Middle East Conflict Continues to Hit Japanese Auto Industry, Causing Raw Material Shortages, Rising Costs, and Export Disruptions

More than a month since the outbreak of hostilities in the Middle East, the impact on Japan's automotive industry continues to widen. Imports of petroleum products such as naphtha have been disrupted, with March import volumes dropping by approximately 30% compared to February. As a key petrochemical feedstock, tight naphtha supplies have led to shortages of raw materials like ethylene used in plastic components, while prices for butadiene and synthetic rubber—essential for tire production—have surged sharply. Rising costs for parts and tires have driven up overall vehicle manufacturing expenses, squeezing automakers' profit margins. Additionally, the Middle East is a significant export market for Japanese carmakers; however, shipping disruptions have caused delays in vehicle deliveries to the region or order cancellations, prompting several automakers to cut production or halt output of models destined for Middle Eastern markets.