European car factories are suffering from war-related supply problems.
Shortages of auto parts made in Ukraine are bringing assembly lines to a halt in Europe, a sign that the disruption to Europe’s economy from the Russian invasion could be bigger than expected.
Volkswagen, Europe’s biggest automaker, said on Tuesday that parts shortages would force it to slow production at its main plant in Wolfsburg and several other German plants, while BMW said it would cut production on sites in Germany, Austria and Great Britain.
BMW, citing Russian “aggression” and the “suffering and loss” it has caused, also said it would halt production in Russia and no longer export cars there. BMW, which assembles cars in Kaliningrad in cooperation with Russian automaker Avtotor, joins a growing list of firms that have decided the relatively small Russian market isn’t worth the risk. Volvo Cars announced on Monday that it was ending sales to Russia.
Motor vehicles are Germany’s biggest export and German car manufacturers support a network of suppliers throughout Europe. Prolonged plant closures could have a significant impact on the European economy, already threatened by its dependence on Russian oil and gas.
Ukraine, although not known as a hub for the automotive industry, is a major supplier of cabling systems essential to the operation of vehicles. The Russian invasion, which comes as automakers suffer from semiconductor shortages, underscored how chaos the industry can be thrown by problems at a few previously obscure factories.
One of the suppliers operating in Ukraine is Leoni, a German manufacturer of cabling systems and other electronic components with 100,000 employees worldwide. Leoni has factories in Stryi, south of Lviv near the border with Poland, and in Kolomyia, in western Ukraine in northern Romania.
Production at both sites was halted by the fighting, Leoni said in a statement Tuesday. A company task force is working “almost around the clock,” Leoni said, adding, “We are currently looking at all options to compensate for production disruptions.”
Volkswagen previously said it would suspend production this week in Dresden and Zwickau – the company’s biggest electric car plant – due to a lack of essential parts made in Ukraine.
Volkswagen said on Tuesday it would also be forced to slow production at its main plant in Wolfsburg from next week, and that assembly lines at the sprawling plant could shut down the following week if there is no was no improvement in the situation. A Hanover plant that produces commercial vehicles and several parts factories will also have to cut production, Volkswagen said.
BMW said production would suffer at its Munich factories; in Dingolfing, northeast of Munich; at an engine plant in Steyr, Austria; and at a Mini factory in Oxford, England.
Mercedes-Benz did not announce any shutdowns, but said in a statement it was watching events closely. “It is too early to assess the full extent of this escalation and its implications for our business,” Mercedes said.