The global automotive industry has been going through a tough time since 2020 with the onset of the coronavirus pandemic whose supply chain was massively disrupted. After a gap of two years, the barriers that still exist on the path to recuperate this sector seems a difficult task. The four consecutive waves of this virus followed by the slump in chip review film production and lack of supply of imperative auto parts forced the industry to halt production of around 10 million vehicles globally in 2021. According to various experts, 2022 would bring positivity for the auto industry as the semiconductor shortage scenario was improving. But, the recent Russian-Ukrainian scuffle has put the industry into an unprotected situation. The ongoing tussle between the two countries has severely affected the current supply chain and logistic department. Recently, S&P Global Mobility has clearly mentioned that due to this war there is a massive shortage of important vehicle components. In fact, the New York Times also reported that the scarcity of auto parts crafted in Ukraine had made the automotive assembly lines of Europe, like Volkswagen Group and BMW to a crashing halt.
Why is the Impact on the Sector so Harsh?
The article in NYT also reported that Ukraine acts as a key corridor for manufacturing important electronic components of the vehicles like entertainment systems, tail lights coupled with various hand-assembled components, which needs a huge number of intelligent and proficient workforce. Ukraine acts as an important corridor because it offers cheap labour who are skilled and at the same time, it has close proximity to the vehicle factories located in Europe. Now, if the wiring systems are stopped from production and any components related to the car’s electrical functions can halt assembly lines from functioning for a while. The German based luxurious brand BMW mentioned in a press conference that it would commence production in the coming few weeks, though the volume of productions are speculated to be the same as that of 2021. In the meantime, the company has also noted that more disruptions are expected as the war goes on and also manufacturing of Mini in Oxford remains barred. At its home soil in Wolfsburg, Vokswagen announced to escalate production, while its EV units will not operate until the end of this month. Meanwhile, another luxurious brand Porsche also stopped its production unit in leipzig where it manufactures, Madan SUV and Panamera sports sedan.