The invasion of Ukraine by Russia is having a deep impact on the automobile supply chain, around the world; especially in Europe as many companies have halted or suspended activities in Russia as a result of the attack and the sanctions from the West.
Russian automobile sales have dropped drastically as the Ruble was battered by the sanctions imposed in response to the invasion of Ukraine, and major global automakers joined a boycott of the nation, leaving buyers with empty showrooms.
Last month, new car sales plunged 63% year over year, the steepest drop since the nationwide Covid-19 lockout in April 2020.
Renault, the French automaker that holds a massive share in the Russian market posted a drop in revenue in the first quarter by more than 17% in comparison to the same period last year. The ongoing shortage of semiconductors is also not helping in this situation either.
Mitsubishi Motors, one of the biggest brands in the world, has stopped its production at its Kaluga plant in Russia. Aside from that, the automaker has also stopped exporting vehicles and supplying parts.
The Kaluga assembly line is also one of the Stellantis' (a leading global automaker) major production facilities in Russia. Stellantis mainly produced and assembled mid-sized commercial vans in Kaluga.
However, Mitsubishi says the main reason for the suspension of Russian operations is logistical challenges.
The Japanese manufacturer did not provide any additional information about the plant's temporary closure. The closed plant used to manufacture the Pajero Sport midsize SUV for the Russian market.
The invasion is also causing ripple effects in neighbouring countries, one such example is the German origin BMW and Volkswagen have both been compelled to shut down plants across Europe as low-cost parts that were previously imported from Ukrainian plants are now shut.
Due to the crisis in Ukraine, Porsche is also experiencing manufacturing challenges due to a scarcity of these similar parts. The automaker is currently being compelled to reduce production at its facilities in Zuffenhausen and Leipzig, Germany.
Ukraine accounts for about a fifth of Europe’s supply of wiring harnesses, which also come from other parts of Eastern Europe as well as North Africa but unlike other parts that may be mass-produced, harnesses are tailor-made for each model. Each car model has its own system, which is millimetre-perfected to allow manufacturers to cram cables around the vehicle.
However, thankfully the Asian markets are not likely to be hit by the supply chain disruptions as most major car manufacturers have separate production facilities in various regions in the continent, so the dependency on Russian or Ukrainian parts is relatively low.
Though many automobile journalists around the world assume this crisis could change the game for the automobile giants as we know them today, they might largely be affected by losing competitiveness to the up and coming Korean, Chinese and Vietnamese manufacturers.
European cars are likely to become costlier to make largely due to the shortage of key components and the war that includes one of Europe’s biggest automobile markets.
