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's created additional problems that'll 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 2 factories in Western Ukraine that employed around 7,000 people. Since Russia’s invasion, these factories have been closed and though they've 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're 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 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're 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.
VW delays
Volkswagen have advised their dealerships that they're 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's their primary concern which is why they're advising customers to expect delays.
BMW factory changes
BMW have advised that they're in discussions with their suppliers in Ukraine but their primary concern is their safety and so they'll be resuming production in other plants to try and reduce the impact of the war for their customers. They've confirmed that factories in Munich and Dingolfing, Germany, will resume production and that 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've 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'll keep you informed as we get more information on whether models are modified for UK drivers.
How'll my new lease be affected by the war?
We're still seeing how the industry is being impacted by the war, and with the unpredictability of conflict and unknown end date we're still discovering the different impacts it'll have across the industry.
If you're currently in the process of arranging, or are looking to arrange, a lease with Xcite Car Leasing we'll 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'll let you know, even if there’s been no change to your order.
If there's been any change to the estimated arrival of your car due to the war in Ukraine we'll work with you to find an alternative if you're 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.
The impact of the current crisis, as well as the long-term effects of Covid-19, aren't specific to one manufacturer or model, though some are feeling it slightly more than others, and so it’s important to remember that you'll find delays across the entire automotive sector.
If you're looking to lease, we recommend looking at ordering a car as soon as you're able to so that your order's in the queue for when production restarts / increases and you can take advantage of the great deals currently available. This doesn't mean you'll be paying for the car, as no payments are made until it's ready for delivery but does mean that though you may experience delays you have a place in the queue.