TrendForce, the leading market information institution, reports that the ongoing Russian-Ukrainian war has led to difficult situations on both sides of the conflict, affecting the entire global automotive industry.
The institution reports that many car factories are suspending their activities in Russia, as well as a ban on importing vehicles. Global companies with foreign capital in Russia are also affected by the possible expropriation of assets within its borders. As a result, three major car brands named by TrendForce would see a greater impact from the loss of the Russian market, including Renault-Nissan’s 32% market share, Hyundai-Kia’s 23% and Volkswagen’s 12%.
Renault is the biggest investor in the domestic car-making market, TrendForce reports, with Russia being the car brand’s second largest market – whether AVTOVAZ is seized or faces restricted sales, any impact will be significant on Renault. On the other hand, even if these affected companies find a way to continue production, the sinking ruble will make imported parts and materials more expensive and increase overall costs.
TrendForce points out that vehicles inherently use more parts, which makes supply chains longer than typical consumer products, and thus poses challenges to avoid political and regional disputes as it encompasses different countries and regions of the world. Any global conflict or regional situation will cause problems for the automotive industry. In the short term, the impacts of the conflict will derail not only automotive brands in Russia, but also investments related to the global market, supply chain, sales and revenues. In the long term, regional policy will also reduce the ability of businesses to grow in the affected regions, their competitiveness and the operational choices of technological deployment for the supply chain. TrendForce believes that on a larger scale, the dispute has impacted the auto industry’s ability to bounce back from facing the challenges of the pandemic and chip shortages.
Three factors have been named to have a significant impact on the recovery of the automotive industry, which will reduce auto sales in 2022. The first factor is that Ukraine is home to many production centers for European automotive brands, and with auto parts production restricted or completely halted in Ukraine due to the conflict, auto production will also be severely curtailed. Volkswagen said production of automotive wire harnesses had been shifted from Ukraine to North America or China to ease further shortages.
The second factor cited by TrendForce is how Russia is home to a significant share of global automotive upstream materials, such as nickel and palladium production. The conflict has caused the costs of these rare metals to rise due to production cuts, also driving up vehicle prices. The third factor is inflation as another concern, which compresses consumers’ ability to buy as costs rise across the board.
According to DesignNews, Ukraine’s Foreign Investment Office has identified major European car brands, such as BMW, Mercedes-Benz and Volkswagen Group brands Audi, Bentley, Lamborghini, Porsche and Volkswagen, as automakers that are significantly dependent on parts of the conflict. supply factories in the affected country.
The news website reports that while many auto parts factories were based in Ukraine, many did not move production out of the country, leading to parts shortages once the conflict began. Quoted by DesignNews, the consultant AlixPartners estimates that nearly 7% of the electrical harnesses used in European car production come from Ukraine.
Supply scrambled amid explosive demand
As the global economy and industries are still recovering and rebounding from the disrupted supply chain of the past two years, the Russian-Ukrainian war comes at a pressing time. Brands are being pushed to source from other places, which, on the other hand, presents a unique opportunity for auto parts suppliers.
With one of Taiwan’s largest auto shows, Taipei AMPA, Autotronics Taipei and the digital version AMPA DigitalGo set to launch April 20-23 at Nangang Exhibition Center Hall 1, the need for crucial automotive wiring harnesses, parts and like, have never been more urgent.
Suppliers in Taiwan are flexible, provide good service at a reasonable price, and operate from a manufacturing center that is also geographically close to the global semiconductor production base. This proximity offers potential customers the opportunity to get in touch not only with auto parts suppliers, but also with automotive electronics, which is also in short supply and in high demand due to the 2021 chip shortage.
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