How Russia's invasion of Ukraine is affecting automotive industry

    Chip shortage aside, the war in Ukraine has affected carmakers' production and deliveries.

    Published On Mar 11, 2022 11:55:00 AM

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    How Russia's invasion of Ukraine is affecting automotive industry
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    The automotive industry has started to take action following Russia’s invasion of Ukraine. Several carmakers have halted deliveries to Russia, while others have paused production due to a lack of parts from Ukraine-based suppliers. Manufacturers affected so far include Group Renault, Stellantis and the Volkswagen Group.

    • Several carmakers have halted delivery of cars in Russia
    • Carmakers have also paused manufacturing in Ukraine

    Many have severed ties with Russian partners, despite the country being the eighth-largest automotive market in the world. Some 16,66,780 cars were sold in the country last year – more than in Canada, France, or the UK.

    Further issues from hindered supply chains are expected in the coming weeks. Meanwhile, companies have committed to supporting Ukrainian workers affected by the war.

    Here's what we know so far on how the outbreak of war is affecting individual manufacturers.

    General Motors

    General Motors has suspended some business, Reuters has reported. The American firm will stop all exports to the country and said, "Our thoughts are with the people of Ukraine at this time. The loss of life is a tragedy, and our overriding concern is for the safety of people in the region." The company sells around 3,000 vehicles in Russia each year.

    General Motors' partner and Russian carmaker Lada is also facing issues and has halted production four days in a week following trade and financial sanctions.

    Hyundai

    Hyundai has stopped production at its St Petersburg plant in Russia for five days, citing a semiconductor shortage. “The plant will be shut down temporarily, due to supply disruption caused by a semiconductor shortage,“ an official said. However, the Korean firm went on to say that the decision had “nothing to do with Russia and Ukraine”.

    Within days of this announcement, the latest update is that Hyundai and Kia have also decided to stop operations in the country.

    Jaguar Land Rover

    Jaguar Land Rover (JLR) has halted deliveries of Russia-bound vehicles. The British firm has said its priority is "the well-being of our entire workforce and their families, as well as those within our extended network.”

    "The current global context also presents us with trading challenges, so we're pausing the delivery of vehicles into the Russian market and continually monitoring the situation on behalf of our global customer base," it said in a statement. 

    The BBC has reported that sanctions imposed by the UK, EU and US are making it more difficult to sell cars in the country. 

    Mercedes-Benz

    Mercedes-Benz has announced that it will donate €1 million (around Rs 8.4 crore) to the Red Cross to support those affected by the crisis in Ukraine.

    Mitsubishi

    Mitsubishi has said that it might suspend production and sales of vehicles to Russia, due to potential supply disruptions, according to Reuters. The Japanese company has 141 dealerships in the country.

    Renault

    Renault shares dropped 6.4 percent on Monday, as a result of Western sanctions placed on Russia. The French firm owns Russian manufacturer Avtovaz, which has suspended assembly lines for a day at its facility in Russia, due to parts shortages. 

    Renault had previously closed its factory in Moscow – which produces models including the Arkana and Captur – because of supply problems, before reopening it. However, they have now shut their plant again. The French automaker also said that it would be assessing available options with its 67.61 percent majority stake in Lada Auto Holding, which owns Russia’s largest vehicle manufacturer AutoVAZ.

    Torsus

    Extreme truck manufacturer Torsus has spoken out against the invasion of Ukraine, where it has facilities and offices. 

    “We receive multiple calls and messages from all over the world asking how our Torsus Kyiv team is doing in these horrible days and if any support is needed,” it said in a social media post. “We're in constant contact with our Kyiv team. Our employees and their families are safe. We strongly recommend them to use all cautions as recommended by the Ukrainian government. Please do not leave bomb shelters until it is safe.”

    Stellantis

    Stellantis CEO Carlos Tavares has said that any decision on how the firm will alter its operations in Russia "depends very much on what the politicians are going to decide".

    Last week, Stellantis set up a task force to monitor its 71 Ukrainian employees. It now has another specifically to "translate these sanctions, that are decided by the hour, into business decisions".

    On the sanctions the West has imposed on Russia, Tavares said, "So far, those sanctions are very targeted, but of course, there will be a point in time when the plants are unable to run. We have one in partnership with Mitsubishi in Kaluga, and as long as they have parts, they can operate; if there are no parts, they can't operate."

    The Russian plant manufactures light commercial vehicles from Citroen, Opel and Peugeot, and Stellantis had been poised to begin exporting these to Western Europe.

    Toyota

    Toyota has lost 13,000 cars' worth of output following a cyber attack that targeted one of its suppliers of plastic and electrical components, Reuters has reported. While Toyota hasn't directly blamed Russia for the attack, it occurred shortly after Japan announced that it would join Western allies in sanctioning the invading country, including by blocking Russian banks from accessing the Swift system. 

    Volkswagen

    The Volkswagen Group will donate €1 million (around Rs 8.4 crore) to refugee charity Unoflucht. 

    “The Volkswagen Group views the Russian attack on Ukraine with great concern and dismay," it said, adding that it hopes for a “quick cessation” of hostilities. “We're convinced that a sustainable solution to the conflict can only take place on the basis of international law. Our thoughts are with all people on site. The safety and integrity of everybody, including our employees, is top priority.” 

    Volkswagen has paused deliveries of cars to local dealerships in Russia, due to supply chain issues exacerbated by Russia's invasion of Ukraine, the Russian RIA news agency has reported.

    Production will be halted for “several days” this week at two factories in Volkswagen’s home country of Germany, because required parts haven't been made in Ukraine. 

    Skoda

    The Czech firm, which has around 600 employees in the country and produces vehicles there in Solomonovo, will donate around €4,00,000 (around Rs 3.3 crore) to the charity People in Need. 

    It has also stated it will support any Ukrainian workers to “build a safe life in the Czech Republic”, assisting with visa applications, accommodation, language courses, employment and education. 

    Skoda is also having to reduce production, due to supply shortages caused by the invasion. Skoda’s supply chain consists of several suppliers based in western Ukraine. It also has two factories in Russia, which are still running. Further disruption is expected.

    "The sales strategy in Russia and Ukraine is currently the subject of intensive discussions. Sales in both Ukraine and Russia can be expected to fall in view of recent developments,” the firm said. 

    Russia was Skoda’s second-biggest market in 2021, taking delivery of around 90,000 vehicles. 

    Volvo

    Volvo became the first automotive brand to take action in the midst of Russia’s invasion of Ukraine, suspending car shipments to the country until further notice.

    Volvo said it made the decision because of "potential risks associated with trading material with Russia, including the sanctions imposed by the EU and US,” according to Reuters.

    The Swedish firm sold around 9,000 cars in Russia in 2021, which came into the country from factories in Sweden, China and the US.

    BMW

    German luxury car maker, BMW said that it had stopped exports of vehicles to Russia and would cease assembly of vehicles with a partner in Kaliningrad. BMW also said that supply-chain disruptions, such as the closure of some supplier plants in Ukraine, would hit production at some factories.

    Porsche

    German sportscar maker Porsche has also announced that it is temporarily halting production and delivery of cars to Russia with immediate effect. It said that due to the current scenario, business activities are facing major interruptions.

    Lamborghini

    Italian supercar maker Lamborghini, which is under the Volkswagen group, has stated that it is putting its business in Russia on hold. It added that it would be making a donation to the UNHCR in support of humanitarian aid in Ukraine.

    Ferrari

    Adding to this list is another Italian supercar maker Ferrari, which, like Lamborghini, has stated that it would put its business in Russia on hold. The carmaker has also pledged a donation of one million Euros (about Rs 8.4 crore) to support Ukrainians in need.

    Suzuki

    Suzuki's Hungarian arm has also announced that it has stopped exporting cars to Russia due to the current situation in Ukraine.

    Tesla

    Tesla has said that it will support employees who are conscripted into the Ukrainian military forces with at least three months pay. The US-based EV manufacturer will assess the impact of Russia’s invasion of its neighbouring country in three months.
     
    Tesla has also said that drivers of other EVs can charge for free at some of their superchargers in Hungary, Poland and Slovakia. Although Tesla does not technically operate in Ukraine, the firm claims there are around 5,000 Tesla owners in the country.

    After various countries and carmakers-imposed sanctions on Russia, the Putin-led government has now banned export of over 200 items – until the end of this year – including medical equipment, vehicles, agricultural equipment and more.

    What are your thoughts on the Ukraine crisis? Let us know in the comments below.

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