Wednesday, February 21

The engine on edge due to the lack of raw materials due to the war in Ukraine


Although Russia does not stand out as a world power in the export of vehicles,
the war with Ukraine it can be a significant loss for the production of automobiles worldwide, and particularly in Europe.

The country represents an important market at a global level, with an average of 293 cars per thousand inhabitants. In 2020, a total of 1.1 million cars left Russian factories, and before the pandemic
reached over 1.6 million units manufactured. At the beginning of 2021, there were a total of 45 million passenger cars registered in the country.

In recent years, and especially in Moscow, high-end cars have been noticeable in traffic, but the truth is that the most popular models are from the medium/low segment, and coexist especially in less urban areas with some cars manufactured during the communist regime.

In Ukraine they were produced before the pandemic
about 200,000 units vehicles per year, while the third position in the area is occupied by Belarus, with only about 40,000 units per year.

In Russia there are also manufacturing plants of such important groups as Renault, Stellantis,
Toyota or Volkswagen. Some of these business groups are already noticing the first consequences.

For example,
Renault has paralyzed the operations of its factories in Russia, its second largest market after Europe: it accounts for 8.9% of its total sales volume.
The Renault assembly plant in Moscow, where the Captur and Dacia Duster are manufactured for the Russian market, has stopped its activity. Vehicle production has also ceased at the AvtoVaz plant in Togliatti, in the south of the country, where the Lada models (a brand integrated into the Renault Group) are manufactured.

The group
volkswagen has announced the stoppage of its German factories in Zwickau and Dresden at the beginning of March, because they depend on various components, such as electrical cables, that are made in Ukraine.
According to the German Manufacturers Association, VDAGerman automotive companies have 49 production centers in Russia and Ukraine.

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Ford, for its part, has a ‘joint-venture’ with Ford Sollers, which has three factories in Russia. The American stated that “it would manage the effects of the crisis in real time.”

Another related company is
the steel company Nippon Steelwhich stated that it would look for a supply alternative, given that 14% of its raw materials come from the two countries in combat.

Putin’s party secretary, United Russia,
Andrey Turchakstated that “they did not rule out nationalizing the factories of companies that announce the cessation of their operations in Russia.”

Lada Granta, the best-selling car in Russia

Manufacturers in Russia

According to the Swiss bank UBS, the main manufacturers in Russia are the Renault-Nissan Alliance, which produces 7.8% of its total in the country. It is followed by the Volkswagen Group (2.5%), Ford (0.5%), BMW, Stellantis and Mercedes-Benz, with 0.4%.

The weight of the sales of the Nissan-Renault-Mitsubishi Alliance over its world total, which includes Lada and Avtovaz, is 8.9%.

The
lada granta it is the best-selling model in Russia. The basic version costs 560,000 rubles (4,700 euros). If we add extras such as heated windshield or cruise control it goes up to 780,000 rubles (6,500 euros). The Lada Vesta model ranks second in sales in Russia. With manual transmission, air conditioning and airbags, it is sold for 795,000 rubles (about 6,600 euros).

The European economy does not have a high number of Russian and Ukrainian suppliers in its first level of relations, but they do have a certain role when it comes to raw materials.

Thus, Russia is one of
the world’s largest exporters of raw materials employed in the automotive industry. It is the leading producer of metals such as palladium, a scarce element whose production Russia dominates with 40% of the market share. It is mainly used for the manufacture of catalysts and batteries.

It is also an important
nickel supplier, used as anticorrosive material. It is the third largest exporter of steel and the second largest producer of aluminum in the world. Its price has already increased by around 15% in the first months of 2022, and it is expected that if the war continues over time, the price will increase even more, especially if the European Union imposes new sanctions and restrictions on imports. raw material.

The sanctioning measures
for the invasion of Ukraine could bring with it a shortage of raw materials, which would aggravate the situation in the main vehicle production plants throughout Europe, which are already suffering production stoppages due to the ‘microchip’ crisis as a result of Covid.

Spanish companies

The three great Spanish manufacturers of the auxiliary industry,
Gestamp,
CIE Automotive and
Antolin Group, have not been left out of the consequences of the war with Ukraine, by stopping the production of a large part of their clients. Among them, there are seven locations and
more than 700 direct jobs.

At the moment, the only one of these three that has stopped its lines is Gestamp, the largest of them in terms of volume, since it has four plants
that employ 459 people. In 2021, the Basque stamping company generated almost 6,000 million euros in turnover, 107 of which came from the Russian plants.

Antolin, for its part, has not yet shut down its two factories in the country, located
in Saint Petersburg and Nizhny Novgorod. Between them, they employ 149 people and the Russian market represents less than 1% of their global sales, although they stated that it grew at a year-on-year rate of 9% in 2021.

CIE only has one factory, in the industrial center of Togliatti —where Stellantis, Avtovaz and Lada have a presence—. “At the moment, there is no decision made, but we depend on the car manufacturers,” they say from the Basque company. This plant, which
employs 65 peoplehad a turnover of nine million euros, just 0.3% of the global figure.

Both Russia and Ukraine are small markets with respect to the export of vehicles manufactured in Spain. According to figures from the National Association of Manufacturers,
Anfacin 2021 they left our factories for Ukraine
a total of 8,432 units. The number is reduced to just 3,098 cars assembled in Spain and exported to Russia.

The main manufacturers with production centers in Spain assure ABC that
they have practically not noticed the consequences of the war. In all the brands they follow the situation through various committees, and in the coming weeks they do not rule out that there may be shortages in some of the supplies or raw materials, which they would try to solve by looking for alternative suppliers.

The most immediate repercussion is the increase in the price of some of the raw materials, so it will have its repercussion on the one hand in the accounts of the manufacturers and on the other hand in
the final increment of the product. Thus, the consumer could notice a rise in car prices of around 1%, sources in the sector have confirmed to this newspaper.

Regarding the increase in energy costs, from Stellantis they have explained to ABC that “the impact at the moment is not perceptible, since
long-term contracts are signed with the energy companies, which guarantees price stability for now».


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