The Iran war has caused the cost to increase, but expensive cars continue to sell

DETROIT — GM The US automaker said on Tuesday that the Iran war is causing an increase in its business costs, but inflation in consumer expenses such as rising gas prices has not stopped buyers from spending on expensive cars.

GM CEO Mary Barra said the Detroit automaker continues to monitor any change in customer spending, but so far, the company’s vehicle mix has remained healthy.

GM said the average transaction price for vehicles was $52,000 during the first quarter, which was in line with last year. The average new-vehicle transaction price across the industry for March, the most recent data available, was $49,275, according to Cox Automotive.

“I think the biggest variable we’re looking at is how long the conflict will last and what it causes from a cost perspective across logistics and supply chain, and whether it will end up having any impact on the shift in mix, but as of right now, it’s not going to happen,” Barra said during the company’s first-quarter earnings call with investors on Tuesday.

Barra’s comments come on the heels of consumer confidence falling to a record low in April as concerns grow about rising energy prices and the broader impact of the Iran war, according to a University of Michigan survey conducted earlier this month.

It also comes after the company reported a 9.7% decline in first-quarter sales compared to an unusual high in March 2025. GM also said it is dealing with tighter inventories, specifically in its full-size pickup trucks, as the company retools for vehicle updates later this year.

If there are significant shifts, including an obvious move to less expensive or all-electric vehicles, the company feels it is well positioned to meet those needs as well, Barra said.

GM Chief Financial Officer Paul Jacobson and Barra said the Detroit automaker continues to offset higher costs as best it can through warranty improvements, cost efficiency and perhaps by deferring some hiring.

“While our operating performance remains strong, as demonstrated by our excellent first-quarter results, the war in Iran has raised our costs and its duration remains uncertain,” Barra said. “We are working to offset these cost pressures by reducing spending in other areas and by continuing to find efficiencies across the business.”

GM executives specifically cited higher energy and logistics costs due to the Iran war and its impact on oil as driving up costs, but declined to disclose the exact amount of the impact.

More broadly, GM said Tuesday that its first-quarter performance is expected to offset additional increases in merchandise and shipping costs — including logistics costs and higher DRAM chips — of $1.5 billion to $2 billion for the year.

Dynamic Random Access Memory, or DRAM, chips are semiconductors essential for the operation of infotainment, digital clusters, advanced driver assistance systems and electric vehicle systems.

But DRAM costs are not related to the Iran war. These price hikes come from growing demand for chips, including outside the auto industry, according to industry experts at S&P Global Mobility.

“Automotive is not the only industry competing for DRAM. The current supply crunch is driven by the explosion of artificial intelligence, especially in data centers, where demand for high-bandwidth DRAM (HBM) is surging. As a result, major DRAM manufacturers are reallocating wafer capacity to serve this more lucrative market,” a February 26 post from S&P Global Mobility said.

Jacobson said Tuesday that the company has “no real concerns” about supply chain shortages related to the Iran war, particularly regarding raw materials, at this time.

“We are not anticipating or concerned about any shortages at this time, and I believe the supply chain team has continued to prove their resolve through another challenge, as we have seen them do in years past,” he said.

GM said Tuesday that it has and will continue to shift shipments of vehicles, including highly profitable full-size pickups and SUVs, to the United States instead of the Middle East amid the war.

“This is usually a very strong market. So after this conflict is over, I think there is an upside there,” Barra said.