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Russia-Ukraine War: How will it affect the auto industry?

Russia’s invasion of Ukraine is another tough test for the economy. The car industry is not spared either, many manufacturers operate plants in both countries and are dependent on local suppliers. What impact is the war having on automakers?

The world does not come to rest. Russia attacks Ukraine, throwing the economy into new chaos. The sanctions against Russia also affect some automakers that operate plants there.

But not only production could become problematic, above all, but there are also signs of an increase in energy and fuel prices, which will affect us all. We have compiled all the latest information on the effects of the war on the auto industry.

  • Supply chain disruption is possible
  • Rising production costs feared
  • An increase in fuel and energy prices expected
  • Production stop of e-cars in two VW plants

production and supply problems

For the automotive industry, Russia is currently less interesting as a sales market. However, until recently, the Russian market was considered to be the market of the future – that has now come to an end. Russia will probably not be relevant as a sales market or as a production location for many years to come.

At the moment, however, many companies still have production sites in RussiaSupply chains are now at risk due to sanctions against the country.

Many auto parts suppliers in Ukraine

The German manufacturers are less affected, BMW and Mercedes-Benz cannot yet fully assess the effects. However, Volkswagen has now announced that the production of electric cars at the Zwickau and Dresden plants will have to be stopped for a few days. The reason: missing parts for cable harnesses that should come from Ukraine.

This renewed delay will certainly not be an advantage for the electric car delivery times, which have already increased enormously due to the Corona crisis.

Overall, the German automotive industry maintains relationships with around 49 suppliers or production facilities in Russia and Ukraine. For safety reasons, the machines in the Ukrainian production cities are idle and all employees have been sent home.

Many medium-sized suppliers for the automotive industry are based there.

Delivery bottlenecks expected

Things will be tight, especially for Russia’s largest carmaker Avtovaz, which belongs to the Renault group. The economic sanctions against Russia also affect the supply of electronic chips for car production. Avtovaz makes 90 percent of its sales in Russia, and around 6 percent of Renault‘s total sales come from Avtovaz.

Rising fuel and energy prices

Even if neither Russia nor Ukraine is a strong sales market for German and European car manufacturers, this war will still leave its mark on us. The energy needed to produce cars and that needed to run vehicles – whether petrol, diesel, or electricity – could become noticeably more expensive as a result of the conflict.

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