Russia’s invasion of Ukraine has led car industry observers to cut production and sales forecasts for the next two years. The crisis has closed factories in Eastern Europe and caused jumps in the prices of already valuable raw materials.
Some factories in Ukraine have tried to continue amid the invasion. The workers reportedly had to take time off work to escape rocket fire.
In March, S&P Global Mobility, formerly IHS Markit, lowered its global car production forecast by 2.6 million vehicles in both 2022 and 2023 due to the conflict. The worst case scenario is as many as 4 million vehicles lost.
European car production is expected to fall by about 9% – approximately 1 million cars.
Part of this will be due directly to lost 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 hitting European carmakers and, the report warns, could spread to other markets if the war continues.
Separately, credit analysts at S&P Global Ratings also predict that global car sales will fall 2% below 2021 levels in 2022. This is a significant drop from 4% -6% sales growth in 2022, which the group last envisioned in October 2021.
The report highlighted disruptions in supplies of critical automotive parts from the region, perhaps most notably cable bundles from Ukraine. Raw materials are also at risk – Russia produces about 40% of the world’s raw palladium – which is used to clean vehicles’ exhaust fumes. The region is also a producer of nickel, which is used in batteries for electric vehicles. Even common minerals and metals, such as iron, are affected.
These are all key materials used to make cars.
Watch the video to learn more.
Add Comment