The Russia-Ukraine war has had a great impact on the auto industry, material shortages

DNHN - There are new problems for the global auto industry because of Russia's brutal war in Ukraine, and they have nothing to do with cars. In Germany, BMW has stopped making cars at two of its plants. Mercedes is taking a break from work at its assembly plants. Volkswagen says it will stop making cars and is looking for new sources of parts.

Since last year, the global auto industry has been having a hard time getting computer chips and other important parts. This has cut production, slowed deliveries, and lowered the prices of cars.

The important electrical wiring that was made in Ukraine is now out of reach, which is bad. Car prices are expected to rise even more next year because demand is high, raw materials are hard to come by, and war is making new problems.

It has been a problem for automakers since the pandemic started two years ago, sometimes closing factories and making cars hard to find. There has been a strong post-recession recovery, which has made people want cars more than there are cars to buy.

This has caused prices for new and used cars to rise far above general inflation.

It has cost more to buy a new car in the United States over the last year. The average price of a new car is now costs $45,596 (according to Edmunds.com).

There has been a big rise in the average used price: It went up 29% in February to $29,646, which is how much it costs now.

In advance of the war, S&P Global Mobility said that global automakers would make 84 million vehicles this year and 91 million next year. There will be less than 82 million in 2022 and 88 million the year after. 

Wells Fargo says that between 10% and 15% of the important wiring that helps make cars in the European Union comes from Ukraine.

Car and parts companies have been investing in factories there for the last decade to cut costs and be close to factories across Europe. There aren't enough wires to make cars in countries like Germany and Poland.

This has slowed down factories and caused S&P to lower its global auto output forecast to 2.6 million vehicles this year and next, Shortages could cut German car exports to the United States and other places.

Parts are coming from all over the world now because BMW wants to work with its Ukrainian suppliers. However, it may not be possible to find new sources of supply.

Neon is a gas that is used in lasers to write circuits on computer chips. Ukraine is the world's top exporter of neon. Russia is also a big supplier of raw materials like platinum and palladium, which are used to make pollution-reducing catalytic converters that can be found in many cars.

Russia also makes 10% of the world's nickel, which is used in electric car batteries. There have been no problems with mineral supplies from Russia at all. Recycling can help solve problems with supplies.

There will still be sanctions on Russian exports even if a deal is made to stop fighting.

 Hong Hanh