Ukraine War Poses More Hurdles for Europe's Auto Sector

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Researched by Industrial Info Resources (Sugar Land, Texas)--The war in Ukraine will negatively affect the automotive industry in many respects. It is not yet possible to predict the full effects of Russian aggression. For now, it is known for certain that supply chains have been severely disrupted.

It can already be assumed that last year's problems with microprocessors are a piece of cake compared to what awaits car manufacturers soon.

Volkswagen AG halted production at its parent plant in Wolfsburg, Germany, as deliveries of key parts such as wiring harnesses from Ukraine collapsed. Audi AG (Ingolstadt, Bavaria), BMW (Munich, Germany), Mercedes-Benz (Stuttgart, Germany), Porsche AG (Stuttgart) and Skoda Auto a.s (Mlada Boleslav, Czech Republic) also are reducing production. Hyundai Motor Company (South Korea) has yet to decide when to resume production at its plant in Russia. Honda Motor Company, Ltd. (NYSE:HMC) (Minato, Japan) has suspended exports, Ford Motor Company (NYSE:F) has suspended operations, and Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) has suspended both the production and import of cars.

Groupe Renault (Boulogne-Billancourt, France) is the brand most heavily involved in Russia, and therefore the brand most painfully affected by the current situation. But everyone will suffer. However, the problems with the lack of electrical harnesses and financial blockades are not the end. In Russia and Ukraine, there are key raw materials necessary for the production of semiconductors.

In addition, Ukraine was the source of two-thirds of the world's production of neon, the gas necessary for the production of conductors and semiconductors. What is worse, Ukraine produced a significant part of this gas, but purified it, and imported the untreated gas from Russia. Not only does neon comes from Russia and Ukraine, but also aluminum, nickel, palladium and pig iron, which are necessary for the automotive industry.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on LinkedIn.