Russia-Ukraine war could drive up auto costs, supply constraints even further: Report

Due to Russia's unjustified attack on Ukraine, the costs of cars can go up, even prompting a shortage of supplies as wiring made in Ukraine that is very important for automobiles is already unavailable. Vehicle prices are projected to rise further into next year, with buyer demand high, supplies limited, and the war producing additional disruptions.

If Russian metal supplies, ranging from palladium for catalytic converters to nickel for electric vehicle batteries, are cut off, US output will almost certainly suffer. As per the reports of AP News, Mark Wakefield, co-leader of Alix Partners' global consulting firm stated, "You only need to miss one part not to be able to make a car." S&P Global forecasted that global automakers would produce 84 million automobiles this year and 91 million the following year before the war. It now expects fewer than 82 million people in 2022 and 88 million in 2023.

New vehicle availability in North America and Europe would be limited

S&P executive director Mark Fulthorpe is one of the analysts who believe that new vehicle availability in North America and Europe would be extremely limited and costs will remain high into 2023, according to AP News. High inflation across the economy for food, gasoline, rent and other needs will undoubtedly render a large percentage of ordinary purchasers. The closure of auto manufacturers in Russia is one factor contributing to the bleak outlook for manufacturing.

Wells Fargo, American multinational financial services company suggests that Ukraine manufactures 10% to 15% of critical wiring harnesses used in automobile production throughout the European Union. Automobile and components manufacturers have invested in Ukrainian manufacturing in order to reduce costs and be closer to European plants over the last decade. The wiring scarcity has slowed manufacturers in Germany, Poland, the Czech Republic, and other countries. Due to the shortages, German automobile exports to the United States and other countries may suffer.

BMW is attempting to collaborate with its Ukrainian suppliers

Wiring harnesses are bundles of wires and connectors that are specific to each model and cannot be found elsewhere. Harness manufacturers such as Aptiv and Leoni have reopened plants in Western Ukraine on an irregular basis despite the fighting. However, Aptiv, a Dublin-based company, is attempting to relocate production to Poland, Romania, Serbia, and even Morocco, according to AP News. BMW is attempting to collaborate with its Ukrainian suppliers and expand its search for parts.

(Inputs from AP News)

Image: Unsplash/ AP