Auto Industries Cut Vehicle Production

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Courtesy of Simon Clancy (Flickr CC0)

Auto industries in Eastern Europe have cut production and sales for the next two years due to Russia’s invasion of Ukraine. The factory’s shutdown has pushed up the price of valuable raw materials.

Factories in Ukraine endeavored to keep going during the invasion, but employees reportedly had to leave work to escape rocket fire.

In March, S&P Global Mobility cut its international auto production by 2.6 million vehicles in both 2022 and 2023 because of the ongoing conflict, which totaled as many as four million lost vehicles. As a result, European automobile production will drop approximately 9% – around one million cars.

Some of this loss is due to failed car deals in Russia and Ukraine. However, these countries only comprised a small global automobile market, about 2% of the total in 2021.

The biggest concern is the parts, materials, and equipment shortage that will spread if the war continues.

Courtesy of Infinite Ache (Flickr CC0)

S&P Global rating credit analysts forecast that global auto sales will drop by 2% in 2022.

The report highlights the barriers to the disruption and supply of the critical automotive parts, wire harness, palladium, nickel, metals such as iron, and minerals that are essential materials used to make cars.

Volkswagen and BMW production were among the most impacted since Russia’s invasion of Ukraine.

Herbert Diess, the Volkswagen CEO, said the company’s 2022 outlook was put into question as they experienced parts problems. In response to the war-related supply chain disruptions, Diess stated that the company is moving some of its production out of Europe to China and North America.

BMW trimmed its automobile section’s 2022 yield forecast because of the unfolding consequence of the Ukraine situation.
Frank Weber, BMW’s chief technology officer, said that the company’s plants would be back to total production next week after suspending or decreasing production outcomes at some German factories after the aggression.

Weber confirmed that the company has worked with suppliers to replicate, not migrate, the harnessing production to keep the jobs in the country. Weber told reporters:

When you look at Ukraine, this wire harnessing industry gives work to maybe 20,000 people. We didn’t just want to take away the work there.

S&P projections between now and 2030 removed nearly 25 million units from automobile production.

Written by Janet Grace Ortigas
Edited by Cathy Milne-Ware


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CNBC: Russia’s invasion of Ukraine will lower car production by millions of units over two years, S&P says; by Michael Wayland

Featured and Top Image Courtesy of Simon Clancy’s Flickr Page – Creative Commons License
Inset Image Courtesy of Infinite Ache’s Flickr Page – Creative Commons License

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