Volkswagen may have to revise its outlook due to Ukraine’s supply constraints


The war in Ukraine could cost Europe’s carmakers hundreds of thousands of vehicles, as the country is the main source of electrical wiring that powers the electrical systems of cars.

The closure of belt factories in Ukraine could reduce output by around 700,000 vehicles in the first and second quarters, said Colin Langan, an automotive analyst at Wells Fargo & Co., in a report. .

Volkswagen AG and BMW AG have shut down plants due to supply disruptions, while Mercedes-Benz AG has reduced production at its plant in Germany.

German auto supplier Leoni AG produced harnesses at two factories in western Ukraine that employed about 7,000 people before the Russian invasion.

The Bavaria-based company lowered its forecasts for annual sales and earnings on Monday, warning that it would not be able to make up for lost output from its facilities this year.

While the component maker plans to double production at some locations outside Ukraine, those adjustments could take as little as two to three months.

If VW can’t get a supply of harnesses for more than three or four weeks, the automaker will have to revise its outlook, said CEO Herbert Diess.

The company has shifted semiconductor production for 50,000 to 100,000 vehicles to assembly plants in China and the US due to disruptions in its European supply chain.

Ukraine has 17 wire-mining facilities, second only to Romania and Morocco among countries with lower-cost locations, according to Wells Fargo’s Langan.

He estimates the supply issue could affect 10pc to 15pc of European car production and sees the potential for a production recall this year. Volkswagen may have to revise its outlook due to Ukraine’s supply constraints

Fry Electronics Team

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