How Russia’s war is reducing global car production

Russia’s invasion of Ukraine has led auto industry watchers to cut their production and sales forecasts for the next two years. The crisis has closed factories in Eastern Europe and caused price spikes in already valuable raw materials.

Some factories in Ukraine tried to continue despite the invasion. Workers should have stopped working to escape the rocket fire.

In March, S&P Global Mobility, formerly IHS Markit, cut its global auto production forecast by 2.6 million vehicles in 2022 and 2023 due to the dispute. The most pessimistic scenario totaled up to 4 million lost vehicles.

European car production is expected to fall by around 9%, or around 1 million cars.

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

The biggest concern is the shortage of materials and parts that is already plaguing European automakers and, according to the report, could spread to other markets if the war continues.

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

The report highlighted disruptions in the supply of critical auto parts to the region, possibly most notably wiring harnesses from Ukraine. Raw materials are also at risk – Russia produces around 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 the batteries of electric vehicles. Even common minerals and metals, such as iron, are affected.

All of these are key materials used to make cars.

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