Ukraine War Worse Than Covid Say Manufacturers

Thu 17th Mar 2022

The impact of the Russian invasion of Ukraine on the motor industry is only just being realised with many manufacturers fearing the worst for import, export and supply chain issues.

Most major European car brands have suffered some form of setback from the war and now Volkswagen, who have paused production at its Zwickau and Dresden factories due to supply problems, have spoken out on the problems.

Herbert Deiss, the VW CEO has compared the Ukraine crisis to the pandemic of the last two years and says the impact could be far worse, with higher prices for consumers. Speaking to the Financial Times, Deiss said: “The threat of this war for Germany and Europe is huge. If you imagine a scenario where we cut off business relations with Russia, which we probably would have to do if this conflict [doesn't cease], you couldn't buy energy any more, and this would lead to a situation that might impact Europe and Germany considerably.”

Volkswagen have two factories in Russia which between them produce a total of nine cars, including three Volkswagens (Tiguan, Polo, Taos), four Skodas (Rapid, Kodiaq, Karoq and Octavia) and two Audis (Q7 and Q8), but despite employing almost 7,000 employees it is not expected to hit VW’s global sales, with only 204,000 cars sold in Russia last year, including their other brands.

The automotive industry has already had to contend with supply chain issues related to the semi-conductor shortage, and Deiss admitted that this would be the latest challenge in a turbulent few years, saying: “We managed semiconductors, Covid . . . quite nicely.”