Hyundai Motor said it is unable to fully replace lost vehicle sales in the Middle East, as conflict in the region and limited factory capacity are constraining efforts to redirect supply.
Speaking at the launch of the Hyundai Ioniq 3 during Milan Design Week, CEO Jose Munoz said the Middle East remained the company’s strongest region in margin terms, although it did not deliver “mass” profits.
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The regional conflict has disrupted Hyundai’s operations, with vehicles produced for Middle Eastern markets not easily reassigned to other destinations.
Reuters reported that while the carmaker is seeking to shift some volumes to other markets, short-term production limitations are restricting the extent of those changes.
Before the disruption, Hyundai had been expanding its footprint in Gulf markets and parts of North Africa.
Earlier this month, the company said exports to Europe and North Africa had been delayed because of shipping route disruption linked to the Middle East conflict.
Those shipping problems have reduced available capacity on key maritime routes, increased freight charges and extended delivery times, putting further strain on Hyundai and businesses across its supply chain.
Munoz said demand had been hit by logistics issues connected to the conflict, and that any improvement would depend on how long the disruption continued.
Alongside measures to respond to the current disruption, Hyundai said it was pressing ahead with its longer-term strategy to invest in manufacturing and supply chains in Europe and the US, focusing on localisation rather than short-term changes.
In the Middle East, the company is also planning a manufacturing facility in Saudi Arabia, which had been scheduled to begin operations in the fourth quarter of this year.
At the same time, Hyundai has been broadening its activities in China.
The group recently launched its Ioniq battery electric vehicle brand in the country and presented two concept models developed for the Chinese market at an event in Beijing ahead of the Auto China 2026 exhibition.
