May 20, 2022

Dubai Week

Complete Dubai News World

Ukraine disrupts war vehicle industry - Jerusalem

Ukraine disrupts war vehicle industry – Jerusalem

Paris – “Al-Quds. The military offensive continues.
Production in Russia began to decline as sanctions began to hit banks and logistics, Russia’s first car group and French Renault subsidiary AvtoVAZ announced a four – day strike at its factories on Thursday. Supply problem in electronic components ”Car companies have been affected since the beginning of 2021.
Renault’s plant in Moscow, which produces SUVs for the local market, will be closed from February 28, while Lada will also be shutting down its vast historic base in Togliatti (southern).
Moreover, the Korean Hyundai-Kia Group, which ranks second in sales in Russia, suspended its plant in St. Petersburg until next week, explaining that the work suspension was not related to the controversy, but to the lack of components.
As the conflict erupted, car sales in Ukraine came to a halt, with a small market recently moving from Russian cars to European and Asian companies. On Thursday, Russian forces arrived near Zaporozhye (southeast), the country’s only car factory and the largest nuclear power plant in Ukraine and Europe.
The Russian market, which still lacked facilities, promised foreign car companies with the collapse of the Soviet Union, and they set up assembly plants there to avoid high import taxes.
In May 2021, Elon Musk, owner of Tesla, announced at a ceremony in the Kremlin that while the electric car market was still in its infancy, he could study plans to set up his fourth factory in Russia. In this oil resource country.
The market saw an improvement, but it collapsed in light of the financial crisis of 2009, and then took a sharp blow in 2014 by imposing sanctions on Russia for its invasion of Crimea in Ukraine.
In 2021 1.5 million cars were sold in Russia, which is equivalent to sales in Italy.
In an analysis published by the Automotive Research Center in Duisburg, Germany, expert Ferdinand Dutenhofer pointed out that Russia is a “dwarf in the car industry”, explaining that only 5% of cars sold are made with Russian technology. Cars relied on foreign companies.
Toyota, Volkswagen, BMW, Mercedes, Volvo, Jaguar and Ford also announced this week that they would suspend production and distribution in Russia, citing logistics issues and the “current geopolitical situation”.
Are Chinese companies replacing Western companies in Russia? “Chinese companies have basically gained market share by exporting cars to them, and this crisis may provide an opportunity if the penalties they face are not significant,” explains Philip Munoz of Cato Dynamics.
Dutenhofer believed that “China could increase its debt and aid to Russia, which would put Russia in China’s economic orbit.” In this regard, he expects the market to shrink to 1.1 million cars by 2022.
Without Chinese intervention, it would drop to 800,000 cars, much like 2015, which would overtake Russia behind Spain and Mexico.
The war also slows car production in the West, and Volkswagen Group’s cradle Wolfsburg’s factories will be closed for the week of March 14 due to a lack of supply from Ukrainian suppliers.
In addition, higher prices for raw materials and energy, especially gas, oil and electricity, can increase the cost of manufacturing cars for all companies.
On the other hand, while companies may be waiting for market recovery to improve their profit margins and finance switching to electric cars, potential customers may be reluctant to buy cars.
“During a crisis, people change their mind about buying a car or put it off,” Philip Munoz said. This reluctance increases if the crisis takes on a regional dimension.