Middle East auto sales outlook cut for 2026 as geopolitical tensions escalate

Core Insights - Rising geopolitical tensions in the Middle East are negatively impacting automotive demand expectations, leading to a downward revision in vehicle sales volumes for 2026 [1] Automotive Market Outlook - The Light Vehicle (LV) market in the region is projected to decline to approximately 2.7 million units in 2026, down from 3.05 million units in 2025, reflecting a decrease in consumer sentiment and heightened regional risks [3] - The Passenger Vehicle (PV) market is expected to drop to 2.35 million units in 2026 from around 2.68 million units in 2025, indicating a year-on-year decrease of 12% [3] - Light Commercial Vehicle (LCV) demand is also anticipated to soften, with volumes expected to fall from around 370,000 units in 2025 to 337,000 units in 2026, a reduction of 9% year-on-year [4] Regional Market Impact - The forecast adjustments are primarily concentrated in Saudi Arabia, the UAE, and Iran, where purchasing activity is highly sensitive to changes in risk and economic expectations [5] - Iran is projected to experience the most significant decline, with LV sales expected to drop by 23% year-on-year in 2026, contributing to over half of the overall sales downgrade in the region [5][6] - The current geopolitical escalation involving Iran, along with broader economic challenges, is likely to constrain purchasing activity and vehicle demand due to reduced discretionary spending [6]