The Middle East conflict is impacting Japan’s auto industry

Since the outbreak of the conflict in the Middle East more than a month ago, its impact on Japan’s auto industry has continued to expand. Not only has the disruption of imports of raw materials such as naphtha put pressure on auto parts production and led to price increases, but it has also forced reductions or halts in vehicle production.

According to statistics from market service firm Kepler, Japan’s imports of petroleum products such as naphtha in March decreased by approximately 30% compared to the previous month. As a crucial chemical raw material, the tight supply of naphtha has directly led to a shortage of raw materials for manufacturing plastic components such as ethylene, and the prices of butadiene and synthetic rubber, basic raw materials for tire production, have also risen sharply.

Tang Jin, chief researcher at the Business Solutions Department of Mizuho Bank and an expert on automotive issues, believes that the continued tension in the Middle East has a direct and profound impact on Japan’s auto industry. The tight supply of naphtha has led to price increases for many auto parts and tires, which will raise the cost of Japanese automakers, compress their profits, and weaken their competitiveness.

The Middle East is one of the most important markets for Japanese automakers. Due to the disruption of vehicle transportation, deliveries to the Middle East market have been impossible, putting pressure on Japanese automakers’ production plans. Several automakers have been forced to reduce or halt production of models destined for the Middle East market due to delivery delays and order cancellations.

According to Japanese sources, Toyota plans to cut production of vehicles destined for the Middle East by 24,000 units in April. Nissan will continue its production cuts implemented since March. Mazda recently confirmed that it will cease production of vehicles destined for the Middle East by the end of May. Subaru recently confirmed that its exports to the Middle East have stopped due to shipping disruptions in the Strait of Hormuz.