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S&P Global Mobility is adjusting forecasts in response to US/Israeli military actions in the Iranian war, which is amplifying geopolitical risks and impacting vehicle demand and production, especially in affected regions in what it thinks is a short-term conflict.*
“The base scenario assumes a short-term conflict, with the most significant effects in Iran and neighboring Gulf Cooperation Council (GCC) countries, while other markets experience milder impacts mainly through higher oil prices,” said Mike Wall the Executive Director, Automotive Analysis, S&P Global Mobility in a release yesterday. [Oddly in AutoInformed’s view, North America’s production outlook is “only marginally reduced for 2026, with a slight increase in 2027…” the respected consultancy said – Autocrat.]
“Rising energy and precious metals costs, along with supply chain disruptions, are pressuring affordability and production across multiple regions. March forecast updates show downward revisions particularly for the Middle East, Greater China, and Europe, with lingering effects expected into 2027,” S&P Global Mobility said. “Overall, the industry faces increased volatility, but global demand is not expected to collapse, with impacts varying by region.”
Regional Impacts
- “European light vehicle production is forecast to decline, with cuts of 82,000 units in 2026 and 176,000 units in 2027, driven by higher energy and precious metals prices and supply chain concerns. The Iran conflict is causing additional downside risks, including rising energy costs and destabilized supply chains, leading to the potential for downgraded demand estimates. Imports from China are expected to rise, intensifying competition in the region.
- “Greater China’s production outlook is reduced by 116,000 units in 2026 and 94,000 units in 2027, reflecting weakened domestic demand and seasonal disruptions. Despite a sharp drop in passenger vehicle production and sales, exports remain strong, though shipments to the Middle East are impacted by the Iran conflict. Structural challenges such as destocking, DRAM pricing/supply issues, and regulatory tightening also contribute to the forecast downgrade.
- “Japan’s 2026 production is cut by 81,000 units due to disrupted shipping routes given the Iran conflict and postponed model launches, with further reductions expected through 2031. South Korea’s 2026 output is reduced by 34,000 units as higher oil prices and weakened demand affect production. In 2027, Hyundai’s relocation of Kona production to Korea partially offsets demand contraction, resulting in a smaller reduction.
- “Middle East/Africa faces the largest production cuts, with reductions of 236,000 units in 2026 and 215,000 units in 2027, mainly due to direct impacts from the Iran conflict. Demand, production, logistics, and supply chains are significantly affected, with repercussions extending beyond Iran to GCC countries. The region’s outlook remains highly uncertain as the conflict continues.
- “North America’s production outlook is only marginally reduced for 2026, with a slight increase in 2027 and a small decrease in 2028. The region is somewhat insulated from direct conflict effects under the base case assumption of a relatively short duration event, though higher oil prices may cause some consumers to delay purchases. Electrified vehicle options and product cycle decisions are more influential than the conflict itself in shaping the forecast. [Well, yes but there is no indication that this will be a short term event or that its economic consequences were considered by the whimsical U.S. president who would be King. Moreover, the former Detroit Three are heavily dependent on sales of gas-gulping light trucks as fuel prices are climbing with no end in sight. Additionally, the Administration is going it alone in this war, as former allies, who were not informed or consulted, refuse to be drawn into the tragic and increasingly bloody conflict – AutoCrat.]
- “South America’s production forecast is trimmed by 64,000 units in 2026 and 2,000 units in 2027, mainly due to weaker exports from Brazil. The Iran conflict is considered a risk, but the base case assumes no major systemic disruption. Regional volumes remain stable, with minor losses offset by gains in Argentina.
- “South Asia’s production outlook is reduced by 71,000 units in 2026 and 60,000 units in 2027, with ASEAN markets facing volatility from pricing, export scheduling, and energy price risks. India’s production is impacted by LNG supply disruptions from Qatar, causing gas shortages and operational challenges for auto plants. The Iran conflict adds uncertainty, leading to reduced output and supply chain risks,” S&P Global Mobility said.
*AutoInformed on
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
Revised Auto Forecasts Assume Slight Iranian War Effects?
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S&P Global Mobility is adjusting forecasts in response to US/Israeli military actions in the Iranian war, which is amplifying geopolitical risks and impacting vehicle demand and production, especially in affected regions in what it thinks is a short-term conflict.*
“The base scenario assumes a short-term conflict, with the most significant effects in Iran and neighboring Gulf Cooperation Council (GCC) countries, while other markets experience milder impacts mainly through higher oil prices,” said Mike Wall the Executive Director, Automotive Analysis, S&P Global Mobility in a release yesterday. [Oddly in AutoInformed’s view, North America’s production outlook is “only marginally reduced for 2026, with a slight increase in 2027…” the respected consultancy said – Autocrat.]
“Rising energy and precious metals costs, along with supply chain disruptions, are pressuring affordability and production across multiple regions. March forecast updates show downward revisions particularly for the Middle East, Greater China, and Europe, with lingering effects expected into 2027,” S&P Global Mobility said. “Overall, the industry faces increased volatility, but global demand is not expected to collapse, with impacts varying by region.”
Regional Impacts
*AutoInformed on
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.