Strait Blockaded, Oil Prices Surge, Orders Halved! Shockwaves of US-Israel-Iran Conflict Sweep Across Global Auto Export Industry

As the joint military strikes by the United States and Israel against Iran escalate and Iran imposes a blockade on the Strait of Hormuz, the global automotive trade is suffering a triple blow: paralyzed shipping, skyrocketing costs, and frozen markets. The strategic waterway, which handles 20% of global crude oil shipments, 40% of seaborne chip transportation, and a large number of automotive ro-ro (roll-on/roll-off) routes, has ground to a halt, plunging the already strained auto export industry into a "wartime mode".

1. Maritime Artery Severed: Freight Triples, Delivery Times Double

Since the outbreak of the conflict, international shipping giants including Maersk, Hapag-Lloyd, and CMA CGM have suspended new bookings for the Middle East and Red Sea routes. Ro-ro vessels carrying vehicles from Asia to Europe, the Middle East, and North Africa are forced to reroute via the Cape of Good Hope in Africa.

· Voyage time increases by 10–14 days, cutting delivery efficiency nearly in half.

· Container freight rates have surged from $1,200 to $6,000 in just three days, a spike of over 400%.

· War risk insurance premiums soar by 300%–500%, with some freight forwarders refusing to accept orders for war-zone destinationsDozens of ro-ro ships are stranded at Persian Gulf ports, leaving new vehicles shipped by Chinese automakers to Saudi Arabia and the UAE stuck in transit, with surging risks of contract breaches and order cancellations.

2. Core Middle East Market Frozen: Exports to Iran Near Standstill

The Middle East is the second-largest export destination for Chinese automobiles, with the UAE and Saudi Arabia ranking among the top 10 markets year-round. Amid the warfare, the market has frozen overnight:

· Iranian market: China exported over 160,000 vehicles to Iran in 2025; currently, orders are halved, factories are suspended, and settlement is blocked.

· Gulf States: Consumer confidence plummets, new car sales drop by over 50% month-on-month, and dealers pause restocking.

· Global demand contraction: Crude oil prices top $120 per barrel, rising inflation suppresses car-buying willingness, and global auto exports are expected to decline by 5%–10% in the short term.

3. Supply Chains Under Pressure: Raw Material Prices Rise, Critical EV Materials in Short Supply

The conflict not only drives up energy and chemical costs but also strikes at the heart of the new energy vehicle (NEV) supply chain:

· Soaring crude oil pushes up prices of automotive raw materials such as plastics, rubber, and chemical fibers, raising manufacturing costs for fuel vehicles.

· Iran is a major supplier of celestite (raw material for strontium in permanent magnet motors) and methanol to China; import disruptions may hinder motor production.

· The Red Sea-Strait of Hormuz route carries 40% of global chip shipments, and delayed parts exacerbate production scheduling chaos for automakers.

4. Industry Polarization: Fuel Vehicles Squeezed, NEVs Seize Structural Opportunities

High oil prices and supply chain disruptions are rewriting the competitive landscape:

· Fuel vehicles: Hit by rising costs and declining competitiveness, exports from Japanese, South Korean, European and American automakers suffer heavy losses.

· New energy vehicles (EVs/PHEVs): Their cost-saving advantages stand out amid high oil prices; China's resilient full industrial chain gains prominence, with NEV export growth surging by over 30% during previous regional conflicts.

· A window for market replacement opens: European, American, Japanese and South Korean brands retreat to avoid risks, creating an opportunity for Chinese automakers to fill the vacuum in the Middle East and European markets.

5. Exporters Shift Gears: Land Transport Alternatives, Market Diversification

To hedge risks, the auto export chain is adjusting rapidly:

· The China-Europe Railway Express and Central Asia-Russia routes are prioritized, with some high-value vehicles switching to rail transport.

· Enterprises suspend new orders for high-risk regions such as Iran, and prioritize stable markets including Saudi Arabia and the UAE.

· Acceleration of CKD (Completely Knocked Down) kit exports and localized manufacturing to reduce reliance on long-distance sea shipping.

This conflict serves as a stress test for globalized automotive industry: it brings short-term triple pains of shipping, costs and orders, while accelerating energy transition, route restructuring and market share reshuffling in the medium and long term. For Chinese automakers, the crisis presents a critical window to consolidate NEV advantages and seize global market share.