Russia-Ukraine war fallout could be worse than pandemic: Volkswagen CEO
- Volkswagen CEO Herbert Diess fears if the Russian-Ukraine war persists, the economies of European countries are going to be severely hit.
At a time when the global auto industry seems to be recovering from a near two-year low due to Covid-19 pandemic and chip shortage crisis, the ongoing Russia-Ukraine war is threatening to push the industry back into another crisis. Volkswagen CEO Herbert Diess said a prolonged war between Russia and Ukraine can impact German and European economies much more grievously compared to the pandemic and the ongoing semiconductor shortage.
The blockages in the global supply chain due to the conflict can lead to high price hikes, inflation and scarcity of energy, said Diess in a report by Financial Times. This statement comes from the chief after many European countries, as well as the United States, take steps against Russia.
Also Read : Russia bans exports of cars, auto parts after sanctions due to Ukraine invasion
Though European countries have outrightly called out Russia's decision to invade Ukraine as unjustified, it is yet to join the US government in the move to enforce a full oil embargo on Russia. The continent depends on oil from Russia as around 45 per cent of its gas imports comes from the latter.
Germany heavily depends on energy and raw materials from Russia and this war can hugely impact the former's economic well-being. “If you imagine a scenario where we cut off business relations with Russia, which we probably would have to do if this conflict [does not cease], you could not buy energy anymore and this would lead to a situation that might impact Europe and Germany considerably," reportedly said Diess. He also added though he supports ‘maximum sanctions’ against Russia, he believes that the countries will have to come back to negotiations, to dialogue after the war ceases.
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Many automakers such as General Motors, Ford, Volkswagen, Volvo, Honda, Harley-Davidson and Daimler Truck have suspended their production operation in Russia after the invasion. Porsche which is 20 Russian cities and has 26 centries in the country also paused vehicle deliveries there recently. Many auto companies have also provided relief funds to Ukraine such as Nissan, Volkswagen and Porsche.