VW suspends delivery of cars to Russian dealers, Volvo suspends shipments

German automaker Volkswagen has temporarily suspended deliveries of its vehicles already in Russia to local dealerships, news agency RIA reported, citing the company's media statement. The carmaker has also decided to halt production at two of its German factories for a few days this week due to a delay in getting parts made in Ukraine.

Volvo Cars has also suspend shipments of cars to the Russian market until further notice due to potential risks associated with trading with Russia, including the sanctions imposed by the European Union and United States.

Earlier this week, Renault and tyre maker Nokian Tyres also suspended production activities at their factories or have shifted manufacturing operations due to Russia's invasion of Europe. Further, the US' export restrictions against Russia has hammering its access to global exports of goods including semiconductors which could lead several companies to alter manufacturing plans.

The ongoing Russia-Ukraine conflict is set to worsen the supply to semiconductors, further increasing the woes of the auto industry already struggling with supply chain crisis. Both the countries have been the key exporters of raw materials that are used in the manufacturing of various microchips.

If that's not all, the Russia-Ukraine conflict could also boost oil prices above $100 a barrel, adding inflationary pressure on European and American consumers, Wells Fargo analyst Colin Langan said in a research note. And while consumers have already been willing to pay above sticker price to buy new vehicles, sustained higher petrol prices could impact long-term recovery of the sector.

Consulting firms JD Power and LMC Automotive have also slashed their 2022 global new-car sales outlook by 400,000 vehicles to 85.8 million units, following Russia's invasion of Ukraine. This comes when the auto industry is already dealing with headwinds due to global semiconductor shortage. "An already-tight supply of vehicles and high prices across the globe will be under added pressure based on the severity and duration of the conflict in Ukraine," Jeff Schuster, president of global vehicle forecasts at LMC, told Reuters.

(with inputs from Reuters)