The conflict between Russia and Ukraine has also cast a shadow over the global auto industry.
According to Bloomberg news on February 28, a Toyota spokesman said that Toyota’s factories in Russia operate normally. At present, the conflict between Russia and Ukraine has no impact on the company’s business. Toyota will continue to closely monitor and evaluate the situation.
But many car companies are not so lucky. According to the financial report of China Central Television, affected by the conflict between Russia and Ukraine, the factories of many multinational enterprises in Ukraine have entered a shutdown state recently. Because the parts produced in Ukraine are not in place, Volkswagen’s two factories in Germany will also stop production for several days.
According to Cui Dongshu, Secretary General of the national passenger car market information joint committee, the conflict between Russia and Ukraine has brought great uncertainty to China’s automobile industry. Automobile enterprises should respond flexibly, protect their own interests and realize the balanced development of China’s automobile exports.
existing car companies are forced to stop production
In fact, Russia is the investment destination of many automobile manufacturers. It is understood that Volkswagen, BMW Group, Mercedes Benz, Renault group, Hyundai Group, Great Wall Motor Company Limited(601633) and other auto enterprises have invested and set up factories in Russia.
Among them, Volkswagen has about 4000 employees working in Kaluga factory in southwest Moscow; BMW Group recently extended its expiring partnership with Russian carmakers to 2028 and expanded its Kaliningrad plant at a cost of 350 million euros Great Wall Motor Company Limited(601633) Russia’s Tula plant was put into operation in 2019, with a project investment of US $500 million and a planned annual capacity of 150000 vehicles.
At present, the impact of the conflict between Russia and Ukraine has begun to spread, and many car companies have shut down and stopped production in their factories in Russia. Reuters reported that Renault said on February 25 that it would suspend some business of the automobile assembly plant in Russia due to the shortage of parts and transportation difficulties. “The business interruption is mainly due to the stricter border control of transit countries, and we are forced to change some established logistics routes.” Renault’s Russian branch said.
AvtoVAZ, a Russian carmaker controlled by Renault, also said that due to the continuous shortage of global electronic components, it may suspend part of the assembly line of a factory in central Russia; Finnish tire manufacturer Nuoji tire said it was transferring some key product lines from Russia to Finland and the United States in response to further sanctions that Russia may face.
“We have been paying close attention to the situation because we expect the conflict between Russia and Ukraine to lead to economic recession and the weakening of the ruble,” said a spokesman for Hyundai Motor Group
Great Wall Motor Company Limited(601633) securities department also said recently that the production and sales of Great Wall Motor Company Limited(601633) Russian factories will not be affected by the conflict between Russia and Ukraine Great Wall Motor Company Limited(601633) the export business to Ukraine may be affected in the short term, but there is no problem in the long term.
It is noteworthy that Russia is also an important producer of metal “palladium”, which is an important raw material for chip manufacturing. Industry analysts believe that under the conflict between Russia and Ukraine, European and American sanctions against Russia may not only impact the chip industry chain, but also have a significant impact on the layout of traditional automobile enterprises in Russia. The already tight industrial chain and price of global automobile supply will face greater pressure.
Chinese auto enterprises export or face losses
IHS Markit data show that Renault group accounts for 39.5% of Russian automobile production; Hyundai Group accounted for 27.2%. In terms of market share, in the Russian automobile market, except that the local brand LADA (a brand of AvtoVAZ, Russia’s largest carmaker) accounts for about 20%, other market shares are occupied by foreign brands. Among them, Volkswagen has a market share of 12.2% in the Russian auto market, followed by Toyota, with a share of 5.5%.
Tim Urquhart, chief automotive analyst at IHS Europe, said: “the world’s largest carmaker has not made a lot of money from Russia, but Renault is clearly the most risky company in terms of risk. Russia has been much worse in the past few years, and I don’t think recent events will change that.”
Public data show that in the past three years, the annual sales volume of the Russian auto market has ranged from 1.6 million to 1.75 million, accounting for only about 2% of the global auto sales in 2021.
Focusing on China’s auto exports, Cui Dongshu believes that China’s auto exports to Russia have performed relatively well in recent years. In 2021, China’s automobile exports to Russia reached about 122800, and the export volume also rose to US $1.97 billion.
“The performance of Chinese auto companies is extremely excellent, especially the export of Chinese passenger cars, which accounts for nearly 80% of the total export volume. But at present, China’s export to Russia is facing huge uncertainties.” Cui Dongshu believes that “the proportion of trucks in China’s automobile industry’s exports to Russia and Ukraine is relatively large, and the export of special vehicles is also relatively important, so transportation is very important for Russia and Ukraine. The conflict between Russia and Ukraine is bound to be an international loss, especially the loss of insufficient demand for Chinese automobile enterprises.”
In addition, Cui Dongshu believes that the impact of the conflict between Russia and Ukraine on chip supply is relatively limited. At present, the rare gas inventory of global semiconductor companies has been in normal use for 6 months, and there is no problem at all. The American semiconductor industry association also said earlier that Russia is only a small market in the chip industry, and the conflict between Russia and Ukraine will not pose a threat to the chip supply. The association said that European and American sanctions against Russia are also unlikely to have a significant impact on the sales of the industry.
“Most chip companies said they had made sufficient preparations to accelerate the construction of a diversified supply chain system to cope with the possible sharp supply shortage. Therefore, the impact of the Russian Ukrainian conflict may not be so severe, and the supply capacity of the industry has been greatly improved and improved under the severe impact of factors such as the previous epidemic.” Cui Dongshu said.
