Iran War Disrupts Auto Supply Chains, Threatening Toyota, Hyundai, and Chinese Automakers

The escalating conflict between Israel and Iran is poised to significantly disrupt the global automotive industry, particularly impacting major automakers with substantial operations or sales in the Middle East. Toyota, Hyundai, and Chinese manufacturers like Chery are facing the most immediate risks, according to analysis from Bernstein and reported by CNBC and Automotive News.

Regional Sales at Risk

These three international automakers collectively account for approximately one-third of all vehicle sales in the Middle East. Toyota leads with a 17% market share, followed by Hyundai at 10%, and Chery at 5%. In Iran specifically, local automakers Iran Khodro and SAIPA dominate, but Chery still holds a 6% market share, as reported by Bernstein. The region is also a growing market for other Chinese automakers, representing about 17% of China’s passenger vehicle exports in 2025, according to data cited by The Economic Times.

Strait of Hormuz Closure and Rising Oil Prices

Beyond direct sales impacts, the potential closure of the Strait of Hormuz – a critical waterway linking the Persian Gulf to the Indian Ocean – poses a significant threat. Bernstein analyst Eunice Lee noted that closure could add 10-14 days to transit times, increasing logistics costs and delaying deliveries. Approximately 20 million barrels of crude oil transit the strait daily, according to consulting firm AlixPartners. Rising oil prices, already exceeding $90 per barrel on Friday, are also contributing to industry concerns.

Impact on Specific Automakers

While Toyota states it does not conduct business in Iran and has no resident employees there, the company is closely monitoring the situation and prioritizing the safety of its personnel in the Middle East. Stellantis, parent company of Chrysler and Jeep, appears to have the largest exposure among European automakers, particularly given recent strategic decisions regarding engine technology. The company’s stock price has already experienced a 11% slump since last Friday, potentially linked to these concerns. Stellantis has stated it is closely monitoring developments but cannot yet fully assess the potential impact on its operations.

Broader Implications for Asian Automakers

The conflict also threatens billions of dollars in car exports from India and China to the Middle East. Companies such as BYD, SAIC Motor, Kia, and Maruti Suzuki have significant exposure to the region. China’s vehicle exports to Gulf countries like Saudi Arabia and the United Arab Emirates reached 1.39 million units in 2025, representing one-sixth of its total overseas shipments. India exported $8.8 billion worth of cars in 2025, with 25% destined for the Middle East, primarily Saudi Arabia.

Ongoing Conflict and Future Outlook

The war between Israel and Iran, which began in October 2023, continues to escalate tensions in the region, as noted by the Council on Foreign Relations. The automotive industry faces a period of uncertainty, with potential for prolonged disruptions to supply chains, increased costs, and decreased sales. Close monitoring of the situation and proactive risk management will be crucial for automakers navigating these challenging circumstances.