How has the Russia-Ukraine war impacted the automotive industry?

Apr 8, 2022

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The Russia-Ukraine war has had a considerable effect on the world’s political, environmental, and economic state and has left many people wondering when it is likely to end. At this moment in time, it’s hard to say how long the effects of the war will affect the world, however, it is likely to still affect us for many years to come. 

One industry it has greatly affected is actually the automotive industry. With many trade routes and companies operating around the Ukraine region, it has been very difficult for automotive manufacturers to operate as they normally would. Trade routes have been closed, new tariffs have been put in place, and the cost of oil and fuel has considerably arisen. Multiple sanctions over the war in Ukraine have created various trading obstacles; because of this, many European manufacturers have decided to cut back their operations in and around Russia. Automakers such as Volvo, Jaguar, and Landrover have all decided to cut back, and are laying off Russian office staff after halting vehicle sales in the country.

In terms of popular materials; supplies such as fossil fuels, nitrogen fertilizers, and industrial metals such as nickel and titanium, used in vehicle production, have been severely reduced. As a result of the reduction, there has been an increase in price for all of these commodities. In the past few months, we have seen a huge rise in oil prices, making haulage trips more expensive and less convenient. 

For some manufacturers such as Renault, the decision to move out of Russia would be detrimental to their business. According to automotivenewseurope, “Renault has kept long-standing ties with Russia intact despite the war in Ukraine because it’s worried about the high cost of pulling out from a venture with a local partner, according to people familiar with the situation.

The French manufacturer wants to avoid the nationalization of its majority-owned automaker, AvtoVAZ, which plays a key role in the company’s turnaround, said the people, who declined to be named because the information is not public.

Renault’s position is backed by the French government, its larger shareholder, they said. Renault continues to monitor the situation, according to a spokesman. In past days, Renault has become the only major global automaker that has not pulled back either on trade with Russia or from production at local factories.Rival Stellantis this week suspended the import and export of cars from the country, part of a broad pullback including Volkswagen Group, Toyota Motor, and Mercedes-Benz. Even Renault’s Japanese partner, Nissan, halted exports. The risk of expropriation has grown more urgent this week after Russia moved closer to seizing or even nationalizing foreign-owned companies that are leaving the market over the invasion of Ukraine.”

The effects of the war are already very detrimental, but it’s hard to tell when it is likely to end. As of May 2022, Russia is now threatening the UK with nuclear warheads meaning the severity of the situation is likely to get much worse.