Car industry reacts to Russian invasion of Ukraine

9 months ago - 4 March 2022, autocar
Car industry reacts to Russian invasion of Ukraine
Volkswagen Group ends all production and sales in Russia, BMW idles Oxford Mini factory and more

Many key players across the global automotive industry have taken decisive action or been heavily impacted as a result of Russia’s invasion of Ukraine

Several global manufacturers have halted deliveries to Russia, while others have been forced to paused production due to a lack of parts from Ukraine-based suppliers. 

 Among the manufacturers affected so far are Groupe Renault, BMW, Jaguar Land Rover, Stellantis and the Volkswagen Group.

Many have severed ties with partners in Russia, which is the eighth-largest automotive market in the world. Some 1,666,780 cars were sold in the country last year - more than in Canada, France or the UK. 

Further issues arising from impacted supply chains are expected in the coming weeks. Meanwhile, companies including Ford and Skoda have committed to supporting Ukrainian workers affected by the war.

Here's what we know so far on how the outbreak of war is affecting individual manufacturers.

Aston Martin

Aston Martin has announced it will pause sales of cars to Russia following its invasion of Ukraine. Both countries are small markets for the British firm, accounting for less than 1% of its overall sales in 2021.

In a statement, Aston Martin said: “As a global brand that exports products to both Ukraine and Russia, Aston Martin is closely monitoring the ongoing situation in Ukraine. Our primary concern is the safety and wellbeing of our partners and customers in Kyiv and their families, and we remain in close contact with our local dealer at this difficult time. 

Due to the operational impact of recent sanctions, Aston Martin is pausing sales and shipment of vehicles to Russia."

BMW

BMW has stopped production of BMW and Mini vehicles in several factories around Europe, because parts can't be delivered from Ukraine. 

"The conflict in Ukraine is having a far-reaching impact on production in the supplier industry there. The resulting production stoppages will lead to successive production adjustments and interruptions at several BMW plants," a spokesman told the Frankfurter Allgemeine Zeitung.

The German newspaper also reported that alternative suppliers were being considered. One of its suppliers, German cable maker Leoni, has two factories in Ukraine and employs around 7000 people. 

As per Automotive News Europe, production will be halted at Munich and Dingolfing in Germany as well as Oxford in the UK. Engine manufacturing will also stop at Steyr, Austria. 

 BMW will also stop exporting to Russia and stop production at its Kaliningrad facility, which built 12,000 vehicles in 2021. 

"Due to the current geopolitical situation, we're discontinuing our local production in Russia and export to the Russian market," BMW said in a statement.

Ford

Ford has suspended its joint-venture (JV) operations in Russia.

“While we don’t have significant operations in Ukraine, we do have a strong contingent of Ukrainian nationals working for Ford around the world,” the firm said in a statement.

As part of the global community, Ford is deeply concerned about the invasion of Ukraine and the resultant threats to peace and stability. 

“The situation has compelled us to reassess our operations in Russia. In recent years, Ford has significantly wound down its Russian operations, which now focus exclusively on commercial-van manufacturing and Russian sales through a minority interest in the Sollers Ford joint venture. Given the situation, we have today informed our JV partners that we are suspending our operations in Russia, effective immediately, until further notice.”

The company, which sold 21,000 vehicles in Russia last year, has a minority stake in truck builder Sollers and produced around 20,000 trucks in Russia last year.

General Motors

General Motors has suspended some business in Russia, Reuters has reported. The American firm will stop all exports to the country, saying: "Our thoughts are with the people of Ukraine at this time. The loss of life is a tragedy, and our overriding concern is for the safety of people in the region." The company sells around 3000 vehicles in Russia each year. 

Honda

Honda will halt exports of cars and motorcycles to Russia from Wednesday 2 March. The Japanese firm doesn't have any factories in the country, but a spokesman told Reuters that challenges with shipping vehicles as well as making payments was the cause. 

Back in 2020, Honda announced it would stop selling new cars in Russia by 2022. It sold just 1836 cars there in 2019 and 1406 in 2020.

Hyundai 

Hyundai has stopped production at its St Petersburg plant in Russia for five days, citing a semiconductor shortage. 

“The plant will be shut down temporarily, due to supply disruption caused by a semiconductor shortage,“ an official said. 

The Korean firm went on to say that the decision had “nothing to do with Russia and Ukraine”.

Local reports have suggested the car maker has halted deliveries to dealerships in the country, per the Korean Herald. 

Jaguar Land Rover 

Jaguar Land Rover (JLR) has halted deliveries of Russia-bound vehicles. 

The British firm has said its priority is "the wellbeing of our entire workforce and their families, as well as those within our extended network”.

"The current global context also presents us with trading challenges, so we're pausing the delivery of vehicles into the Russian market and continually monitoring the situation on behalf of our global customer base," it said in a statement. 

The BBC has reported that sanctions imposed by the UK, EU and US are making it more difficult to sell cars in the country. 

Mercedes-Benz

Mercedes-Benz has announced that it will donate €1 million (£833,690) to support those affected by the crisis in Ukraine.

“As an immediate emergency measure, we're donating one million euros to Deutsches Rotes Kreuz eV (Red Cross) for their help for Ukraine,” said CEO Ola Källenius.

Daimler Truck, Mercedes’s commercial vehicle division, has suspended its operations in Russia, where it holds a 10% stake in domestic HGV manufacturer Kamaz. The German firm said the parts it supplied to Kamaz were used exclusively for commercial vehicles, rather than military trucks.

Mitsubishi 

Mitsubishi has said that it might suspend production and sales of vehicles to Russia, due to potential supply disruptions, according to Reuters. The Japanese company has 141 dealerships in the country.

Renault

Renault shares dropped by 6.4% on Monday as a result of Western sanctions placed on Russia. The French firm owns Russian manufacturer Avtovaz, which suspended assembly lines for a day at its Togliatti facility, due to parts shortages, earlier this week.

Renault has previously closed its factory in Moscow because of supply problems. The facility produces models including the Arkana and Captur crossovers for the local market.

Torsus

Extreme truck manufacturer Torsus has spoken out against the invasion of Ukraine, where it has facilities and offices. 

“We receive multiple calls and messages from all over the world asking how our Torsus Kyiv team is doing in these horrible days and if any support is needed,” it said in a social media post. 

“We're in constant contact with our Kyiv team. Our employees and their families are safe. We strongly recommend them to use all cautions as recommended by the Ukrainian government. Please do not leave bomb shelters until it is safe.”

The firm’s director of corporate strategy, Yuliya Khomych, has left the country for Prague, where the business is headquartered.

Torsus stands with Ukraine and Ukrainian people in their fight for their country and for peace in the whole Europe,” it said. 

“We call on you to support Ukraine by asking your governments to fully switch off Swift [which facilitates transfers between banks] and take whatever measures available to cut off the Russian economy from access to finance and technologies.” 

Stellantis

Stellantis CEO Carlos Tavares has said that any decision on how the firm will alter its operations in Russia "depends very much on what the politicians are going to decide".

"We're expected to be a compliant corporation,” Tavares said. “We comply with the rules, laws and regulations in peacetime and we comply with sanctions in wartime."

Last week, Stellantis set up a task force to monitor its 71 Ukrainian employees. It now has another specifically to "translate these sanctions, that are decided by the hour, into business decisions".

On the sanctions the West has imposed on Russia, Tavares said; "So far, those sanctions are very targeted, but of course there will be a point in time when the plants are unable to run.

"We have one in partnership with Mitsubishi in Kaluga, and as long as they have parts, they can operate; if there are no parts, they can't operate."

The Russian plant manufactures light commercial vehicles from Citroën, Opel and Peugeot, and Stellantis had been poised to begin exporting these to Western Europe.

Tavares added: "It's important we stay focused on our people. We represent in our company 170 different citizenships. We're the most diverse car company in the world."

Toyota

Toyota has lost 13,000 cars' worth of output following a cyber attack that targeted one of its suppliers of plastic and electrical components, Reuters has reported. 

While Toyota hasn't directly blamed Russia for the attack, it occurred shortly after Japan announced that it would join Western allies in sanctioning the invading country, including by blocking Russian banks from accessing the Swift system. 

"It's difficult to say whether this has anything to do with Russia before making thorough checks," said Japanese prime minister Fumio Kashida.

Volkswagen Group

Volkswagen Group has confirmed it has immediately ended all production and sales in Russia. The firm revealed the decision on social media where it said it would stop building cars at its Kaluga and Nizhny Novgorod factories, which are both based in Russia.

The Kaluga plant employs around 4000 people and builds the VW Polo, VW Tiguan and Skoda Rapid, under licence, as well as the Audi Q7 and Q8 from knockdown kits for the Russian market. It also builds petrol engines for several cars. The Nizhny Novgorod facility builds the VW Taos and the Skoda Kodiaq, Karoq and Octavia. 

“Against the background of the Russian attack on Ukraine and the resulting consequences, the Group Board of Management has decided to discontinue the production of vehicles in Russia until further notice,” said Ralf Brandstätter in an online statement. 

This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod. The export of vehicles to Russia will also be stopped with immediate effect,” he added.

At Volkswagen, we are convinced that a sustainable solution to the conflict can only be achieved on the basis of international law. We therefore appeal to the political actors to end the fighting and return to diplomacy.” 

Volkswagen also halted production at two of its EV factories this week, with VW, Audi and Cupra all affected by the stoppage. Production at the firm’s Zwickau and Dresden factories will be on hold until Friday. 

Affected models include models built on the firm’s MEB platform, such as the ID model range and the Cupra Born.

The Volkswagen Group will donate €1m (£833,690) to refugee charity UNO-Flüchtlingshilfe as a result of the Russian invasion of Ukraine. 

We at VW Group are very concerned about the current situation in Ukraine,” it posted on social media. “The Group board of management decided that the Group and its brands will donate one million euros to its long-standing partner Unoflucht.”

It also said: “The Volkswagen Group views the Russian attack on Ukraine with great concern and dismay," adding that it hopes for a “quick cessation” of hostilities. 

“We're convinced that a sustainable solution to the conflict can only take place on the basis of international law. Our thoughts are with all people on site. The safety and integrity of everybody, including our employees, is top priority.” 

Porsche will stop production at its factory in Leipzig until the end of next week following Russia’s invasion of Ukraine. Production at the firm’s Zuffenhausen facility meanwhile will continue. 

Skoda has issued a statement regarding Russia’s invasion of Ukraine. The Czech firm, which has around 600 employees in the country and produces vehicles there in Solomonovo, will donate around €400,000 (£333,390) to the charity People in Need. 

It has also stated it will support any Ukrainian workers to “build a safe life in the Czech Republic”, assisting with visa applications, accommodation, language courses, employment and education. 

‘Human’ is one of our company’s brand values,” Skoda said. “Now it’s more important than ever to put this value into action. Join us in making a contribution and supporting those who need our help.”

Skoda is also having to reduce production due to supply shortages caused by the invasion, which has prompted it to limit output of the Enyaq electric SUV.

"Due to the current situation in Ukraine, Skoda Auto is facing critical supply shortages of parts from several local suppliers that have an effect on some of our models,” the company said. "This is the reason why we will limit production of the Enyaq iV from this week on."

Skoda’s supply chain consists of several suppliers based in western Ukraine. It also has two factories in Russia which are still running. Further disruption is expected.

"The sales strategy in Russia and Ukraine is currently the subject of intensive discussions. Sales in both Ukraine and Russia can be expected to fall in view of recent developments,” the firm said. 

Russia was Skoda’s second-biggest market in 2021, taking delivery of around 90,000 vehicles. 

Volkswagen has paused deliveries of cars to local dealerships in Russia, due to supply chain issues exacerbated by Russia's invasion of Ukraine, the Russian RIA news agency has reported. 

Production will be halted for “several days” this week at two factories in Volkswagen’s home country of Germany, because required parts haven't been made in Ukraine.

Volvo

Volvo became the first automotive brand to take action in the midst of Russia’s invasion of Ukraine, suspending car shipments to the country until further notice.

Volvo said it made the decision because of "potential risks associated with trading material with Russia, including the sanctions imposed by the EU and US,”.

The Swedish firm sold around 9000 cars in Russia in 2021, these coming to the country from factories in Sweden, China and the US.

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