The world has become a global village, literally. As a result, the interdependence of countries has seen a huge surge in the past few decades.
Countries now have their manufacturing plants located thousands of kilometers from their homelands.
While the main purpose of this was to reduce the prices of parts and automobiles as a whole, it has also increased the reliance on other countries.
The recent Russia-Ukraine war is going to disrupt the global industry and the automotive segment is no exception.
As Russia supplies gas to several European countries, the auto manufacturers will take a massive hit.
Germany To Feel the Heat, Soon
Germany will be hit the hardest and the Nord Stream 2 gas project has already been halted.
According to news, the project is on the brink of collapse and soon to announce bankruptcy.
Which German Automaker Companies Will Be Most Affected?
Under such circumstances, major German automakers will feel the pressure. Some of these German companies include:
– VW Group.
So, if you take into account the most selling cars on this continent, many of them come from Germany.
So, when this country experiences the worst shortage of gas supplies in decades, the results won’t be good.
Korean Automakers In Warm Waters
Russia is no different. By attacking its neighbour, it has welcomed a large number of trade sanctions.
This means that the automakers operating through their huge setups in Russia will also take a hit. These are the two Korean companies that are likely to suffer the most:
As both of them have enormous manufacturing roles in Russia, they will be affected the most.
Which Other Companies Will Be Affected?
Other companies that are facing difficulties or have been ordered to completely stop deliveries to Russia include:
– Land Rover;
These companies fear that getting through the Russian customs won’t be easy for them now.
Ukraine Has A Major Role
The semiconductor chips used in the automotive segment had already been in the limelight due to delays.
As the majority of the raw material used in these chips comes from Ukraine, the situation will probably aggravate in the future.
What Role Does Russia Have In The Automotive Industry?
Russia is a huge country that is brimming with natural resources. Some of the most precious metals that are used in catalytic converters are found in this country.
The role of Russia is so eminent that around 38% of palladium used in this industry comes from this country alone.
Some other metals which Russia provides for these parts include:
Catalytic converters are vital for the car industry if it wants to keep a check on global emissions.
A recent report suggests that most companies have enough reserves to last for around 6 months. However, what will happen after that? Nobody knows this for now.
If the situation exacerbates, it can affect the global automotive industry and jolt it to its core.
What Will Be The Overall Effect?
Here are some of the effects on the auto industry of the Russia-Ukraine war:
- Long waiting times for customers;
- Higher vehicle prices;
- Inability to control emissions due to lack of metal availability;
- Massive downsizing if the sales are disrupted.
Many markets including the United States are already suffering from record high automotive prices.
Even the prices of pre-owned vehicles have gone out of control in some countries.
War is dangerous, now more than ever before. While two countries participate in it, the whole world suffers in one way or the other.
Let’s hope that the situation improves soon, otherwise hard times are coming, and they’re not too far.
The information provided reflects the situation as of 1st of March.