Highlights

  • Iran war continues; Strait of Hormuz traffic restricted for more than a month.
  • S&P outlines April 2026 automotive industry forecast assumptions.

On Feb. 28, 2026, the US and Israel began an airstrike offensive against Iran for numerous geopolitical reasons. The Iran war remains ongoing as of April 2.

S&P Global Mobility updates forecast assumptions as the Iran war continues

At the time of writing, the S&P Global Mobility April 2026 light-vehicle sales and production forecasts are in development. The automotive industry forecast figures presented here are preliminary and may change before a mid-April release date.

As noted in our previous report, if the US–Iran war turns into a ground war or if other countries become involved. This assessment does not address broader escalation scenarios.

Strait of Hormuz restricted shipping disrupts global trade with increasing impact as time goes on

The Strait of Hormuz is a major global trade thoroughfare. Although it is not officially closed, the risk of shipping tankers being caught in the crossfire and threats from the Iranian government have caused transport companies to avoid it and seek other routes. 

However, in recent days, oil tankers bound for India and China have been allowed to pass. Traffic disruption in the strait drastically affects economic activity and costs that grow the longer the war with Iran continues.

2026 light-vehicle sales could fall by 200,000 units in Gulf Cooperation Council countries

Gulf Cooperation Council (GCC) countries have seen new vehicle supply disrupted. For countries reliant on sea imports, we expect to see vehicle shortages, longer wait times and reduced model availability. Within the GCC, rising vehicle prices and cost inflation are likely. Freight, insurance and logistics costs will surge as goods are rerouted when possible and war-risk insurance premiums increase. 

The Iran war’s impact on fuel and freight costs drive up landed vehicle prices in the region and amplify GCC inflation across imported goods. Export constraints and cost inflation will weaken fiscal conditions, dampen consumer sentiment and reduce credit appetite, further softening demand for new vehicles and other imports. 

Against those conditions, our draft April 2026 total automotive industry volume (TIV) light-vehicle sales forecast estimates the region could lose about 200,000 units of vehicle sales.

Global light-vehicle sales could drop 800,000 units in 2026

The global market is also likely to experience deeper supply chain disruptions if the strait remains closed through the end of April. Our March 2026 TIV base case assumptions were optimistic that tanker traffic would resume after a couple of weeks and be restored by late March or early April. This has not materialized. 

The base case assumptions behind our April 2026 TIV forecast now assume that the strait will remain essentially closed through April. Reopening the strait is expected to be gradual, and normal shipping in the region is unlikely to resume until the second half of 2026. The situation remains highly fluid.

Presuming the strait is reopened, confidence in oil flows will rebuild as the situation stabilizes. A remaining uncertainty is that the extent to which energy assets have been damaged during the Iran war, as well as the cost and time needed for repair.

In our April 2026 draft light-vehicle global auto sales forecast, we now expect a reduction of 800,000 to 900,000 units in 2026 and 500,000 units in 2027; this includes the 200,000-unit reduction in GCC sales. The impact on countries across the world is also likely to be uneven, and we are not providing our regional forecast at this time. 

Current vehicle inventory appears strong enough to absorb potential production cuts, so the sales reduction forecast is based on economic impact rather than lower production.

The April 2026 draft reduction is in addition to a 500,000-unit impact reflected in our March 2026 global auto sales forecast. These figures also account for other macroeconomic impacts, affordability pressures from higher oil prices and the direct impact on vehicle sales in the Middle East. The April 2026 affordability impact assumptions include the expectation that higher energy inflation will prompt central banks to delay interest cuts rather than raise rates.

Higher oil prices will drive the economic issues. If the strait remains closed through April, S&P Global Energy projects dated Brent crude to average US$120 per barrel that month, with daily swings from US$100 to US$150. Within these assumptions, we see the market experiencing volatility and negative economic impact this year, but not a prolonged crisis.

Light-vehicle production impacts amid global auto supply chain disruptions

S&P Global Mobility analysts are also working on the next light-vehicle production forecast. At this time, it is possible that the base case of the strait being closed through April might cause a larger reduction for 2026 than reflected on the TIV sales side. It is not possible to provide guidance on the scope and severity of automotive disruption, as a range of production-related uncertainties remain. 

The Asia-Pacific (APAC) region is most at risk and most impacted by the flow and price of oil. Sourcing for the region—whether energy or goods—may require more significant adjustments and alternative supply patterns. Middle East and Africa (MEA) are also larger end markets for ASEAN, Japan, Korea and China production. The automotive industry in those regions will feel more of the direct impact from lost MEA sales. 

Along with cost pressures, there are increasing concerns around feedstock coming from or transported through the region. These risks could affect the global auto industry, but APAC is currently attuned to them. Concerns over helium supply, used in semiconductor manufacturing, are not affecting our base case assumptions.  

Chip makers had roughly six months’ supply prior to the US–Iran war, but the longer the strait remains closed, the greater the risk of widespread supply chain disruptions across the global auto industry. Other supply uncertainties include aluminum, methanol and bromine. 

Medium- and heavy-duty commercial automotive industry impacts from rising oil prices and economic pressure

Some impacts to the medium- and heavy-duty commercial vehicle (MHCV) automotive industry mirror those in the light-vehicle sector, including potential inflation and still-high (or rising) interest rates slowing consumer spending.

However, the MHCV industry could face additional pressure as these factors slow business investment and trucking freight, while knock-on cost increases across the supply chain affect goods transportation. The next MHCV forecast, due May 2026, is expected to show a further reduction from the March forecast, which had reduced US 2026 MHCV demand by 1%.  

For the MHCV industry, high fuel costs at the pump have a more dramatic effect on total cost of ownership and operation than they do for consumer vehicles. Our MHCV team anticipates potential short-term mix changes in the US, specifically for buyers who substitute gasoline for diesel in medium trucks, particularly Class 4. The market may also see limited downsizing in Class 8 trucks from large 15L diesel engines to smaller-displacement engines. 

In markets outside of the US, particularly East Asia, the situation could accelerate a shift to electric vehicles, though this is unlikely for the US under the current base case. Diesel is the more widely used fuel, and diesel costs go up alongside gasoline.

For the US, however, the MHCV team notes that revised oil price assumptions do not increase costs enough to make zero-emission vehicles more cost-effective. Fleet operators considering such a change would also likely face increased operating costs for diesel trucks, while higher interest rates increase borrowing costs and restrict available capital. 

Looking forward: Global auto industry outlook as Iran war continues

The Iran war has increased uncertainty, and its duration has already exceeded our initial base-case expectations. Our April 2026 forecast assumptions are aligned with S&P Global Market Intelligence, Energy and Economic and Country Risk teams, providing a multidisciplinary perspective.

If the situation persists for longer than we’ve presumed, further economic harm, lower availability, higher commodity costs and reduced manufacturing are possible. As we previously noted, the duration of the war with Iran remains the primary factor determining the severity of the damage and the effort needed to recover. 

Though the April 2026 forecast will incorporate a longer automotive disruption than the March forecast presumed, many expectations carry forward, though with greater impact. The impact of oil and natural gas pricing variables is disruptive due to their cumulative effect.

As commodity price increases take hold across the economy and auto supply chain, they will increasingly strain monthly household budgets and create a knock-on effect to lower global auto sales.

Navigate the impact of global disruptions with confidence

S&P Global Mobility offers clients unique insights to navigate supply chain disruptions, global trade shifts and more, allowing you to see opportunities others don’t. With 100+ years of automotive industry expertise, we offer tailored, ongoing advisory services designed to help you navigate tariffs and win.  

Inquire Today

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

Content Type

 

Article

Themes

 

Automotive Industry Forecast and Analysis