AutoTechInsight
Rapid Response 2026: Updated forecast assumptions amidst the Iran war (Issue 6)
S&P Global Mobility’s sixth Rapid Response of 2026 addresses our upcoming June 2026 light-vehicle sales forecast assumptions. Changes reflect dramatic headwinds in mainland China domestic market demand, indications that China exports may be lifting demand in some markets, adjustment to expectations of impact of the Iran war and a look at potential outcomes to the United States Mexico Canada Agreement (USMCA) talks. At time of writing, the June 2026 light-vehicle production forecast is in development, though directionality is discussed.
S&P Global Mobility’s sixth Rapid Response of 2026 addresses our upcoming June 2026 light-vehicle sales forecast assumptions. Changes reflect dramatic headwinds in mainland China domestic market demand, indications that China exports may be lifting demand in some markets, adjustment to expectations of impact of the Iran war and a look at potential outcomes to the United States Mexico Canada Agreement (USMCA) talks.
Mainland China: Local demand falls, exports may be improving TIV The S&P Global Mobility June 2026 forecast reflects re-assessment of the headwinds slowing China’s domestic market, along with the other factors. Sales have been weak since November 2025, which had been expected. However, the slump has been significantly larger and more prolonged than anticipated. Our June 2026 forecast reflects an expected 7% yoy 2026 sales drop to 25.38M units. The June 2026 round lowers China’s 2026 sales forecast by 1.2M units, compared with the April 2026 forecast.
Iran war keeps oil prices high and creates affordability issues as well as direct market impacts: We see combined direct Middle East sales impact and additional affordability issues from Iran war reducing the June 2026 forecast for 2026 by about 700,000 (vs April 2026 forecast) and about 1.1 million units for 2027. Of that, the direct impact of lost sales in the Middle East market sees sales in that region lowered by about 194,000 units in 2026 and 160,000 units in 2027. Additional affordability pressures have caused a reduction in the global sales forecast of 511,000 in 2026 and 940,000 units in 2027, compared with our April 2026 forecast.
United States Mexico Canada Agreement (USMCA) continues progress: We continue to see potential for several new elements to be added to the USMCA. Among them could be implementation of US tariffs on USMCA-compliant vehicles of 10% (the 25% on non-compliant vehicles presumably remains); addition of a US Value Add (USVA) for Canada- and Mexico-built vehicles bound for the US as high as 50% of value, though the key will be how this is defined and calculated. The treatment of capital and currency exchange rates may be addressed to ensure compensation for imbalances.
