Iran crisis threatens recovery of automotive industry

The crisis in Iran has created a new obstacle to the global automotive industry's recovery. Beyond the direct repercussions for consumers, who face significant uncertainty and rising fuel prices, manufacturers are also concerned about the short- and medium-term implications.

If the price of crude oil keeps escalating, it could affect both manufacturing and final sales. The first major impact is the cost of energy. Vehicle manufacturing is an electricity and gas intensive process. An escalation of the conflict could lead to a spike in energy prices, which drives up plant operating costs. Logistics is the other major battlefront as higher fuel prices and possible disruptions to trade routes affect the supply chain.

According to a report by the Bernstein consultancy, the conflict threatens to destabilise the bottom lines of key manufacturers in Europe and Asia. Chinese brands are facing their first major geopolitical bump in the road. The Middle East absorbed 17 per cent of China's passenger car exports in 2025, after a spectacular 59 per cent annual growth in the last five years.

The report places Jianghuai (JAC) in the highest risk zone, with nine per cent of its total sales directly linked to the region. It is followed by SAIC (seven per cent) and Chery (six per cent). The latter is particularly vulnerable as it is not only the largest Chinese exporter to the region, but also holds a six per cent market share within Iranian borders.

With regard to European manufacturers, in 2025, the Middle East and Africa region was one of the main financial resources for Stellantis, reporting adjusted operating income of 1.36 billion euros and an operating margin of 14 per cent, according to Berstein data. In principle, this group could be affected by the crisis. However, Stellantis Spain has told ABC that "in terms of production and exports, the Spanish plants have no flows with Iran; in terms of the logistics chain, it is still complicated to assess the impact of the closure of the Strait of Hormuz".

The Volkswagen group also rules out any interference in terms of logistics or parts supply and believes it is "too early" to say whether the conflict will have an impact on sales. "We have everything under control, but of course we will keep an eye," CEO Oliver Blume said. In the Africa and Middle East region, the Volkswagen Group experienced a ten per cent growth in deliveries to 420,800 units. For the time being, the company will be waiting to see what happens in the coming weeks to find out how the conflict will impact its sales in this region.

For other manufacturers, the disruption of trade in the Gulf and the diversion of ships via the Cape of Good Hope adds up to 14 days to routes and consequently to vehicle delivery times.

The Japanese and Korean giants seem to be better protected from the turmoil in Iran. Although Toyota leads the region with a 17 per cent share and Hyundai follows with ten per cent, their exposure to the Iranian market is minimal. Their business is concentrated in Saudi Arabia, which gives them relative stability vis-à-vis their Chinese competitors. Kia Spain states that they are not affected by vehicle routes from Korea, as they do not cross the Strait of Hormuz.

Consumer association Ocu states that it is difficult to make forecasts in such a changing climate "but everything points to rises, although some may not be immediate". It explains that the Strait of Hormuz is one of the most sensitive points on the planet, as approximately one fifth of the world's oil passes through it. However, "the direct impact on Europe would be more limited than on Asia, since only around ten per cent of the oil that passes through Hormuz is destined for Europe, while most of it goes to China, India, South Korea and Japan".

Since the start of hostilities with Iran, petrol and diesel prices on the mainland and the Balearic Islands have risen by seven and 13 per cent respectively - an increase which, according to the Spanish confederation of petrol stations (CEEES) "still does not reflect the reality of supply costs". While pump prices have contained the impact, international prices have shot up by 18.5 per cent for petrol and an alarming 47.5 per cent for diesel "placing stations in a critical financial position that threatens the stability of companies and individuals".

Given this situation, the CEEES has requested an urgent tax cut from the government, including a reduction of the IVA tax to ten per cent or a temporary rebate of up to 50 per cent on the special tax on hydrocarbons. These measures, which they believe should remain in place until international prices stabilise, would allow for an immediate price reduction of between 15 and 22 cents per liter, offsetting the excess state revenue and alleviating the economic pressure resulting from the armed conflict.

Although a conflict in the Strait of Hormuz drives up the price of crude oil, the impact on the electric vehicle user is indirect and much more contained. According to Arturo Pérez de Lucia, Director General of AEDIVE and Deputy President of E-Mobility Europe, although there is an "energy transmission chain", the effect is not comparable to that of fossil fuels.

"Even in that scenario, electric cars are often still cheaper to run than combustion cars, because the impact of oil on electricity is much smaller," he says. The key to the electric vehicle's (EV) resilience in wartime lies in its internal physics. Whereas an internal combustion engine is inherently inefficient, using only 20-30 per cent of the fuel's energy, the EV is a prodigy of energy transformation.

For the individual user, the best defence against tariff volatility is autonomous supply. Pérez de Lucia points out that the combination of solar panels and domestic batteries is the most effective way to "avoid the impact of electricity tariff rises", allowing energy to be stored during the day to recharge the vehicle at night without relying on the external grid.

Bernstein's analysis points to two other far-reaching collateral damages. For heavy transport, European lorry orders could come to a screeching halt. With diesel accounting for up to 30 per cent of a lorry's ownership cost, rising oil prices are stifling the profitability of logistics operators.

The Spanish logistics sector is reconfiguring its operations in real time. The predominant strategy is diversification, as international shipping lines have suspended bookings to the Gulf, forcing Spanish companies to divert cargo to alternative hubs in Oman (such as the ports of Salalah or Sohar) and the Indian Ocean.

From these hubs, goods are redistributed via feeder services or land transport. However, this "multimodal flexibility" is not without its challenges, as the diversion to secondary ports generates growing congestion and an exponential increase in operating costs, aggravated by the "global disorganisation" that experts warn of.

In addition, the transport of critical goods is affected by interference in GPS systems in the area, forcing companies to increase safety stock levels, definitively abandoning the just-in-time model for one of strategic storage on national territory.

In the tyre sector, the big tyre manufacturers are seeing their profit forecasts in jeopardy. Rising oil prices have a direct impact on the cost of raw materials for tyre production, with a lag of just a few months.