Volkswagen and Volvo Car have warned that the conflict in the Middle East could dampen vehicle demand, reported Bloomberg.

The additional pressure comes as the sector already faces uneven electric vehicle (EV) sales, tariffs and slower growth in China.

Volkswagen passenger car sales chief Martin Sander said: “We see already in many markets customer sentiment going down. We’ve had a lot of uncertainty among consumers already and this is now, of course, adding another layer of anxiety.”

Volvo UK managing director Nicole Melillo Shaw said she’s concerned the heightened uncertainty could cause buyers to postpone, or abandon, purchase plans.

“If I don’t need to and I’ve got other considerations around the cost of living going up, then maybe I won’t buy another new car,” she was quoted by the publication as saying.

Sander and Shaw were speaking at an event hosted by the Society of Motor Manufacturers and Traders.

Automakers are also wrestling with declining earnings after tariffs introduced by US President Donald Trump added strain to an industry already trying to limit downturns in China.

The bumpy transition to EVs remains another challenge, particularly as Chinese brands intensify competition in Europe by attracting customers with lower-priced models.

Sander said supply chains have not been disrupted by the conflict in Iran, but that activity in the Middle East “has basically stopped”.

For 2025, the Middle East Light Vehicle (LV) market is estimated to have sold three million units, of which a third can be attributed to sales in Iran.

Other major players include Saudi Arabia, the UAE, and Israel.

This year, the Middle Eastern outlook was initially one of growth as sales have been following an upward trend across the region in recent times.

However, as the situation regarding the Iran War is developing quickly, the analysts at GlobalData, Just Auto’s parent company, have taken a more cautious stance on the LV forecast for 2026.