UK-based automotive sector forecast provider LMC Automotive stated that the war between Ukraine and Russia has led to plant closures across Germany and a likely loss of around 150,000 units in March alone. In addition, by the beginning of March this year, almost all automotive production in Ukraine and Russia had come to a complete standstill.
Shortages of components, which are sourced from Russia and Ukraine, are affecting markets across Europe and will continue to do so. However, the plant closures in Europe (excluding Russia and Ukraine) due to the war mostly concern plants operated by German companies. The underlying reason for the strong impact on German automakers is their reliance on a cluster of wiring harness suppliers in Ukraine.
German automaker Volkswagen Group, the worst affected by the supply disruption, has announced that it is increasingly sourcing affected components from plants in Romania and Hungary as well as some from outside Europe to offset the shortfall in Ukraine. Meanwhile, several Ukrainian suppliers are continuing to produce in small volumes, although the sustainability of this supply remains at risk. Nevertheless, the disruption to German output due to wiring harness shortages seems increasingly likely to recede in April.
