The text was prepared by Vladimír Orth, a guest of the podcast.
Day February 28 started a military conflict in Iran and the operation in the Persian Gulf very quickly became a large-scale regional conflict that directly affected 10 countries: Iran, Israel, Bahrain, Qatar, Saudi Arabia, United Arab Emirates, Iraq, Oman, Turkey and Lebanon.
Estimating its impact is not so difficult today, especially in the age of available data, analytical tools and artificial intelligence. At the same time, however, few people still believe in the original estimates, according to which the intervention was not supposed to last longer than three weeks. Today it is clear that this is a large-scale conflict, in which no one can reliably estimate its duration or final consequences.
By closing the strategic transport corridor through Strait of Hormuz traffic was practically significantly restricted in both directions. It was there that dozens of oil tankers passed by every day, which makes this area one of the most sensitive places in the global economy.
Direct reach to automotive
What we are already seeing in the automotive industry today is a loss of the new vehicle market in volume of approx 4.43 million cars per year. At the same time, supply chains, which are crucial for the automotive industry, were also disrupted. The most affected are not only the countries directly affected by the conflict, but also the surrounding states of the Middle East region and the Arabian Peninsula. The war is not only focused on military infrastructure. It also affects facilities for extraction, storage and distribution of oil, oil products and gas. This outage subsequently affects major customers in Asia and their production capacities. Until 32% of the global production of petroleum products because it comes from this area. The biggest customers are mainly China, India, Indonesia and the Philippines.
Impact on the automotive market in Asia and Europe
These changes can further accelerate the onset of electric vehicles in Asiabecause the pressure on the price of conventional fuels will grow. In Europe, on the other hand, we expect that, due to the ongoing recession, there will be a reduction in fuel consumption in households and a greater interest in more ecological and economical vehicles. At the same time, the trend will continue downsizingi.e. a move to smaller and cheaper cars.
The energy crisis, which started with the war in Ukraine and the subsequent restriction of the purchase of Russian oil products by the EU, is today connected with the consequences of the war in Iran. The combination of these two factors creates extremely unfavorable conditions for European consumers and industry.
I will not now enter into a discussion about how long this conflict will last and what effect it will have on the war in Ukraine. It is essential to understand what impact it will have on people and their mobility.
Mobility will be more expensive
Mobility is gradually changing and it is necessary to realize that it is becoming more and more financially demanding for people, not only from the point of view of acquiring a vehicle, but also of owning it. Downsizing it is already visible today in Western Europe, where smaller cars and more ecological solutions dominate the decision to buy a car.
They are especially popular small crossovers and vehicles for smaller families. On the contrary, models like station wagons and limousines they are gradually losing their positions and several car companies have already limited or stopped their production.
What happens if the conflict lasts longer?
If the conflict lasts longer than one to three months, the pressure on fuel prices will be even greater and the market will start looking for alternatives. It is not excluded that the discussion on the purchase of Russian oil and the re-evaluation of the sanctions, which so far have not brought the result to the extent that the European Union expected, will be opened again.
From the point of view of car production, some car companies will have problems with production, because their suppliers and logistics routes that were set before the conflict will not be able to fulfill the original plans. The conflict can impact most significantly Asian car manufacturers and the segment of battery-powered vehicles.
Europe and Slovakia are already declining
The average decline in the purchase of new cars in Europe for the first two months of 2026 is at the level of -3,9 %. In Slovakia, the decline is even more significant and reaches -7,05 %.
The market has its winners and losers, but the biggest losers are car companies, which, although they quickly gained positions in the previous period, do not have a sufficiently loyal customer segment.
The biggest drop for the period 1–2/2026 noted:
1. SsangYong (Korea): -81,82 %
2. Mitsubishi (Japan): -77,27 %
3. Dongfeng (China): -50,00 %
4. Lexus (Japan): -41,61 %
5. Mini (UK): -40,00 %
This drop, which is higher than the EU27 average, is mainly due to the following factors:
● ongoing recession,
● consolidation measures,
● changes in VAT deduction,
● weaker financing capacity due to high indebtedness.
Historical lows and aging of the vehicle fleet
Purchases of new cars fell to new historic lows. Just look at the roads and see how many new vehicles are actually being added. This subsequently results in other effects: a high level of import of used vehicles, a higher share of older cars over 5 years old and a growing need for repairs and spare parts.
This pressure is likely to increase further due to the nature of the economy and the deepening consequences of government measures that have a direct impact on the economic slowdown.
I do not think that the situation will improve significantly in the coming months. The current delivered vehicles are largely still cars ordered in 2025, which are only being shipped gradually. A decrease in new orders is reported by practically all brands, and it is not only a problem for Slovakia, but for the entire European Union. The only difference is to what extent each country is affected.
The consumer will be more careful
In connection with the war in Iran, the caution of consumers when buying cars will grow even more, and the decline in demand may be even more significant. In periods of high uncertainty, the consumer is naturally worried and not interested in buying durable goods unless he can evaluate the risks of such a situation for his future.
In response to the rise in fuel prices, the Slovak government introduced capping fuel prices and consequently the restriction of their sale to foreign citizens, as fuel prices in the surrounding countries have risen by 15 to 17%. However, it is not clear how long the state will be able to maintain this model, because someone has to finance such a benefit. The annual volume of compensation can vary 250 to 550 million euros. If the conflict lasts longer, the state budget may not be able to handle this burden.
Inflation as another problem
A very important factor that will affect the Slovak and European economy in connection with the conflict will be future inflation. So far, economists’ statements are restrained, but given the possible duration of the conflict and its intensity, I believe that we can expect inflation at the level of more than 5% in the second half of 2026.
At the same time, this means the devaluation of savings, a drop in the standard of living and an increase in the cost of practically everything. Also for this reason, I consider the gradual reduction of dependence on car ownership and a greater shift to rental and subscription model of mobilitywhere part of these risks can be spread more effectively.
At the same time, higher inflation will increase the price of materials and labor, which will again be reflected in the purchase prices of cars in the medium term. We have already seen a similar development in years 2022 to 2023when car prices were growing significantly just under the pressure of inflation.
Conclusion
The coming period will not bring much positive news to the automotive industry. It is all the more important to know what may come and prepare for it in advance. The ability to correctly read developments and react in time will be decisive for companies, consumers and the entire mobility market.
The mentioned episode of the podcast about the automotive industry in the EU and Slovakia:
