Russia’s devastating war on Ukraine is bringing a whole set of new problems to the global auto industry, just as it was starting to recover from the pandemic and computer chip shortages.
DETROIT — BMW has halted production at two German factories. Mercedes is slowing work at its assembly plants. Volkswagen, warning of production stoppages, is looking for alternative sources for parts.
“You only need to miss one part not to be able to make a car,” said Mark Wakefield, co-leader of consulting firm Alix Partners’ global automotive unit. “Any bump in the road becomes either a disruption of production or a vastly unplanned-for cost increase.” Eventually, high inflation across the economy — for food, gasoline, rent and other necessities — will likely leave a vast number of ordinary buyers unable to afford a new or used vehicle. Demand would then wane. And so, eventually, would prices.
The wiring shortage has slowed factories in Germany, Poland, the Czech Republic and elsewhere, leading S&P to slash its forecast for worldwide auto production by 2.6 million vehicles for both this year and next. The shortages could reduce exports of German vehicles to the United States and elsewhere.
BMW is trying to coordinate with its Ukrainian suppliers and is casting a wider net for parts. So are Mercedes and Volkswagen. Likewise, Russia is a key supplier of such raw materials as platinum and palladium, used in pollution-reducing catalytic converters. Russia also produces 10% of the world’s nickel, an essential ingredient in EV batteries.
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