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The war in Ukraine, a painful blow to the European car industry: how it affects us

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The German operations of VW, Mercedes and BMW were among the factories hardest hit in Europe by the war in Ukraine.

According to an estimate by LMC Automotive, German carmakers lost about 150,000 vehicles from their production plans in March due to a shortage of supplies due to the war in Ukraine.

The German operations of Volkswagen, Mercedes-Benz and BMW were among the most affected by the war, which sent shockwaves through the European supply chain.

German carmakers are more affected than others largely because of the country’s proximity to Ukraine and its dependence on cable, cable and other components, said Jeff Schuster, global president for vehicle forecasting at LMC.

Some Ukrainian suppliers managed to continue operating during the war, but Russia’s invasion of the country left many carmakers without access to the components they needed.

“The good news is that some vendors are still up and running, and some have restarted,” Schuster said. “It simply came to our notice then. But in general, the proximity is what really left the German operations exposed. “

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The VW Group in particular was affected by supply chain disruptions. LMC estimates that five VW plants lost more than 10,000 units of their planned production in March, and three of them had to cut more than 20,000 vehicles.

The problems continue

Schuster warns that forecasts are difficult amid war uncertainties, but the LMC anticipates that German carmakers will see April production levels better than in March.

Automakers such as VW have been quick to find new sources for parts that have been discontinued in Ukraine. These pieces are starting to come from other Eastern European countries, including Romania and Hungary, or from outside Europe as a whole.

“It all takes a little time, but one of the things I find remarkable about the industry is how resilient it is and how fast it adapts,” Schuster said. “We would expect a smaller impact in April, if all goes well, without any problems.

“If there is a kind of treaty or resolution, it would certainly be a better situation.”
developments

Here are some of the developments from last week’s industry that stem from the war:

  • Supply outages and a lack of wiring have forced Volkswagen to postpone the launch of its ID5 electric vehicle for a month until May 6, according to the carmaker. ID5 is built at a factory in Zwickau, Germany.
  • It seems that Renault is considering the transfer of ownership of its majority Russian company AvtoVAZ to a local investor as a way to leave Russia. A transfer would help the carmaker release legal responsibilities to AvtoVAZ, Bloomberg reported, citing people familiar with the matter.
  • Mercedes-Benz has been forced to cut production at its plant in Sindelfingen, Germany, due to war-related supply challenges, although it continues to operate. The factory produces the brand’s E-Class, S-Class and EQS models.
  • Porsche reduced sales at factories in Zuffenhausen and Leipzig, Germany, due to a lack of parts. The plants were at a low level last week, a Porsche spokesman said.
  • Greenway, Poland’s largest provider of electric vehicle infrastructure, offers free parking to Ukrainian refugees fleeing the country. Poland and Ukraine share about 852 kilometers of border in eastern Poland and western Ukraine.
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