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Ukrainian wiring harnesses overtake semiconductors as Volkswagen’s biggest supply chain headache

  • Volkswagen says getting wiring harnesses from Ukraine has become its biggest supply chain issue
  • Issue could force company to change 2022 outlook if solution is not found within weeks
  • Ukrainian suppliers of neon – needed to make semiconductors – add to headache by halting production

Time 3:11 pm, March 15, 2022

Difficulties getting hold of key parts from Ukraine has become the biggest supply chain headache for Volkswagen, the firm’s boss has revealed.

VW CEO Herbert Diess says that a lack of wiring harnesses from the country is now a bigger issue for the brand than the global semiconductor shortage.

The harnesses bundle up to 3.1 miles of wiring in every car VW makes and are unique to each individual model.

If a solution is not found in the coming weeks, the German firm could be forced to revise its financial forecasts.

There are also fears that Russia’s continued invasion of Ukraine will have a knock-on effect on the price of new cars, with parts set to become more expensive.

Reuters reports that batteries and catalytic converters are among the components due to skyrocket in price over the coming months.

Diess said: ‘The war in Ukraine has put our existing outlook into question.’

In order to counter the issues in Europe, VW is now looking to accelerate improved sales in China.

The carmaker is currently undergoing the process of relocating production from Ukraine to north Africa and eastern Europe in response to the crisis.

Volkswagen sold two million fewer cars than planned last year due to semiconductor shortages that rocked the industry.

Bosses are currently expecting deliveries to increase by between five and 10 per cent this year, with revenues due to rise by between eight and 13 per cent.

How the automotive industry has reacted to Russia’s invasion of Ukraine

Elsewhere, experts are warning that yet more semiconductor misery could be round the corner.

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It comes after Ukraine’s two leading neon suppliers ceased production because of Russia’s invasion.

Neon is a key ingredient in the production of semiconductors, with the two affected companies supplying around half of the world’s semiconductor-grade neon.

Angelo Zino, an analyst at CFRA Research, said: ‘If stockpiles are depleted by April and chipmakers don’t have orders locked up in other regions of the world, it likely means further constraints for the broader supply chain and inability to manufacture the end-product for many key customers.’

Jack Williams's avatar

Jack joined the Car Dealer team in 2021 as a staff writer. He previously worked as a national newspaper journalist for BNPS Press Agency. He has provided news and motoring stories for a number of national publications including The Sun, The Times and The Daily Mirror.

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