German manufacturers: ‘Impact war Ukraine is getting worse’

German manufacturers: ‘Impact war Ukraine is getting worse’

German automakers are bracing for further production disruptions due to the war in Ukraine. The German trade association VDA reports this to the news agency Reuters† This is mainly due to a shortage of raw materials and a disrupted logistics chain.

According to the VDA, the car industry will eventually have to deal with shortages and higher prices of raw materials. These include neon, which is needed for the production of microchips and which is widely exported by Ukraine, as well as palladium for the catalysts and nickel for lithium-ion batteries. The German car industry is largely dependent on Russia for the latter two raw materials. Palladium accounts for one fifth of total imports. For the supply of nickel, the German company BASF has a partnership with the Russian Norilsk Nickel. The war now puts pressure on those supply lines.

“It is difficult to give a reliable forecast now due to the rapidly changing situation, but one thing is clear: the production of cars in Germany will be further disrupted,” said the VDA. The trade association also mentions the current shortage of wiring harnesses in the list of problems, which has already forced Volkswagen and BMW, among others, to stop production.

The VDA also states that it is currently too early to say anything about the effect of the sanctions against Russia on car manufacturers. According to the VDA, German automakers exported 35,600 cars to Russia last year and produced 170,000 cars in the country for the domestic market. The volume of exports to Ukraine amounted to 4,100 cars in 2021.

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