'Aftermath of the Ukraine War' Global Car Production Decreases by Over 5 Million Units

S&P Cuts Production by 2.6 Million Units This Year and Next... Worst-Case Scenario Predicts 8 Million Unit Decline

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] Due to Russia's invasion of Ukraine, it is forecasted that global automobile production will decrease by more than 5 million units this year and next year.

S&P Global Mobility has downgraded its global automobile production forecast by 2.6 million units each for this year and next year, Bloomberg reported on the 16th (local time). The newly presented global automobile production figures by S&P Global Mobility are 81.6 million units for this year and 88.5 million units for next year.

S&P expects that Russia's invasion of Ukraine will not only affect energy and raw material prices but also exacerbate the shortage of semiconductors used in automobiles. It also stated that supply disruptions of harnesses are expected as Ukraine, a major supplier of harnesses, is caught up in the war.

According to market research firm AutoAnalysis, Ukraine accounts for about 20% of harnesses supplied to Europe. As a result, the operations of major European automakers' factories such as BMW and Volkswagen are being disrupted.

Supply disruptions are also expected for neon gas and palladium, which are used in semiconductor production. European auto parts manufacturers source neon gas from Ukraine and palladium from Russia.

S&P pointed out that the lockdown measures initiated last week in Changchun, the center of China's automobile production, due to the spread of COVID-19, are also a negative factor.

With Changchun under lockdown, local joint venture production plants of Volkswagen, Audi, and Toyota have suspended operations. Tesla announced it will halt operations at its Shanghai plant on the 16th and 17th.

S&P forecasts that in the worst-case scenario, automobile production could decrease by 4 million units each this year and next year.

This content was produced with the assistance of AI translation services.