Global car production could slump over 5 million units due to Russia-Ukraine war
The global auto industry is looking at potential, production loss of more than five million units forecasts research agency S&P Global Mobility. The study claims that global production will slump more than five million units due to the ongoing conflict between Russia and Ukraine, which has been impacting the automotive supply chain adversely. The agency has also lowered its 2022 and 2023 estimates each by 2.6 million vehicles, which forecasting a global car production of 81.6 million units this year and 88.5 million units next year.
The war between Russia and Ukraine is affecting the price of key raw materials and energy as well. Both Russia and Ukraine play vital roles in the global automotive supply chain, especially for the European automakers. While Ukraine is a key supplier of neon gas that is used for chip manufacturing, Russia supplies a huge number of palladium that is used for making catalytic converters, which turn engine exhaust into less toxic emissions. The conflict between these two countries has abruptly stopped the production of these raw materials impacting the supply chain. The experts believe the impact of these shortages will be long-termed.
Crude oil price in the international market has increased substantially in the wake of the crisis. Russia plays a key role in crude oil production and supply.
Apart from these, the fresh surge in Covid-19 cases has resulted in plant closures in China, especially in the manufacturing hubs such as Shenzhen and Changchun. Toyota Motor Corp., Volkswagen AG and Tesla Inc. are among the key auto companies that have idled their manufacturing factories this week. The US too is mulling lockdown amidst a fresh spike in Covid-19 cases in the country. All these factors combined are likely to impact automotive production, which would result in a substantially lowered production in 2022.