10:24 am, March 17, 2022
Experts have warned that new car production is set to be slashed even further this year thanks to the war in Ukraine and an existing shortage of semiconductors.
S&P Global Mobility, which specialises in automotive data, has cut its forecasts for the next two years as a result of the current global issues.
It now predicts that 170.1m cars will be built worldwide across 2022 and 2023 – a drop of more than five million compared to previous forecasts.
That breaks down as 81.6m cars in 2022 and 88.5m cars in 2023 – both 2.5m fewer than previously thought.
The firm’s worst case scenario predicts that as many as four million cars per year could be wiped off production lines.
A report from S&P Global Mobility said: ‘With conflict in Ukraine comes more reminders of the fragility of the world’s automotive supply chains.
‘The downgrade decomposition will broadly comprise just under one million units from lost demand in Russia and Ukraine; and the remainder split between the worsening semiconductor supply issues, and the loss of Ukraine-sourced wiring harnesses and other components respectively.
‘In addition, the complete loss of Russian palladium is a tail risk with the potential to become the industry’s biggest supply constraint.’
How the automotive industry has reacted to Russia’s invasion of Ukraine
- Inchcape to drop Russian operations completely in wake of Ukraine invasion
- Toyota and Nissan boost humanitarian relief efforts in Ukraine with multi-million donations
- Tesla will pay Ukrainian staff for three months if they are called back to fight for their country
- Mobile mechanics prepare to drive coach of paramedics and nurses to Ukraine
- Car dealers face further new car delays as manufacturers announce factory closures
- Stellantis donates one million euros to help Ukrainian refugees and civilians fleeing from Russian invasion
- Car factories stall as war in Ukraine causes parts supply issues across region
- Jaguar Land Rover suspends car deliveries to Russia
- Volkswagen halts production at German plants due to difficulties getting parts from Ukrainian supplier
- Ukrainian wiring harnesses overtake semiconductors as Volkswagen’s biggest supply chain headache
- Mercedes-Benz could lose £2bn in assets as Russia looks to clamp down on ‘unfriendly states’
The change in forecasts is yet more bad news for new car dealers, with registrations already hitting historic lows thanks to supply chain issues.
The Russian invasion of Ukraine has already sent huge shockwaves around the industry, despite previous hopes of a recovery.
A number of manufacturers have been forced to close production plants due to difficulties in getting parts.
Volkswagen recently admitted that getting hold of wiring harnesses from its Ukrainian suppliers is now its biggest supply issue.
To make matters worse, Ukraine’s two main suppliers of Neon for semiconductors have both ceased production due to the war.
The results have been huge waiting times for customers which are not set to improve any time soon.
Mark Fulthorpe, S&P Global Mobility executive director for global production forecasting, added: ‘The downside risk is enormous.’
