Some Chinese automakers are disproportionately exposed to the escalating conflict in Iran due to their reliance on Middle East exports — a region that Western rivals largely abandoned years ago under sanctions, according to the equity research firm Bernstein.
The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes daily, has been brought to a near standstill as the war — now in its seventh day — spreads across the Middle East and disrupts energy production.
Brent crude futures rose 4.5% on Friday morning to $89.23 a barrel, hitting levels not seen in nearly two years.
Danish shipping giant Maersk said on Friday morning it had temporarily suspended two services linking the Middle East to Asia and Europe due to the escalating conflict, adding to the supply chain disruption already rippling through global trade routes.
The Strait of Hormuz, through which automakers from China, India, South Korea and Japan ship billions of dollars’ worth of vehicles to the Middle East every year.
Chinese brands including Chery, Geely, BYD, SAIC, and Changan are among the major exporters facing disruption.
Chinese Brands Fill Sanctions Vacuum
The Middle East accounted for 17% of Chinese passenger vehicle exports in 2025, with automakers shipping approximately 500,000 vehicles to the region last year, Bernstein said in a new research note first reported by Automotive News.
Iran is the region’s largest automotive market, accounting for about 38% of its approximately 3 million annual sales.
Inside the country, Chinese players including Chery, JAC, Mazda’s partner Hainan Automobile and Changan are the main international presence — filling a vacuum left by established global brands that exited under sanctions.
Jianghuai (known as JAC), SAIC, Chery, Changan and Great Wall Motor face the greatest exposure among Chinese brands, according to the analysis. Chery alone accounts for an estimated 5% of Middle East regional sales, Bernstein said.
The research note identified three channels through which the conflict threatens the automotive industry: direct disruption to sales inside Iran, disruption to vehicle deliveries throughout the broader region affecting shipments and sales at international players, and rising pump prices from interrupted oil tanker movement through the Strait of Hormuz.
“By far the biggest risk is that a prolonged war continues to drive up oil prices and undermine confidence in the global economy, crashing auto sales well beyond the Gulf,” Bernstein wrote.
Prolonged Conflict Expected
The firm predicted the conflict is poised to drag on, following US President Donald Trump’s pledge that the military will keep up the offensive until its goals are achieved.
Trump said on Thursday that he “must be involved in selecting Iran’s next leader.”
Vehicle shipments to markets across the Gulf — including Saudi Arabia, the United Arab Emirates, Kuwait and Israel — face potential disruption from the broader security environment.
Toyota Motor Corp. will cut production by 40,000 vehicles to account for possible logistic disruptions to Middle East shipments, Japan’s Nikkei newspaper reported.
Affected models include the Land Cruiser and other SUVs, according to the report.
Higher oil prices disproportionately affect automakers with heavy internal combustion engine exposure.
Among European manufacturers, Bernstein singled out Stellantis NV as facing particular risk from rising gasoline prices.
Asian Brands Most Exposed
Toyota accounts for 17% of Middle East regional sales, Hyundai Motor Co. for 10% and Chery for 5%, according to Bernstein.
The concentration of Asian brands in the region means the conflict’s commercial impact falls disproportionately on manufacturers from China, Japan and South Korea.
China exported a record 7.098 million vehicles in 2025, according to the China Association of Automobile Manufacturers, with new energy vehicle exports surging 103.7% to 2.615 million units.
Premier Li Qiang acknowledged mounting economic headwinds on Thursday during the opening of the National People’s Congress in Beijing, setting China’s GDP growth target at 4.5% to 5% for 2026 — the lowest since 1991.
Domestic Pressure
The conflict adds another layer of pressure for Chinese automakers already contending with a domestic slowdown.
BYD Co.‘s global sales fell 41% year over year in February — the sixth consecutive monthly decline — as overseas shipments surpassed domestic sales for the first time in the company’s history.
Geely overtook BYD as China’s top-selling automaker in January.
The combination of weakening domestic demand, a government crackdown on below-cost pricing, and now the disruption of a key export region creates a challenging environment for an industry that had been counting on international markets to offset slowing growth at home.
Chery, which faces among the highest exposure to the Middle East conflict according to Bernstein, is simultaneously pursuing expansion into Canada under a new tariff deal and preparing to enter multiple new markets.
The company set a 2026 sales target of 3.2 million units, approximately 14% above last year, with over 900,000 of its 2025 sales being new energy vehicles.
