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The war in Ukraine could destroy the European car industry: the most important decisions

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The crisis in Ukraine has disrupted some car assembly plants and forced companies to suspend deliveries to Russia.

Russia’s invasion of Ukraine is causing waves in the car supply chain. The attack also prompted companies to stop shipments to Russia or suspend operations there.

Here are some of the effects on the automotive industry:

European production is faltering

German carmakers warn of several production losses

The German carmakers’ association VDA has said that the repercussions of Russia’s invasion of Ukraine have disrupted transport routes, as well as financial transactions, and that it is preparing for the lack of a range of raw materials. He said the impact of the conflict on maritime, rail and air transport exacerbated supply chain problems at a time when stock levels were already low.

The Volkswagen Group is deeply affected by the war between Russia and Ukraine

Volkswagen has anticipated a production shutdown at its Wolfsburg plant as the supply situation with key parts, such as wire harnesses, worsens. Porsche, Audi, BMW and Mercedes-Benz are also reducing production in Germany.

Audi will reduce German production due to the crisis in Ukraine. Production of the A4 and A5 models at the Audi plant in Ingolstadt, Germany, will be suspended from March 7-11. In Neckarsulm, production of the A6 and A7 models will be discontinued on March 7-18.

Porsche is halting production at its Leipzig plant, which builds Macan and Panamera, as the conflict in Ukraine disrupts its supply chain.

The Volkswagen Group joined the exodus of Russian companies, suspending exports and local production in the country in response to its invasion of Ukraine. The move affects the production of VW and Skoda models.

Volkswagen will stop production this week at two German electric vehicle factories after Russia’s invasion of Ukraine hit component deliveries. Production of VW, Audi and Cupra battery-powered compact electric cars built on the VW Group’s MEB platform will be affected.

Mercedes and BMW have to stop production

Mercedes-Benz expects to reduce production at some of its European plants, but will aim to avoid complete production shutdowns.

BMW is discontinuing production at its factories in Germany and the United Kingdom due to supply outages.

Stellantis is preparing for a difficult year

Stellantis CEO Carlos Tavares has called on US and European officials to cut steel protection tariffs as commodity and energy prices rise.

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Moreover, Stellantis set up two task forces to deal with the effects of the Russian invasion of Ukraine. One is to monitor the sanctions imposed on Russia by the United States and its Western allies. The other is following the staff of the Ukrainian carmaker.

Jaguar, Aston Martin stop Russian deliveries

British carmakers Jaguar Land Rover and Aston Martin have cut off supplies to Russia as sanctions over the war in Ukraine have created growing trade barriers for the car industry.

Volvo, GM, VW, Daimler Truck suspend deliveries to Russia

Volvo has said it will suspend deliveries of cars to the Russian market until further notice, while Volkswagen has temporarily suspended deliveries to local car dealerships already in Russia. Daimler Truck also said it would freeze its commercial activities in Russia with immediate effect, including cooperation with Russian truck manufacturer Kamaz.

Renault’s actions are shattered by concerns about the carmaker’s exposure to Russia

Renault is the most exposed European carmaker in Russia, with the company’s shares falling to its lowest level since November 2020, as countries around the world escalate measures to penalize President Vladimir Putin for invading Ukraine.

The company’s shares fell 11% on trading in Paris on Tuesday, lowering its market valuation to less than 7.5 billion euros for the first time in almost 16 months. Shares have fallen 37 percent since February 16.

Russia is Renault’s second largest market, with the carmaker generating about 5 billion euros a year, about 12% of its car revenue, according to Bloomberg Intelligence.

Car production in Europe is collapsing due to a lack of materials

Automakers, including Volkswagen, BMW and Porsche, are struggling to get crucial wiring, as suppliers in western Ukraine have been blocked by Russia’s Russian invasion, forcing production to stop at German car factories.

Delivery jams have already hit some Volkswagen assembly plants, including its Wolfsburg plant and its German electric vehicle factories, while Porsche has suspended production at its Leipzig plant.

BMW is forced to stop production of BMW and Mini cars in its German and other European factories.

The key supplier, Leoni, has formed a task force to address the disruption of supply of wire harnesses produced in Ukraine, which has led German carmakers to reduce or stop production.

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Russia’s invasion of Ukraine raises the price of used metals, from aluminum in the body to palladium in catalytic converters and high-quality nickel in batteries for electric vehicles.

Automotive technology provider Aptiv has moved production of high-volume vehicle parts from Ukraine in the past two months ahead of possible hostilities, said CEO Kevin Clark.

Chinese carmakers could benefit as rivals leave Russia

Chinese carmakers operating in Russia, including Haval, Chery and Geely in the Great Wall, have the potential to gain market share, analysts say.

They could benefit Russia after global brands stopped exporting to the country and stopped production at their Russian factories amid the crisis in Ukraine. The Chinese operating in Russia have so far remained silent if they will continue to do business in the country. Russia has become a major market for Chinese brands, including Great Wall Haval, along with Chery and Geely, mainly for SUV sales.

“If US and European Union sanctions against Russia remain in place for an extended period of time and US and European carmakers are effectively banned from doing business in Russia, there is potential for Chinese carmakers to gain market share in Russia. Said Eunice Lee, a senior analyst who focuses on Asian cars at Bernstein Bank.

China has not yet imposed sanctions on Russia, allowing its business to continue operating.

Toyota, Nissan, Hyundai and Honda cease operations in Russia

Toyota will stop production at its plant in Russia, while imports of vehicles into the country have also been suspended indefinitely due to supply chain disruptions. Toyota is the best-selling Japanese brand in Russia.

Nissan has suspended vehicle exports to Russia in light of the logistical challenges of the conflict in Ukraine. Meanwhile, Russia’s largest carmaker AvtoVAZ will shut down its factories in Togliatti and Izhevsk on Saturday, March 9-11, as it faces a crisis in the supply of electronic components.

Honda Motor Co. stops exports of cars and motorcycles to Russia, joining a growing number of global companies that choose not to do business in the country after its invasion of Ukraine.

Hyundai said it had not decided when it would resume operations at its plant in St. Petersburg, Russia, citing ongoing problems with component delivery.

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