German Automakers Bearing Brunt of Putin’s War on Ukraine

“The war in Ukraine has led to plant closures across Germany and a likely loss of around 150k units in March alone,” James Norris, Senior Analyst, European Light Vehicle Production at the respected LMC Automotive consultancy said today.

By the beginning of March this year, following Russia’s invasion of Ukraine, almost all automotive production in the two warring countries had come to a complete standstill. The problem for German automakers is that are dependent on Eastern European suppliers, including Ukraine.  

Morris said, “In normal times, Russia is the third-largest European Light Vehicle producer (behind Germany and Spain), manufacturing just under 1.5 million units in 2021. So, closures on the current scale (amounting to over 90% of the country’s Light Vehicle capacity) are having a profound impact on regional volumes. Disruption in Ukraine, with its small Light Vehicle assembly operation – just 7,000 units were built last year – has only a limited regional volume impact.

Ken Zino of AutoInformed.com on German Automakers Bearing Brunt of Putin’s War on UkraineOverall, shortages of components sourced from Russia and Ukraine are affecting manufacturing in other markets across the region  with no end in sight. However, the chart below shows announced plant closures in Europe (excluding Russia and Ukraine) due to the war. “It is striking that most shutdowns are in plants operated by German OEMs. In March alone, OEM announcements and our estimates lead us to believe that German automakers will lose just under 150,000 units of output (against our volume benchmark),” said Morris.

Ken Zino of AutoInformed.com on German Automakers Bearing Brunt of Putin’s War on UkraineHe is optimistic though, noting resourcing is actively being pursued, notably at the VW Group, the automaker arguably hurt the most. VW is increasingly “sourcing affected components from plants in Romania and Hungary, as well as some from outside of Europe to offset the shortfall in Ukraine.”

Moreover, “Ukrainian suppliers are continuing to produce in small volumes, although the sustainability of this supply remains a risk. Nevertheless, the disruption to German output due to wiring harness shortages seems increasingly likely to recede in April,” Morris said.

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