Luxury Car Sales in the Middle East Take a Hit Amid Iran War

The Middle East has long been one of the most lucrative markets for luxury automakers. Although it represents less than 10% of total sales volume for most high-end brands, the region delivers outsized profits — largely due to wealthy buyers who routinely commission bespoke, limited-edition vehicles loaded with premium finishes like gold leaf, mother-of-pearl inlays, and custom wood trims.

A prime example is the Rolls-Royce Phantom Arabesque, a one-off model featuring laser-engraved hood art inspired by Arabian architecture, unveiled just before conflict erupted in the region. A base Phantom starts at roughly £430,000, but bespoke customizations can double or triple that figure — making Gulf buyers among the most valuable customers in the global luxury auto segment.

That all changed when war broke out on February 28. Ferrari and Maserati temporarily paused regional deliveries. Dubai-based dealership F1rst Motors, which sells vehicles ranging from $250,000 to $14 million, closed for several days and reports business is still down around 30% since reopening. Meanwhile, the pipeline of exclusive, high-margin special editions has effectively dried up.

The timing could not be worse. Luxury automakers are simultaneously grappling with US tariff uncertainty, a collapsed Chinese market, and sluggish European demand. Russia became inaccessible after its invasion of Ukraine in 2022, eliminating yet another key revenue stream. Lamborghini's CEO acknowledged there is no new market available to offset these mounting losses.

Bentley's CFO warned that extended conflict could force the brand to revisit production levels, while Volkswagen's CEO confirmed the group expects a clear financial impact. Ferrari noted Middle East volumes grew to 4.6% of global sales last year, surpassing even China.

As former Aston Martin CEO Andy Palmer put it, for premium and luxury car manufacturers, the current situation is simply "an utter disaster."