The instability introduced on by the Iran battle and rising geopolitical tensions pose a menace to automakers with a presence within the Center East.
European luxurious and high-performance manufacturers resembling Porsche, Mercedes-Benz, BMW, Rolls-Royce and Ferrari all have had thriving companies within the Center East market that, when it comes to quantity, is lower than a fifth of america however that punches above its weight when it comes to earnings.
“The Center East has not too long ago change into one of many highest-margin structural progress areas for premium automakers,” stated Metzler Analysis analyst Pal Skirta.
These automakers have been confronted with declining market share in China and tariffs in america, two international locations which are among the many most vital luxurious patrons on the planet. That has elevated the significance of worthwhile facilities just like the Center East as automakers.
The Center East area, relying on which international locations are included, has an annual quantity of about 3 million automobiles.
Iran is the largest market within the area, making up 38% of its complete, in keeping with Bernstein Analysis. Two of the highest three greatest sellers are home automotive manufacturers Iran Khodro and SAIPA, which solely promote in Iran. Different high-volume manufacturers embrace Japanese carmaker Toyota, Korea’s Hyundai, and Chinese language maker Chery.
Luxurious demand is larger in close by Gulf markets resembling Saudi Arabia and the United Arab Emirates — which have a excessive focus of rich patrons with cash to spend, in keeping with GlobalData analyst Vivek Sharma. The UAE alone sometimes exceeds 300,000 automobiles yearly in gross sales and a comparatively excessive share of that, or about 20%, is premium imports, in keeping with GlobalData.
The ripple results of the Iran battle throughout the area threaten these automakers.
Volkswagen Group CEO Oliver Blume stated in mid-March that the battle within the area may weaken premium auto demand, particularly for VW Group’s Porsche and Audi manufacturers.
Porsche instructed CNBC in an e-mail that it’s “constantly assessing the present state of affairs and attainable influences on the corporate.”
It additionally stated the “present state of affairs within the Center East may have a destructive affect on provide chains and demand sooner or later.” Porsche would not have any business actions in Iran itself.
The automaker has grown within the area during the last half decade or so — each when it comes to what number of automobiles it sells and the way a lot cash it makes per automobile. Porsche made 28% more cash per automotive bought in 2025 within the area than it did in 2020, Skirta instructed CNBC.
As of 2024, the Porsche 911 — which within the U.S. begins at $135,000 — is now 20% of the model’s complete gross sales within the area, and its ultra-high-end customization enterprise, referred to as Sonderwunsch, grew by roughly 125% between 2020 and 2024.
In the meantime, BMW Group’s Center East area deliveries rose by round 10% year-on-year in 2025, in keeping with GlobalData. Excessive-performance and high-priced fashions, resembling BMW M variants, noticed progress of round 38%.
Mercedes-Benz additionally confirmed that its gross sales within the Center East have been seeing double-digit progress. It is without doubt one of the world’s strongest markets for high-end automobiles resembling the AMG G 63, which has a beginning worth of roughly $200,000.
Over the previous two years, roughly, Mercedes-Benz has expanded its presence within the UAE, Saudi Arabia, Kuwait and Qatar.
Mercedes-Benz instructed CNBC by way of e-mail that “it’s nonetheless too early to attract dependable conclusions or determine clear traits – this additionally applies to any potential reluctance by clients within the Center East (or elsewhere) to purchase automobiles. Nevertheless, we’re carefully monitoring the dynamic improvement of the battle in addition to the general market state of affairs. In precept, we’re all the time ready to reply flexibly to totally different market conditions.”
Extremely-high-end automobiles even have a sturdy market within the area.
Ferrari shipped 626 automobiles in 2025 to the Center East, a notable quantity for a low-volume automaker. That is greater than it despatched to the UK, Switzerland and France, in keeping with the corporate.
And in 2024, the area was the world’s largest for personalized Rolls-Royces, by common worth per automotive.
GlobalData stated after the beginning of the battle that it expects the posh automobile phase within the Center East to develop at round a 7% to eight% compound annual progress price, doubtlessly reaching near 300,000 models by 2033.
There are two primary threats, stated Metzler analyst Skirta. Within the quick time period, conflicts may prohibit journey or mobility, which could weigh on showroom visitors and gross sales. Long term, weaker asset costs or monetary market volatility may depress climate and scale back spending on high-ticket objects.
“Finally, the affect on the automotive sector will rely closely on the length and depth of the battle,” he stated.
