The global automotive manufacturers are unable to procure parts from Russia and Ukraine, have started establishing special units to manage the crisis. They are seeking alternatives in case the invasion continues in the near future.
The war affects the automotive industry in several ways. As Ukraine and Russia are two important supplier countries in the global automotive industry, the recent situation is creating bottlenecks in the production chain, so much so that some factories have temporarily stopped manufacturing. While some automotive giants such including Volkswagen, Skoda, BMW, which manufacture in Russia, temporarily stopped their activities in this country due to the sanctions of Western counties. Also, numerous brands have suspended vehicle deliveries to the Russian market. It is expected that the war in Ukraine could cause the loss of more than 1 million vehicles in global automotive production.
German Volkswagen became one of the most affected automotive brands. It temporarily suspended vehicle production at its factories in Zwickau and Dresden. Volkswagen AG Board Member for Purchasing Murat Aksel announced that they have established a crisis team to monitor the potential impacts of the war on their business activities. Aksel added that their suppliers in Ukraine are trying to continue production as much as possible despite the situation.
Disruptions in production in global automotive factories may deepen the long-standing supply problem in Turkey. Ali Bilaloğlu, president of Turkey’s Automotive Distributors Association (ODD), said last week that the supply is still very limited and many brands are still unable to respond, even to the decreased demand.
“The Russian crisis will exacerbate the supply problem. Both Russia and Ukraine have serious vehicle production and sub-industry facilities,” he said.
Automotive Industry Association (OSD) head Haydar Yenigün said that the impact of the current situation on the Turkish automotive market will become more apparent, adding that the sector representatives continue to create their action plans against all risks and possible scenarios. He added that it is hard to measure the import volume from Russia due to the multilayered and complex supply chain structure in the automotive industry.
“According to TurkStat data, the value of the bodies, components and parts of motor vehicles imported from Russia in 2021 amounted to $9 million. However, we can say that the indirect export of Russia, which is an essential exporter of raw materials and energy, to the automotive main industry is much higher. On the other hand, Russia is an important player in the global energy market, as it has significant natural gas reserves in the world. This process may have an impact on the energy market and therefore on the industrialists as well,” he said.