MENA's Auto Slowdown. Who Is Still Buying Cars?

**Tim Elliott** (0:00)
This is the Morning Drive at Mira Business FM. We are halfway, more than halfway through 2026 The automotive sector in the MENA region is hitting a something of a speed bump.
After years of post-pandemic recovery, a new BMI research piece of research forecasts a 3.9% decline in vehicle sales across the region this year. But behind that headline number is a story of extreme divergence. While some markets are facing steep contractions, others are proving surprisingly resilient. Joining us is Anna-Marie Baisden, Head of Autos and Infrastructure Research at BMI. Joins us from London to unpack the numbers and look at what they mean for carmakers, dealers and consumers. Anna-Marie, it's good to be talking to you.

**Anna-Marie Baisden** (0:49)
Hi Tim, good to see you.

**Tim Elliott** (0:50)
Good to have you with us. Appreciate it. I know it's early with you. So the BMI, your latest forecast predicts a more cautious MENA vehicle sales outlook, 3.9% decline for the year. To set the stage here, is this a cyclical cooldown after a period of relatively intense growth, or are we seeing a fundamental shift in regional demand really because of the geopolitical climate?

**Anna-Marie Baisden** (1:21)
It's really because of the geopolitical climate. So just to give some context, heading into this year, we'd actually expected the region to be one of the best performers again. Continuing some of that growth, maybe not as strong as before, but still positive growth.
But when we decided to revise our forecasts was when we saw the conflict heading into a more extended period. You know, this kind of eight-week time frame had been floated by the US and by other sources. And you know, when it became clear that it was going to take longer than that to try and reach a deal, that's when we realized that we should revise our forecasts. And it's fair to say that, you know, the way things have escalated again in the last couple of days, and particularly the impact it's having on the trade through the straighter form moves, then there's even further down side to that forecast.

**Tim Elliott** (2:17)
So that's one element. But what other factors are driving weaker consumer demand across the region?

**Anna-Marie Baisden** (2:26)
So it's kind of a perfect storm of a few things.
We're looking at consumer sentiment. You know, when you've got a situation like you have with the conflict at the moment that really makes consumers think about their priorities.
You've got the inflationary impact. You know, we've seen all prices peaking this year, going back up again now that strikes have started again. That will raise petrol and diesel costs. So you're then thinking about your running costs. But it also has a broader inflationary impact. So prices of everything start to rise. And then when you're making financial decisions, very often a new car can be, you know, the last thing on your mind. And then there's the supply side as well. You know, the shipping lanes being disrupted. So there's also an impact on the inventory that's available for consumers.

**Tim Elliott** (3:18)
The report has a, it highlights a pretty striking divide. North African markets proving to be resilient, support for growth.
Iran, Lebanon facing double digit contractions. So what's the primary differentiator here? Is it, you know, local economic health? Is it the impact of the trade disruptions that hits, you know, these markets kind of unevenly?

**Anna-Marie Baisden** (3:46)
Yeah, and certainly, you know, the proximity to the conflict and being directly impacted makes a big difference as well.
You know, going back to that consumer sentiment, if you are more directly impacted by the conflict, then you're not going to be thinking about the higher value purchases. But also the economy is getting hit harder. That inflationary impact is a lot higher. And that's why we're seeing bigger declines in Lebanon, which I should say, you know, the Lebanese auto market's been struggling for a few years anyway. So this has really exacerbated the situation.
But then when you contrast that with North Africa, they're more removed both from the conflict and from the shipping disruptions. You know, they've got different transport routes, more connected to Europe as well, which helps in terms of getting goods in and out. And also if you're a market like Egypt or Morocco, there's a level of local production as well, which helps you not as reliant on imports. And they're seeing investment into the supply chain as well. So that also helps in terms of having, you know, more support for local production and for the inventories.

**Tim Elliott** (4:58)
We track, obviously, the situation in the Strait of Form moves reasonably closely on this program. Your research mentions that shipping conditions are expected to improve gradually through Q3, 2026 So does that mean that the worst of this kind of inventory winter is behind us? Or are the frictions in the supply chains that we've seen just part of the cost of doing business now? Or is that just accepted?