By Nathalie Voit
Not only is the war in Ukraine expected to dent global oil supply, but automakers worldwide are forecasting massive supply shortages in the semiconductor industry as the conflict in Europe continues to derail production across key sectors.
Audi warned on March 17 about upcoming supply challenges in the market for automotive parts, including shortages of key components like semiconductor chips and wire harnesses.
“We will see tremendous interference with all the supply chains, not just the chip business, but any supply chains internationally,” Audi Executive Hildegard Wortmann said at a media roundtable on Thursday, according to CNBC. “The consequences will be tremendous out of this on the whole supply situation.”
The company said it was adjusting operations in its Hungarian manufacturing facility due to the neighboring war.
Audi’s parent company Volkswagen relayed similar concerns this week, stating it would shift production to China and North America “because of the situation in Europe.”
“The war in the Ukraine has put our existing outlook into question,” said Volkswagen CEO Herbert Diess at the carmaker’s annual press conference on Tuesday, according to Automotive News.
The German automaker has suspended existing operations in Russia due to the conflict. According to Automotive News, it plans to ramp up production in its main facility in Wolfsburg, Germany. However, Diess warned that a lack of wire harnesses typically sourced from Ukraine could severely stall production in its European factories.
According to automotive research firm S&P, about 45% of Ukraine-made wire harnesses are typically exported to Germany and Poland, making German automakers particularly vulnerable to changes in the geopolitical landscape.
Other automakers, including BMW, have paused production due to the situation in Ukraine. In an announcement released March 17, BMW said it had slashed its 2022 profit margin forecast from 8%-10% to 7%-9% as a result of the conflict in eastern Europe and ongoing microchip shortages.
“The BMW Group is fully aware supply issues will drag on. Consequently, it has already adjusted its EBIT forecast for the financial year 2022,” the company wrote in a blog post. “From the initial targeted range of 8 to 10%, the projected earnings before interest and taxes have been reduced by BMW to 7-9%. To make matters worse, the microchip shortage is unlikely to get any better until the latter half of the year.”
The automaker said it would resume production in Germany and the U.K. on March 21.
The news adds uncertainty and volatility to an already strained industry. On March 16, S&P Global Mobility lowered its global light vehicle production forecast by 2.6 million units for 2022 and 2023.
