Prolonged Middle East war to weigh on sputtering US auto demand

US demand for automobiles and auto parts has been straining under higher inflationary costs, but buyers, both consumers and manufacturers, will face another level of sticker shock if the war in the Middle East extends into the summer.

Even before the war-driven spike in gasoline prices, the US automotive industry was steeling for a tough year. Prior to the start of the conflict, Journal of Commerce parent company S&P Global forecast that vehicle sales would fall 2% from the previous year due to a long list of headwinds for the industry, including higher borrowing costs for vehicle buyers and steel tariffs upping input prices.

But already relatively high prices for new vehicles and auto parts — the cheapest new 2026 model car available is $20,550, according to CARFAX — will increase significantly if the war continues through May, according to a mid-March report from S&P Global.

If the war lasts through the end of 2026, that elevated pricing will negatively impact consumer demand and, by extension, container volumes. A war scenario of more than a year will result in continued inflation and declining demand until prices reach a new “set point,” S&P Global analysts said.

Containerized US imports of automobiles and auto parts fell 9.4% year over year in 2025, dragging the five-year compound annual growth rate (CAGR) down to 3.8%, according to PIERS, a Journal of Commerce sister product within S&P Global. Exports, meanwhile, spiked 15.3%, boosting the five-year CAGR to 6.6%. The majority of seaborne vehicle imports and exports travel via roll-on/roll-off (ro/ro) ships; those volumes are not captured by PIERS data.

The uncertainties surrounding the length of the war will undoubtedly impact the US container trade in vehicles and parts as importers and exporters in the automotive sector review and possibly modify their business plans, said Chris Hopson, principal analyst for the global light vehicle forecast group at S&P Global.

“2025 was an uncertain year because of the tariffs, and the auto industry digested it better than we might have expected,” Hopson said. However, due to the war in Iran, how long the industry can continue to bear those higher costs “is open to question.”

The weakening market for new US car sales has a silver lining for importers of aftermarket parts used to maintain and repair vehicles, such as filters, batteries and brakes. Customers of Advance Auto Parts, who are often in one of the most economically depressed cohorts, typically would rather keep their cars running a little longer than shop for a new car, said CEO Shane O’Kelly.

“That car is how they get to work; it’s how they get to church; [how] they get the kids to activities,” O’Kelly told investors during a March 11 earnings call. “If that thing is not running, they’re getting it fixed, so I don’t necessarily see demand curtailing.”

‘General inconsistencies’

Auto parts importers have been looking — and will continue to look — at changing sourcing away from China to Southeast Asia and the Indian subcontinent because of the higher tariffs imposed last year, according to Steve Hughes, a consultant for the aftermarket auto parts industry. But those changes can’t happen overnight, Hughes explained, because it takes anywhere from six months to two years to set up operations in a new location.

Mainland China accounted for 35.2% of US containerized autos and parts imports last year, down from more than 40% as recently as 2021, according to PIERS. The primary beneficiaries of China’s declining market share, South Korea and Japan, have increased their combined share of the market to 27% from 20.8% during that period.

Noel Hacegaba, CEO of the Port of Long Beach, said the port has experienced a general shift of sourcing of most imports, including autos and auto parts, away from China to other countries. Imports of passenger vehicles landing in Long Beach, mostly on ro/ro ships, were flat in 2025, while exports rose 6.2% year over year, according to Hacegaba. Containerized auto parts imports through the port rose 1.1%, while exports fell 15%. Los Angeles-Long Beach is the busiest US port complex for containerized auto imports.

The Port of Baltimore, also a major gateway for ro/ro and containerized auto imports and exports, continues to feel the impact of tariffs. Those impacts are reflected in the higher prices consumers must pay, but the problem runs even deeper than cost, said Jonathan Daniels, executive director of the Maryland Port Administration (MPA).

“The biggest issue we have seen with shippers is the general inconsistencies in the tariffs,” Daniels told the Journal of Commerce.

Although original equipment manufacturers take higher tariff costs as a given, not knowing the exact rate for finished vehicles and components makes it difficult to make strategic sourcing and production decisions, Daniels explained. Depending on the level of tariffs on each, it might be cheaper to import fully assembled cars, or it might make more sense to import the necessary pieces and assemble them in the US.

Despite these uncertainties, more than 700,000 automobiles and light trucks crossed Baltimore’s docks for the 13th consecutive year in 2025, according to MPA data. Daniels said the port continues to develop infrastructure to support processing facilities in the region, adding that exports of damaged cars to West Africa to be used for parts remains a bright spot for the industry.

For containerized exports, the largest individual markets are the United Arab Emirates and Georgia, which accounted for 12% and 11.8% of outbound auto and part shipments, respectively, with no other country exceeding 10%, according to PIERS.