March 2026 light vehicle production forecast

Europe

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

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/ Korea

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

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

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.

South America

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

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.