Luxury carmakers' profits in UAE, Gulf threatened by Iran war

Where Diplomacy Meets News

Luxury carmakers’ profits in UAE, Gulf threatened by Iran war

March 30, 2026

DUBAI,— A custom Rolls-Royce Phantom with detailed laser engraving on its hood and a wood-finished interior inspired by Arabian design was presented earlier this year for a Dubai client, highlighting the level of personalization offered to wealthy buyers in the Gulf before the Iran war began.

The Middle East represents a relatively small share of global sales for most luxury automakers, generally under 10 percent by volume.

However, industry executives say the region delivers a much higher share of profits due to demand for customized vehicles and premium features.

The base price of a Rolls-Royce Phantom stands at about 430,000 pounds, or roughly $572,416. Prices can rise significantly when customers request bespoke additions, Reuters reported.

In some cases, the final cost may be two or three times higher than the starting price, driven by exclusive materials and design elements tailored to individual buyers.

Rolls-Royce Motor Cars, owned by BMW, introduced the one-off Phantom Arabesque shortly after opening its second showroom in Dubai.

The launch took place just days before U.S. and Israeli strikes on Iran and Iran’s response across the Gulf, which disrupted business activity in the region.

Bentley CEO Frank-Steffen Walliser described the Middle East earlier this month as the strongest market globally for luxury vehicles. Still, the outbreak of war has forced many dealerships in Gulf countries to temporarily close their doors starting February 28.

Ferrari and Maserati, part of Stellantis, suspended deliveries during the conflict, although both companies later confirmed that showrooms have resumed operations.

Rolls-Royce said in an emailed statement that it is closely watching developments in the region and declined to predict long-term effects due to ongoing uncertainty.

F1rst Motors, a Dubai-based dealership offering high-end brands, also halted operations briefly after the fighting began. The showroom, known for selling Ferraris and Bugattis, offers vehicles priced from around $250,000 up to $14 million.

Director Chris Bull said the business has seen a drop of about 30 percent since reopening.

He noted that while foot traffic has declined, demand for vehicles priced above $1.4 million has remained stable. Sales outside the United Arab Emirates continue to perform well.

Bull said some customers are willing to pay as much as 30,000 euros to transport vehicles valued at around $7 million out of the country.

He added that despite reduced showroom visits, overall business levels remain manageable.

Luxury carmakers including Lamborghini, Bentley, Ferrari, Jaguar Land Rover and Porsche are monitoring the situation closely, with executives expressing concern about the impact of the conflict on a key profit center.

Volkswagen CEO Oliver Blume said the Middle East market delivers very high margins and acknowledged that the Iran war would likely affect business in the region.

Automakers rarely publish detailed profit margins by region, and some companies such as Bentley and Rolls-Royce no longer release global sales figures.

Ferrari reported that the Middle East accounted for 4.6 percent of its total sales last year, exceeding its sales in China and rising from 3.5 percent in 2024. A spokesperson said Ferrari’s regional sales remain stable for now.

Luxury car Yellow Lamborghini Aventador Dubai UAE racing car — A Yellow Lamborghini Aventador Dubai, UAE. Photo: Creative Commons/Ayrat/pexels

One defining feature of the market is demand for limited-edition vehicles. These often include high-end materials such as wood inlays, mother-of-pearl accents and gold finishes, allowing manufacturers to charge premium prices.

In 2024, Jaguar Land Rover sold 20 special edition Range Rover Sport SV vehicles known as the Sadaf edition. Each unit was priced at about 330,000 pounds, roughly three times the base price in Britain.

Former Aston Martin CEO Andy Palmer said that during his leadership, early offers of exclusive models were often directed at collectors in the Middle East.

He said interest from buyers in the region was typically strong without the need for extensive marketing.

Industry executives now say that demand for custom-built vehicles in the Middle East has slowed significantly. Walliser said customers in the region are currently focused on other concerns rather than purchasing new luxury cars.

At the same time, global challenges are adding pressure on automakers. Sales in the United States have been affected by tariff uncertainty, while demand in China and Europe has weakened.

Bentley reported a 5 percent decline in sales last year. Chief Financial Officer Axel Dewitz said the company does not yet plan to reduce production but noted that the situation could change if the current crisis continues.

Lamborghini CEO Stephan Winkelmann said the company has faced multiple challenges since the COVID-19 pandemic.

He said there are limited opportunities to expand into new markets to offset declining demand elsewhere.

He added that sales in Russia stopped after the 2022 invasion of Ukraine, the market in China has sharply declined, and tariffs have affected sales in the United States.

He said the Middle East is now also experiencing a slowdown.

Andy Palmer said the current situation is unlike anything he has seen before in the luxury car sector. He described the impact on premium manufacturers as severe.

(With files from Reuters)