07/04/2026

BIZ & FINANCE TUESDAY | APR 7, 2026

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Luxury carmakers’ Gulf profits under threat o Many showrooms in region temporarily closed after outbreak of war

DUBAI: A laser-engraved hood inspired by Arabian architecture and a matching wood-trim interior are among the luxuries Rolls-Royce featured in a one-off Phantom Arabesque model commissioned by a Dubai customer it showcased in February before the Iran war. Now the Middle East market, which in volume terms accounts for less than 10% of sales at most luxury carmakers but punches far above its weight in profit, is under threat just as demand is weakening almost everywhere around the globe. A standard Rolls-Royce Phantom starts at about £430,000 (RM2.3 million), but the addition of bespoke features for wealthy Gulf buyers can push prices far above that – for some models bespoke additions can double or triple the price tag. Rolls-Royce Motor Cars, owned by Germany’s BMW, revealed the Arabesque just a week after opening its second Dubai showroom, before US-Israeli strikes on Iran followed by Iran’s strikes on the Gulf sent shockwaves across the region. “It’s the best market in the world,” Bentley CEO Frank-Steffen Walliser said earlier this month of the Middle East. But many luxury dealerships in the Gulf closed temporarily after war broke out on Feb 28. Ferrari and Stellantis unit Maserati paused deliveries this month, although both say showrooms have since reopened. In an emailed response to questions, Rolls-Royce said it was “closely monitoring” the situation in the Middle East. “Given the fluidity of the situation, it would be premature to speculate on longer-term impacts,” the automaker added. Meanwhile, F1rst Motors in Dubai, which sells all the top luxury car brands, shut its doors for the first few days after the war started, but has since reopened. Director Chris Bull said the showroom is best known for its selection of Ferraris and Bugattis and sells vehicles ranging from about US$250,000 all the way up to US$14 million. Bull said since F1rst Motors reopened, business is down about 30%, although sales of cars priced at more than US$1.4 million have stabilised and its sales outside the United Arab Emirates remain robust. “Obviously, there are fewer people walking in the front door ... But we’re still managing to maintain a good level of business,” Bull said, adding some buyers will pay up to €30,000 (RM139,000) to fly a US$7 million car out of the country. Brands including Lamborghini, like Bentley a unit of Volkswagen, Italy’s Ferrari, Tata Motors’ Jaguar Land Rover and Germany’s Porsche are watching nervously, hoping for a swift end to the conflict. “It’s very high margin,” Volkswagen CEO Oliver Blume said of Middle East sales in a media briefing earlier this month, adding of the Iran war: “We will see an impact there for sure”. Most luxury and premium automakers do not break out profit margins by region and some, including Bentley and Rolls-Royce, no longer publish global sales numbers. But Ferrari reported volumes in the Middle East made up 4.6% of overall sales last year, more than it sold in China and up from 3.5% in

Jaguar and Land Rover logos are displayed in front of their showroom in New Delhi. – REUTERSPIC

all but ground to a halt, industry executives said. “People in the Middle East have other thoughts than looking for a new Bentley at the moment,” Bentley CEO Walliser said. As their US sales have been hit by uncertainty over tariffs, demand in China and Europe has slumped, leaving high-end automakers with few remaining sources of growth and even contemplating the possibility of cutting production. Even before the Iran war, Bentley’s sales fell 5% last year, although the carmaker’s CFO Axel Dewitz told reporters this month the company does not yet see the need to cut production. “However, if the current crisis endures for a couple of weeks, I think we would need to

2024. The Italian sports car maker’s sales in the region are stable for now, a spokesperson said. A hallmark of the region is limited-edition runs that allow automakers to charge hefty premiums for special wood trims, mother-of pearl inlays or even gold leaf finishes. In 2024, for instance, JLR sold 20 “Sadaf” edition Range Rover Sport SV vehicles for about 330,000 pounds each - around three times the starting price in Britain. Former Aston Martin CEO Andy Palmer said that during his tenure the first calls would be to offer wealthy collectors in the Middle East high-margin special editions. “You almost didn’t need to ask,” Palmer told Reuters. Now this bespoke business in the region has

revisit the situation,” he said. Lamborghini CEO Stephan Winkelmann said this month it has faced many challenges since the Covid-19 pandemic, adding that “there is no new American market out there that we can tap into to boost our sales volumes”. Sales in Russia halted after Moscow’s invasion of Ukraine in 2022, the luxury market in China has “collapsed”, tariffs have hit Lamborghini’s most important market in the United States and now business is at a standstill in the Middle East, he said. For former Aston Martin CEO Palmer, the situation is like no other he can remember. “For a manufacturer of premium and luxury cars in particular, it’s an utter disaster.” – Reuters

Indonesia raises jet fuel surcharge, flight ticket prices as oil cost soars JAKARTA: Indonesia announced yesterday a 28-percentage point rise in the surcharge on jet fuel, and said it will allow airlines to raise the domestic ticket price, which the government caps, by up to 13%. impact of the price rise on travellers. “The amount of subsidy given by the government is around 1.3 trillion rupiah (RM306 million) per month,” the minister said. The measures would be reevaluated after two months, he added, depending on whether “the war in the Middle East continues”. For international flights, the price has nearly doubled. The government insisted yesterday it would not cut its subsidy on domestically-consumed gasoline and natural gas, however. Sadewa said at the same news conference yesterday. “I want to emphasise that the subsidised fuel price will not be raised until the end of the year. And my budget is adequate.”

Airlangga also announced the government would eliminate the import duty on aircraft spare parts in a bid to lower airline operational costs. Jakarta last month announced fuel rationing and mandated work from home for civil servants as it seeks to conserve energy stocks. Several Asian airlines have raised their fuel surcharges, and many worldwide have upped fares to reflect the increase in jet fuel prices. – AFP

The subsidy covers about 30% to 40% of the cost for consumers and consumes a large chunk of the annual budget in Southeast Asia’s most populous nation. Jakarta’s 2026 fuel subsidy calculation was premised on a global oil price of US$70 per barrel, and the government is legally required to keep the fiscal deficit at no more than 3% of GDP. “With savings here and there, we can ensure that the deficit will still be around 2.9%,“ Finance Minister Purbaya Yudhi

As global oil prices soar on the back of the Middle East war, Economy Minister Airlangga Hartarto told reporters the jet fuel surcharge would rise from 10% to 38%, and the base ticket price between 9% and 13%. Southeast Asia’s largest low-cost carrier AirAsia X said yesterday it, too, was raising ticket prices and cutting routes to cushion the impact of the war on Iran. In Jakarta, Airlangga said the government would bear the 11% value added tax on domestic flight tickets to offset the

Global crude prices have soared to more than US$100 per barrel since the US and Israel unleashed a series of strikes on Iran on Feb 28, sparking a region-wide conflict and the effective closure of the crucial Strait of Hormuz. At Jakarta’s Soekarno-Hatta International Airport, the price of jet fuel for domestic flights has increased more than 70% since March, according to the website of state oil company Pertamina.