BMW and Volkswagen have warned that Russia’s invasion in Ukraine has caused shortages of vital components. They are reducing vehicle production in Europe.
Two German carmakers stated that the war is having “negative” effects on auto supply chains. They have been already affected by shortages of semiconductors .
BMW stated Wednesday that Ukraine bottlenecks have forced it to modify or stop production at several factories. This is likely to have a negative effect on vehicle sales.
Maximilian Schoeberl from BMW’s corporate affairs director stated that Ukraine is home to many suppliers. Therefore, we will also have to deal with production interruptions or supply disruptions for key components.
Both companies’ executives stated that wiring harnesses are used to bundle or organize wires and cables. Their main suppliers were located in western Ukraine.
BMW claimed that the war caused its suppliers to reduce, or suspend, production of harnesses. This in turn led to the automaker having to cut its own production. According to the company, production will resume at two factories in Germany next week. Meanwhile, production at its Mini factory in Oxford (England) is expected to resume next week.
Schoeberl stated, “But it is clear that the situation will remain volatile.”
Nicolas Peter, BMW finance chief, said that raw material prices will cost the company hundreds and millions of euros. The invasion sent commodity price prices skyrocketing due to concerns that Russia would reduce supplies of metals such as nickel or palladium, which are essential for auto production.
Volkswagen announced Tuesday that it is supporting Ukrainian wiring harness suppliers as they attempt to continue operations.
CEO Herbert Diess stated that wiring harnesses are the dominant constraint. They are sourced from as many as 11 Ukrainian plants, nine of which work at “reduced capacities”.
He stated that “we cannot expect this to continue”, and VW is currently relocating production. This will take time.
Volkswagen stated that it is also moving some of its auto production from Europe to other areas, including China and South America.
After the war, both companies stopped production in Russia and exported to Russia .