Iran Conflict Casts Shadow Over European Automakers

Iran Conflict Casts Shadow Over European Automakers.

“duration of the war is the critical factor, with potential impacts ranging from immediate supply chain disruptions and rising fuel costs to long-term shifts in vehicle production and consumer demand toward EVs”

The conflict centred on Iran will increase immediate automotive industry supply chain and logistics costs, may jeopardize European auto markets, and if extended, may spur greater demand for electrified vehicles as oil prices spurt, according to a report from S&P Global Mobility.

According to Reuters on Monday, bond markets sank across the world as the U.S.-Israeli war with Iran pushed oil prices well above $115 per barrel. This heightened investor fears over inflation and interest rates, according to Reuters.

The report from S&P Global Mobility said the conflict poses a significant and multi-faceted threat to the global automotive industry.

“The duration of the war is the critical factor, with potential impacts ranging from immediate supply chain disruptions and rising fuel costs to long-term shifts in vehicle production and consumer demand toward EVs,” the report said.

Last week, Bernstein Research said Toyota,  Hyundai and Chery  of China were the biggest automaker manufacturers serving the Middle East, where 3 million new cars were sold in 2025.

“Of the international (manufacturers), Toyota, Hyundai, and Chery account for 17%, 10%, and 5% of the Middle East’s sales, respectively,” Bernstein said in a report.

From the European perspective, Stellantis  seems to have the largest exposure.

“At the other end of the spectrum from Stellantis, Ferrari shipped 626 cars in the Middle East in 2025, mainly comprising the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait. This was equivalent to 4.6% of Ferrari’s global shipments,” Bernstein said, adding many of Ferrari’s wealthiest Middle Eastern customers buy their cars in other regions as well.

According to S&P the key findings from its report were – 

• Immediate Supply Chain & Logistics Crisis: The conflict is causing a spike in insurance and logistics costs, creating a direct risk of disruption for Asia-sourced components, particularly just-in-time parts destined for European vehicle production, with potential parallels to the costly shipping logjams seen after the COVID-19 pandemic.
• Production Risk Extends to Europe: a conflict of 4 to 12 months would spread supply disruptions to Turkey. This poses a significant threat to European markets, as a disruption in Turkey’s production of light commercial vehicles would have an outsized effect on the region.
• Rising Costs May Accelerate EV Shift: Sustained increases in fuel costs could spur greater demand for hybrid and electric vehicles. Rising commodity and shipping costs may force automakers to prioritize higher-margin vehicles to protect profitability, a strategy reminiscent of the recent semiconductor crisis.

S&P said conflict is the critical variable determining the severity of these impacts. 

“From immediate logistical headaches to a potential long-term realignment of production strategies and consumer preferences, the war in the Middle East presents a significant news story and a complex challenge for the entire automotive value chain,” S&P said.