How Are Manufacturers Adapting To the Ukraine Crisis?

Sat 5th Mar 2022

European motor manufacturing has had it hard over the last three years, the pandemic brought mass factory closures which led to a drop in output and then a fall in sales, and then just as they looked to be recovering they were hit with the global semiconductor shortage. So the biggest companies have had to be fairly flexible and adapt to the changing global picture, but few could have seen a war in Europe impacting output.

Russia’s invasion of the Ukraine has led to many logistical concerns for Europe’s biggest car producers, some actually have factories in the two countries, many others have supply chains dependent on the territories.

It is still early days to assess the full impact of the war, but many companies are already making changes.

Volkswagen looks to be one of the hardest hit, the German company has paused production at their Zwickau and Dresden facilities because of supply chain disruptions, a statement last week said: “The Volkswagen Group has taken note of the reports of Russian attacks on Ukraine with great concern and dismay. Volkswagen hopes for a swift end to hostilities and a return to diplomacy. The safety and security of our employees is our top priority for all local activities.

“The Volkswagen Group’s global supplier network, which comprises more than 40,000 suppliers, also includes a number of suppliers in western Ukraine. Due to the current situation in this region, there may be disruptions in the supply chain. This can lead to adjustments in production at individual Group locations. Group Purchasing is engaged in an intensive exchange with the relevant suppliers and is reviewing alternatives.”

Renault is another company which is likely to feel the impact, the French company has a factory in Moscow, which produces a range of vehicles including the Kaptur and the Dacia Duster. In a statement the company confirmed that output was likely affected. “We are following the ongoing situation very carefully. We observe some logistic impacts in our Renault Moscow plant.”

It’s not just factory or supply chain issues affecting the industry. Most, if not all, producers in Europe have halted the delivery of vehicles into Russia, a huge market, which again could see a pause to factory lines on the continent and at home.