The automotive industry has seen long-term delays due to the Covid-19 pandemic and its impact on the supply chain, manufacturing procedure and transportation and this continues to be the case. However, the conflict in Eastern Europe has created additional problems that will impact the production of new cars.
In this article, we hope to provide you with a little more context on how the production of new cars is being affected and help you set realistic expectations based on how the war in Ukraine will impact European manufacturers.
Ukraine Plant Closures
There are a number of manufacturers in Europe who have plants in Ukraine which most notably produce the wire harnesses that are an essential component in the electric system used to power a vehicle.
German auto supplier Leoni AG made wire harnesses at two factories in Western Ukraine that employed by around 7,000 people. Since Russia’s invasion these factories have been closed and though they have increased production in their other factories it may take a few months for them to increase production enough to replace what was being made in Ukraine.
Ukrainian Metal Supplies
Ukraine is an exporter of the precious metal palladium, which is used to manufacture catalytic converters that help to reduce the harmful emissions your car puts into the atmosphere.
They are also a key source for European factories of nickel ore which manufacturers refine into cathode materials to make batteries for electric and hybrid vehicles.
Additionally, Ukraine is also a key supplier for Europe’s neon gas, which is used to make microchips that are an essential component in the running of modern vehicles.
A number of manufacturers have advised they are slowing down or temporarily pausing production at European factories due to parts shortages and we expect to see more factories take similar measures as the conflict continues.
Volkswagen have advised their dealerships that they are currently experiencing a bottleneck in the supply of new vehicles due to Covid and semi-conductor shortages and the Ukrainian war will add to this bottleneck, though they add that the humanitarian crisis in the area is their primary concern which is why they are advising customers to expect delays.
BMW Factory Changes
BMW have advised that they are in discussions with their suppliers in Ukraine but their primary concern is their safety and so they will be resuming production in other plants to try and reduce the impact of the war for their customers. They have confirmed that factories in Munich and Dingolfing, Germany, will resume production and the Oxford and Swindon will be operating again from next Monday however they still expect to see a decline in their overall productivity due to part shortages and not wanting to overextend current employees at these locations.
Pause in Russian Sales
Many manufacturers, including Honda, Jaguar Land Rover and VW, have committed to no longer exporting and selling vehicles to Russia. The additional vehicles this provides to the rest of the European market may help cushion the impact but we have seen companies forecasts across Europe be slashed as parts and supply chains are disrupted by the war.
Also because the UK has right-hand drive vehicles unlike the left-hand drive that the rest of Europe use this may not be as helpful for the UK market unless they look at converting them.
We will keep you informed as we get any more information on whether models are modified for UK drivers.
How Will My New Lease Be Affected By the War?
We are still seeing how the industry is being impacted by the war, and with the unpredictability of conflict and unknown end date we are still discovering the different impacts it will have across the industry.
If you are currently in the process of arranging, or are looking to arrange, a lease with Xcite Car Leasing we will let you know of the lead time on the vehicle as advised by the dealership at the time. Our Customer Services Team regularly request updates from our dealers and as soon as we have an update we will let you know, even if there’s been no change to your order.
If there has been any change to the estimated arrival of your car due to the war in Ukraine we will work with you to find an alternative if you are unable to wait and will keep you informed of all the information we get about the industrywide delays.
Drivers in current lease vehicles may also be able to extend their current lease vehicle in order to get them to
The impact of the current crisis, as well as the long-term effects of Covid-19, are not specific to one manufacturer or model, though some are feeling it slightly more than others, and so it’s important to remember that you will find delays across the entire automotive sector.
If you are looking to lease, we recommend looking at ordering a car as soon as you are able to so that your order is in the queue for when production restarts / increases and you can take advantage of the great deals currently available. This does not mean you will be paying for a car, as no payments are made until it is ready for delivery but does mean that though you may experience delays you have a place in the queue.
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