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How will the Russian invasion of Ukraine affect the global car industry?

Though the significance of material setbacks pales in comparison with the human cost of the conflict, the automotive sector is beginning to experience global side effects of the ongoing Russian invasion of Ukraine.

Several carmakers have paused production at factories in Russia, reports the Wall Street Journal. Volkswagen has suspended two Russian factories and halted the export of Volkswagen, Audi, Skoda, Porsche and Bentley products to the country.

Toyota, Ford, BMW, Hyundai and Renault have also reportedly stopped production at their Russian facilities.

Skoda has reportedly closed its factory in Ukraine that produces the Fabia, Superb, Karoq and Kodiaq according to Automotive Logistics.

These effects are not limited to Ukraine and Russia. Production of the Enyaq iV electric car in Czech Republic has reportedly been affected by a parts shortage caused by the closure of factories in Ukriane and Volkswagen has paused production in some of its German facilities due to supply restrictions of certain components.

As reported by Automotive News Europe, the German firm has stopped production this week at factories in Dresden and Zwickau citing delivery issues with electrical cables produced in Ukraine. This currently affects the production of VW ID3, ID4 and Cupra Born electric cars.

Ukrainian firm Leonio AG produces these systems for several European car manufacturers. The closure of its two factories in Ukraine could result in further delays for additional carmakers.

CNBC reports that Mercedes and Audi have also suspended production of certain cars due to a shortage of similar wiring components. Meanwhile, in the UK, MINI production at the firm’s Oxford factory has stopped due to reported component shortages.

According to the BBC, Jaguar and Land Rover have paused the delivery of new cars to Russia as a result of sanctions imposed on the country by the UK, EU and the US. The broadcaster also reports Volvo will stop delivering cars to Russia until further notice.

The Korea Herald reports that Hyundai will temporarily close a factory in St Petersburg, Russia, from March 1-5. This is reportedly a result of the ongoing microchip shortage, not Russia’s invasion of Ukraine.

However, the two issues may not be completely unconnected. Some microchip producers rely on a supply of neon gas and palladium from Russia and Ukraine reports CNBC; the supply of which could be affected by the ongoing invasion.

Meanwhile, Stellantis (the parent brand of Fiat, Chrysler, Peugeot, Citroen and DS) has reportedly established two task forces to deal with the effects of the invasion.

One is said to be monitoring sanctions imposed by Western countries on Russia, with the other keeping tabs on the firm’s Ukraine-based staff — all of which are said to be safe as of its latest update.

As the conflict continues and further sanctions against Russia are imposed, it’s likely the automotive sector will see further impacts.


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