Car production and sales disrupted as invasion of Ukraine continues
03 March 2022
Roughly one week after Russia began its invasion of Ukraine, the automotive industry is still coming to grips with the new geopolitical reality. As Putin’s forces continue their destructive campaign, western countries have been piling on sanctions.
This leaves carmakers with no uncertain choice about their business operations in Russia. Leave, or suffer international condemnation. Meanwhile, OEMs are also faced with supply-chain complications. After nearly two years of semiconductor shortages, the reliability of car-part supplies from eastern Europe now appears perilous.
So, more companies are having to adjust their activities in Europe. The list of affected carmakers now includes Mercedes-Benz, Volkswagen (VW) Group, BMW Group, Aston Martin, Jaguar Land Rover (JLR), Toyota, Stellantis, and Ford. This latest update follows ongoing reporting from Autovista24, including a special podcast assessing the multiple scenarios facing the automotive industry.
In a tweet, Mercedes-Benz confirmed it is suspending exports of its passenger cars and vans to Russia, with production there also paused until further notice. Previously, Daimler Truck also suspended its business activities in Russia as it continued to monitor the developing situation.
VW Group stopped production at its Russian sites until further notice, meaning its Kaluga and Nizhny Novgorod factories. Exports to the country will also be halted. The company also wants to take responsibility for its employees there, providing short-time working benefits. The impact on business activities in the affected countries will undergo continual assessment from the company’s designated task force.
‘The VW Group views the situation in Ukraine with great concern and dismay,’ a VW spokesperson told Autovista24. ‘We continue to hope for a cessation of hostilities and a return to diplomacy. We are convinced that a sustainable solution to the conflict can only take place on the basis of international law. In all activities on site, the safety and integrity of people is the top priority.’
Porsche supply chains are also affected, meaning orderly production will soon no longer be possible. The crisis is affecting its German manufacturing plants, highlighting how the supply chain disruption is spreading beyond eastern Europe. Production in Leipzig was suspended on 2 March until the end of the week, with work at the Zuffenhausen site carrying on for the time being. The sportscar brand also confirmed it would donate €750,000 to UN Refugee Aid, as well as €250,000 to the Ferry Porsche Foundation, which focuses on supporting children.
The BMW Group also looks to be putting its Russian manufacturing and exports on hold, Reuters reports. The carmaker said it expected production would be disrupted due to supply bottlenecks. This already appears to be the case in the UK as its subsidiary Mini, schedules a shutdown of its Oxford plant from 7 to 11 of March. The BBC points to a shortage of parts from Ukraine as the cause.
British car builders
Elsewhere in the UK, Aston Martin is pressing pause on car sales and shipments to Russia. Confirming this development to Autovista24, a spokesperson for the brand explained this was due to the operational impact of recent sanctions. The automotive markets in Russia and Ukraine are small ones for the luxury sportscar brand, making up less than 1% of its global unit sales last year.
‘As a global brand that exports product to both Ukraine and Russia, Aston Martin is closely monitoring the ongoing situation in Ukraine,’ they said. ‘Our primary concern is the safety and wellbeing of our partners and customers in Kyiv and their families and we remain in close contact with our local dealer at this difficult time.’
JLR will also stop sending vehicles to Russia, as sanctions placed on the country create trading obstacles. ‘The current global context also presents us with trading challenges so we are pausing the delivery of vehicles into the Russian market and continually monitoring the situation on behalf of our global customer base,’ a spokesperson told Reuters in a statement.
Car company comments
As of 24 February, Toyota stopped all activities in Ukraine, covering 37 retail locations, including sales and aftersales. The company’s Russian operations, spanning 168 retail locations, as well as its imports have been paused until further notice. Its plant in St Petersburg, where the RAV4 and Camry models are made, will be put on hold as of 4 March. While Toyota said this was due to supply-chain disruptions, it does not expect manufacturing and sales in the rest of Europe to be impacted.
‘Like everyone around the world, Toyota is watching the ongoing developments in Ukraine with great concern for the safety of people of Ukraine and hopes for a safe return to peace as soon as possible,’ Toyota said. ‘As a company with operations in Ukraine and Russia, our priority in dealing with this crisis is to ensure the safety of all our team members, retailer staff, and supply chain partners.’
Meanwhile, Stellantis CEO Carlos Tavares, said the 14-brand giant would be a compliant corporation, working inside of the laws, regulations and sanctions, Autocar reports. The company put a 24/7 support team in place to monitor the health and safety of its 71 employees based in Ukraine. Stellantis has also committed to a €1 million donation in humanitarian aid to support Ukrainian refugees displaced by the crisis.
‘Stellantis condemns violence and aggression and, in this time of unprecedented pain, our priority is the health and safety of our Ukrainian employees and families,’ said Tavares. ‘An aggression that shook a world order, already unsettled by uncertainty, has been launched. The Stellantis community, made of 170 nationalities, looks with dismay as civilians flee the country. Even if the scale of causalities is not yet apparent, the human toll will be unbearable.’
Ford has suspended its operations in Russia and is also supporting relief efforts. In recent years, the company has wound back its activities in the country, choosing instead to focus on commercial-van offerings through a minority interest in the Sollers Ford joint venture. This collaborative effort will now be suspended until further notice, the company confirmed in a statement.