- The Iran conflict could cut global car sales by 1.4 million units by 2027.
- The longer the Strait of Hormuz stays closed, the worse the impact becomes.
- Even if fighting stops, car sales may stay under pressure well into next year.
The longer the war in Iran lasts, the worse the effects will be, including on the automotive industry. While it’s surging oil prices that are generating most of the headlines, the war is expected to contribute to a significant slide in global car sales this year.
Many shipping companies now consider the Strait of Hormuz as a no-go zone, even though it’s not officially closed, triggering an array of supply chain disruptions. If the Strait remains like this through April and then slowly reopens, it could lead to 800,000 to 900,000 fewer new cars being sold this year alone.
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Presuming this happens, roughly 200,000 of these lost units could come from Gulf Cooperation Council countries, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, all of which have already experienced significant disruptions in the supply of new vehicles. This will trigger longer wait times and higher vehicle prices, and cause freight, insurance, and logistics costs to balloon.
Effects To Last Through 2027
S&P Global Mobility predicts that even if the Strait of Hormuz begins reopening after April, shipping conditions will take time to recover. A return to normal volumes likely won’t happen until the second half of 2026. The disruption won’t be limited to this year’s new vehicle sales. The firm estimates that a further 500,000 vehicles could be lost in 2027 as a knock-on effect of the conflict, pushing the total shortfall beyond 1.4 million units.
Total vehicle production could be impacted. Analysts note that the Asia-Pacific region is being hit hard by oil supply disruptions and price hikes, and vehicle production in Japan, Korea, and China may slow.
Importantly, these impacts are only likely if the war comes to a close in the coming weeks, allowing normal operations through the Strait of Hormuz to return. If this doesn’t happen, or if the war drags on for months, or even years, as has been the case with other conflicts in the region, the effects will be even worse.
