The Iran war has dealt a sharp blow to one of the world’s most lucrative automotive markets, with Gulf showrooms temporarily shuttered, deliveries paused and bespoke orders — the lifeblood of ultra-luxury carmakers — brought to a near-standstill.
Ferrari, Maserati, Rolls-Royce and Bentley are among the brands feeling the strain after conflict broke out on 28 February, closing dealerships across the Gulf and disrupting a market that, despite representing less than 10% of volume for most luxury manufacturers, contributes disproportionately to their profits.
“It’s very high margin,” Volkswagen CEO Oliver Blume said of Middle East sales at a briefing earlier this month. “We will see an impact there for sure.”
Dubai-based multi-brand dealership F1rst Motors — which sells vehicles ranging from $250,000 to $14 million, with Ferraris and Bugattis among its flagship offerings — shut for the first days after hostilities began. Since reopening, director Chris Bull said business is down around 30%, though sales above $1.4 million have stabilised and demand outside the UAE remains solid.
“Obviously, there are fewer people walking in the front door,” Bull said. “But we’re still managing to maintain a good level of business.”
The blow is particularly acute because of the Gulf’s appetite for high-margin limited editions — vehicles featuring bespoke wood trims, mother-of-pearl inlays or gold leaf finishes that can double or triple a base price. In 2024, Jaguar Land Rover sold 20 “Sadaf” edition Range Rover Sport SVs at around £330,000 each, roughly three times the British starting price.
Bentley CEO Frank-Steffen Walliser, who earlier this month called the Middle East “the best market in the world”, was blunt about the current standstill. “People in the Middle East have other thoughts than looking for a new Bentley at the moment,” he said.
The timing could hardly be worse. Luxury carmakers are simultaneously navigating weakening demand in China and Europe, US tariff uncertainty, and the long-term loss of the Russian market following the 2022 invasion of Ukraine.
“There is no new American market out there that we can tap into to boost our sales volumes,” Lamborghini CEO Stephan Winkelmann said this month.
For former Aston Martin CEO Andy Palmer, who said Gulf buyers were always the first call for high-margin special editions during his tenure, the combined pressures are without precedent.
“For a manufacturer of premium and luxury cars in particular,” he told Reuters, “it’s an utter disaster.”
(Reuters)