Russia’s war is affecting global car production

Workers at the Daimler-Mercedes factory in Bad Cannstatt, April 2020. Photo: Reuters / Daily Sabah

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Russia’s invasion of Ukraine has led automakers to cut production and sales forecasts for the next two years. The crisis has shut down factories in Eastern Europe and raised prices for already-priced raw materials, according to CNBC.

Some factories in Ukraine have tried to continue the invasion. Workers were forced to take a break from work to escape the rocket fire.

In March, S&P Global Mobility, formerly IHS Markit, reduced its global car production estimate by 2.6 million vehicles in both 2022 and 2023 due to the conflict. The worst case scenario was up to 4 million vehicles lost.

European car production is expected to fall by about 9% – about 1 million cars.

Some of this will be directly due to the loss of car sales in Russia and Ukraine, but these countries together form a small share of the global car market – about 2% of the total in 2021.

The biggest concern is the shortage of materials and parts that are already affecting European carmakers, and the report warns that it could spread to other markets if the war continues.

Separately, credit analysts at S&P Global Ratings also forecast that in 2022 global car sales will fall 2% below 2021. This is a significant decrease from the 4% -6% increase in sales for 2022. , which the group last predicted in October 2021.

The report highlighted interruptions in the supply of essential car parts in the region, perhaps especially wiring in Ukraine. They are also at risk of raw materials – Russia produces about 40% of the world’s raw palladium – which is used to clean vehicle exhaust. The region is also a producer of nickel, which is used in electric vehicle batteries. Even common minerals and metals, such as iron, are affected.

All these are key materials used in the manufacture of machines.