The Middle East may account for less than 10% of total sales for most luxury car brands, but when it comes to profits, it is one of the most important regions in the world. Wealthy buyers in the Gulf are known for spending heavily on bespoke options and exclusive details that can push the price of a luxury car to double or even triple its original cost.
Now, that highly profitable market is under pressure because of the war with Iran, at a time when luxury carmakers are already dealing with slowing demand in several major markets around the world.
Before the conflict began, Rolls-Royce unveiled a unique Phantom model in February called Arabesque, created for a customer in Dubai. The one-off car featured a laser-engraved hood inspired by Arabian architecture, along with a matching wood-trimmed interior. A regular Rolls-Royce Phantom starts at around £430,000, or roughly $572,000, but the extra features requested by wealthy Gulf buyers can push the final price far beyond that.
Rolls-Royce, which is owned by BMW Group, had opened its second showroom in Dubai just one week before the war broke out. Soon after, American and Israeli strikes on Iran, followed by Iranian retaliation across the Gulf, created uncertainty throughout the region. Bentley CEO Frank-Steffen Walliser had previously described the Middle East as “the best market in the world” for luxury brands, but that quickly changed after the conflict began on February 28.
Sales Slow And Showrooms Shut Down
As tensions rose, several luxury car showrooms across the Gulf temporarily closed their doors. Ferrari and Maserati also paused deliveries during the month before resuming operations later. Rolls-Royce said it is closely monitoring the situation, but noted that it is still too early to understand the long-term effects because events are changing so quickly.
In Dubai, companies selling Ferraris, Bugattis, and other luxury cars also shut down during the first days of the war before reopening later. According to management, business activity dropped by around 30% after reopening. However, demand for cars priced above $1.4 million remains relatively stable, and sales outside the UAE are still performing well. Some customers are even paying up to €30,000 just to transport a $7 million car out of the country.
Luxury brands including Lamborghini, Bentley, Ferrari, Jaguar Land Rover, and Porsche are all watching the situation closely and hoping the conflict ends quickly, especially since these companies are already facing major problems in other markets. Volkswagen Group CEO Oliver Blume said the Middle East delivers extremely high profit margins, but admitted that the war will clearly affect this crucial region.
Bespoke Orders Are Drying Up
According to Ferrari, the Middle East represented 4.6% of its total sales last year, which is higher than its sales in China. That figure was up from 3.5% in 2024. One of the reasons the Gulf market is so valuable is the popularity of limited-edition cars and highly customized models featuring luxury wood finishes, mother-of-pearl details, and even gold-leaf accents.
For example, Jaguar Land Rover sold 20 special Range Rover Sport SV Sadaf Edition models in 2024 at around £330,000 each, nearly three times the vehicle’s starting price in the UK. Former Aston Martin CEO Andy Palmer said one of the first things luxury brands would do was offer highly profitable bespoke editions to wealthy collectors in the Middle East because demand was always there.
But that business has now almost come to a complete stop. Industry executives say buyers in the region are focused on much bigger concerns than ordering a new Bentley or customizing a luxury car.
A Global Problem For Luxury Brands
The challenges facing luxury carmakers go beyond the Middle East. Sales in the United States have slowed because of tariffs, China’s luxury market has weakened sharply, and Russia has been out of the picture since the war in Ukraine began. All of this is leaving premium brands with fewer places to grow, and some companies are even starting to consider cutting production if the current crisis continues.
Bentley saw its sales fall by 5% last year, but the company’s finance chief said there is still no immediate need to reduce production. At the same time, he admitted that if the crisis lasts several more weeks, the company may have to rethink its plans.
Lamborghini CEO Stephan Winkelmann said the brand has faced one challenge after another since the COVID-19 pandemic. According to him, there is no new market left that can make up for weaker sales elsewhere. Russia is gone, China has slowed dramatically, tariffs are hurting the US market, and now the Middle East is also facing a major slowdown.
Former Aston Martin CEO Andy Palmer summed it up best when he described the current situation as a disaster for luxury car brands, saying he has never seen anything like it in his career.
