by Impact of Conflict Duration
The longer the war in Iran lasts, the worse its consequences will be, including the impact on the automotive industry. Although the rapid rise in oil prices attracts the main attention, the conflict is expected to cause a significant drop in global car sales this year.
Logistics Issues and Consequences
Many shipping companies already consider the Strait of Hormuz a no-go zone, even if it is not officially closed. This is causing a series of disruptions in supply chains. If this situation with the strait persists until April, followed by a slow opening, it could lead to 800-900 thousand fewer new cars being sold this year.
If this happens, approximately 200 thousand of these lost units could fall on the countries of the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. All of them have already experienced significant disruptions in the supply of new vehicles. This will provoke longer waiting times and higher car prices, as well as inflate costs for freight, insurance, and logistics.
Consequences to Last Until 2027
S&P Global Mobility analysts forecast that even if the Strait of Hormuz begins to open after April, shipping conditions will recover slowly. A return to normal volumes is unlikely to occur before the second half of 2026. The disruptions will not be limited to new car sales this year. The firm estimates that an additional 500 thousand cars could be lost in 2027 as a consequence of the conflict, raising the total shortfall above the 1.4 million unit mark.
The total volume of vehicle production could be disrupted. Analysts note that the Asia-Pacific region has been heavily impacted by oil supply disruptions and price increases, so car production in Japan, Korea, and China could slow down.
Importantly, these consequences are likely to materialize only if the war ends in the coming weeks, allowing normal operations through the Strait of Hormuz to resume. If this does not happen, or if the war drags on for months or even years, as has been the case in other conflicts in the region, the consequences will be even worse.
This situation clearly demonstrates how much the globalized automotive industry depends on stability in key regions and along vital transport routes. Disruptions at a single point, such as the Strait of Hormuz, have a cascading effect, impacting production, logistics, and final sales worldwide. The consequences of the conflict will be felt in the market much longer than the actual hostilities last, as restoring complex supply chains and investor confidence takes time. This could lead to structural changes in companies’ approaches to risk management and supply route diversification in the future.
