Iran war threatens lucrative business of German carmakers

The Iran war endangers the growth of German premium carmakers in the Middle East region. While sales stagnate elsewhere, BMW, Porsche, and Mercedes thrive with luxury models in the Gulf states. Supply chains remain resilient despite the escalation, as research indicates.

The consequences of the Iran war burden the German auto industry in a key growth region. Premium manufacturers BMW, Porsche, and Mercedes particularly benefit from rising sales of expensive luxury variants in the Gulf states, where demand increases despite global stagnation. These markets are gaining strategic importance for the makers, offering the highest margins.

Handelsblatt research indicates that supply chains for production components are resilient, even amid the war escalation. Nevertheless, the conflict threatens the boom in this profitable segment. Reporting from Düsseldorf highlights the industry's dependence on stable conditions in the Middle East.

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Illustration of Iran's Strait of Hormuz blockade during war, driving up global oil and gas prices and threatening Europe's energy supply.
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War in Iran causes surge in energy prices

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On the fifth day of the war in Iran, Tehran's blockade of the Strait of Hormuz has driven up oil and gas prices, affecting the global economy. European gas prices rose from 32 to 49 euros per MWh, while Brent crude climbed from 72 to 82 dollars per barrel. Europe, vulnerable due to its reliance on imports, faces heightened risks if the conflict drags on.

The ongoing conflict in Iran has interrupted Russia's supply chains for luxury goods, including cars, iPhones, and jewelry, primarily routed through the United Arab Emirates. Closures in the Strait of Hormuz and air traffic disruptions threaten shortages if the situation persists beyond a month. Importers warn of stranded vehicles and delayed deliveries amid existing Western sanctions.

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The Iran war has caused worldwide petrol price hikes, expected to accelerate global electric vehicle (EV) uptake. In China, more than half of new car sales were EVs in 2025, potentially saving US$28 billion a year in avoided oil import costs.

Following TotalEnergies CEO Patrick Pouyanné's stark warning of impending energy shortages, other French business leaders like LVMH's Bernard Arnault and Saint-Gobain's Benoit Bazin express growing alarm over the economic fallout from two months of US-Iran conflict and the Strait of Hormuz blockade. President Macron seeks to reassure, but concerns mount.

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Two days after oil prices surged past $90 a barrel amid the Iran war, commodities analyst Christian Kopfer warns of impending rationing and supply chain chaos as stocks dwindle. Swedish consumers already face gasoline at 16 kronor per liter, with worse to come without resolution in the Strait of Hormuz.

The war in Iran raises concerns about a potential migration wave to Europe. German Chancellor Friedrich Merz called for preventing uncontrolled movements from Iran, while international organizations warn of a humanitarian emergency. Despite 100,000 departures from Tehran, no wave has been observed at borders yet.

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Hong Kong's major retailers are using direct sourcing and economies of scale to avoid price hikes amid surging logistics costs from the Middle East war. Sa Sa International chairman Simon Kwok Siu-ming warns of pressure on petroleum-derived beauty products. Shipping and airfreight costs have risen 10 to 15 per cent.

 

 

 

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