iran war began in February, Stevens of MichAuto said he thinks that steadiness is fragile as gas prices add to the pile of existing concerns during a "reckoning time in our industry."

"You have the fuel economy policy shifts, you have tariff policy and trade policy, you have the China pressure, you have the AI and automation pressure," Stevens said. He especially emphasized the threat of Chinese competition to the U.S. auto market and how rising prices - at the pump and for vehicles overall - could sow demand for China's famously affordable EV offerings.

"I really do believe the leadership of our companies is finely tuned and honed and aware of what's going on globally around them," he said. "But they're going to have to innovate, and they're going to have to make affordable vehicles and efficient vehicles."

Stevens pointed to a recent Brookings report noting that close to 80% of American workers commute by car to their jobs.

"Gas prices are impacting people because Americans drive to work," he said. "Which is why you hear the buzz about, 'Oh, you know, I can't wait to get my hands on a cheap Chinese EV.'"

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This story was originally published June 5, 2026 at 1:06 PM.