The Middle East has consistently served as a growing and profitable market for automakers such as Porsche, Mercedes-Benz, BMW, and Ferrari NV. Ultra-luxury and high-performance brands like Rolls-Royce and Ferrari NV generate substantial sales, particularly for high-priced, highly profitable custom models. However, regional instability threatens to dampen short-term demand as automakers concurrently face challenges in China and tariffs in the United States. The instability stemming from the Iran conflict and escalating geopolitical tensions presents a significant threat to automakers operating in the Middle East.
European luxury and performance brands, including Porsche, Mercedes-Benz, BMW, Rolls-Royce, and Ferrari NV, have thriving operations in the Middle East. While the market accounts for less than one-fifth of U.S. sales volume, it holds considerable importance in terms of profitability. "The Middle East has recently emerged as one of the highest-margin structural growth regions for premium automakers," stated Pal Skirta, an analyst at Metzler Research. These manufacturers are grappling with declining market share in China and new tariffs in the U.S., two of the world's most critical markets for luxury vehicle purchases. This elevates the importance of lucrative hubs like the Middle East.
Annual vehicle sales in the Middle East region are approximately 3 million units. According to Bernstein Research, Iran is the largest market in the region, accounting for 38% of total volume. Two domestic brands, Iran Khodro and Saipa, which sell exclusively in Iran, are among the top three by sales volume. Other high-volume brands include Japanese automaker Toyota, South Korea's Hyundai, and Chinese manufacturer Chery. In neighboring Gulf markets like Saudi Arabia and the United Arab Emirates, demand for luxury vehicles is higher, concentrated among wealthy buyers, noted GlobalData analyst Vivek Sharma. The UAE alone typically records annual sales exceeding 300,000 vehicles, with a relatively high share—around 20%—being premium imports.
The ripple effects of the Iran conflict across the region threaten these automakers. Oliver Blume, CEO of Volkswagen Group, stated in mid-March that regional conflicts could weaken demand for premium cars, particularly for the group's Porsche and Audi brands. Porsche confirmed in an email that it is "continuously assessing the current situation and its potential impact on the company." It also indicated that "the current situation in the Middle East could negatively affect supply chains and demand in the future," while clarifying it has no business activities in Iran itself.
Over the past five years, Porsche has achieved growth in the region in both volume and profit per vehicle. Skirta noted that Porsche's profit per car in the region for 2025 is 28% higher than in 2020. As of 2024, the Porsche 911—which starts at $135,000 in the U.S.—now constitutes 20% of the brand's total sales in the region, while its ultra-premium custom business, Sonderwunsch, grew by approximately 125% between 2020 and 2024.
Meanwhile, according to GlobalData, the BMW Group's deliveries in the Middle East for 5 increased by about 10% year-over-year. High-performance, high-price models like the BMW M Series saw growth of around 38%. Mercedes-Benz also confirmed double-digit sales growth in the Middle East, which is one of its strongest global markets for high-end models like the AMG G 63, which starts at approximately $200,000. Over the past two years, Mercedes-Benz has expanded its presence in the UAE, Saudi Arabia, Kuwait, and Qatar. The company stated via email, "It is too early to draw reliable conclusions or identify clear trends—this also applies to potential customer reluctance to purchase vehicles in the Middle East or elsewhere. However, we are closely monitoring the conflict's dynamics and overall market conditions. In principle, we are prepared to respond flexibly to different market situations."
The ultra-luxury segment also enjoys a strong market in the region. Ferrari NV delivered 626 cars to the Middle East in 2025, a notable figure for a low-volume manufacturer, exceeding its shipments to the UK, Switzerland, and France combined, according to company data. Furthermore, in 2024, the region was the largest global market for bespoke Rolls-Royce vehicles by average value per car.
GlobalData anticipates that the luxury vehicle segment in the Middle East will grow at a compound annual growth rate of approximately 7% to 8% following the start of the war, potentially approaching 300,000 units by 2033. Metzler analyst Skirta identified two primary threats. In the short term, conflict could restrict travel or mobility, potentially impacting showroom traffic and sales. Long-term, weaker asset prices or financial market volatility could reduce wealth, leading to decreased spending on high-priced goods. "Ultimately, the impact on the auto industry will largely depend on the conflict's duration and intensity," he said.