The ongoing Russia-Ukraine crisis has already caused supply disruptions at certain auto manufacturing plants in Russia. The prolonged conflict could lead to even more supply constraints and subsequent delays in automotive production and shipments, finds GlobalData, the leading data and analytics company.

A contraction in sales in Russia in particular, but also now spreading to other markets, would see significant revenue losses for the automotive sector. At an assumed average global car price of $30k, losses caused through reduced sales volume approach $100 billion in 2022 alone. With China so far not directly drawn to criticize Russia’s actions there could be opportunity for Chinese original equipment manufacturers (OEMs), who have made recent gains thanks to an undersupplied market, to double their market share to 7% in 2021. They are well placed to substitute for withdrawing Western brands.

Other OEMs choosing to remain active in Russia may also benefit from improved shares, though in a vastly reduced market. The most exposed global OEMs in Russia are Renault-Nissan, Hyundai-Kia and VW Group. Light vehicle production volumes for the three groups in 2021 were 580k, 397k and 173k units, respectively.

Yennepally Vasanth Reddy, Business Fundamentals Analyst at GlobalData comments: “It is interesting to see how auto companies deal with supply chain constraints and absorb rising prices of raw materials, especially palladium, a key component for manufacturing catalytic converters. Russia accounts for one third of the world’s supply of palladium and the recent crisis is likely to drive the price of this commodity upwards*.”

GlobalData has identified some of the world’s major car brands that have suspended exports to Russia, stopped production at its plants in the country or both;

Toyota Motor Russia

Toyota is one of the top brands in Russia, producing approximately 98,000 vehicles annually. Toyota Motor Russia stopped production at its plant in St Petersburg and halted the import of vehicles due to supply chain disruptions.

Ford

Ford also suspended its operations in the country, which is focused exclusively on commercial van manufacturing and sales through a minority interest in the Sollers Ford joint venture.

General Motors

General Motors suspended its business and its vehicle exports in Russia. However, it has limited supply chain exposure due to its small presence in the country.

Volkswagen

Volkswagen have also ceased production on its sites in Kaluga and Nizhny Novgorod. It also stopped vehicle exports to Russia. According to Volkswagen, the company sold approximately 199,000 vehicles in the Russian market in 2021, with a market share of 11.9%. Of this, around 170,000 vehicles were manufactured at the company’s production sites in Russia.

Mercedes-Benz Group AG

Another European automotive giant, Mercedes-Benz Group AG, also decided to discontinue the export of cars and vans and local production in Russia. As of December 31, 2021, Mercedes says that its total assets in the country are worth approximately €2 billion through its subsidiaries.

Daimler Truck Holding AG

Daimler Truck Holding AG ceased all business activities in Russia. The company suspended deliveries of truck components to Kamaz, a Russian truck manufacturer.

Others

Swedish automakers, Scania and Volvo suspended their business in Russia. Scania halted deliveries of automobiles and spare parts, while Volvo stopped sales of new cars in the country. Honda, Nissan and Subaru also decided to stop exports of cars and motorcycles to Russia, while Mazda halted shipments of parts.

Stellantis suspended exports of automobiles from Russia and stopped shipping vehicles to the country from overseas. The company has a manufacturing plant in Kaluga, which it owns in partnership with Mitsubishi. Jaguar Land Rover also stopped deliveries of its vehicles to Russia. The Italian companies Ferrari and Lamborghini, decided not to manufacture luxury sports cars for sale in Russia.

However, Renault is the only auto major that has not pulled out from Russia or suspended its operations, considering the high costs involved and is keen to avoid expropriation of Avtovaz. Renault’s exposure to Russia remains the highest in European automotive companies. Renault says it owns a 68% stake in Avtovaz, the country’s largest carmaker.

For more information about how the Russia-Ukraine crisis is affecting industries, download GlobalData’s Ukraine Conflict Executive Briefing

*Sourced from https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-platinum.pdf