Ukraine war further exacerbates auto disruption

BMW is among the car manufacturers that are warning of supply chain disruptions exacerbated by Russia’s invasion of Ukraine, reports Reuters.

The German carmaker, which sold a record 2.52 million vehicles last year despite semiconductor chip shortages, had expected to deliver even more this year, but now expects output on par with 2021.

In the UK, fewer than 900,000 vehicles were manufactured in 2021, the lowest level since 1956, as factories slowed production while scrambling to obtain scarce semiconductors.

No recovery in sight

Cox Automotive says further headwinds face the new vehicle manufacturing market, disappointing those looking forward to any projected recovery. The Ukraine crisis could mean that the sector is heading towards continuing rapid changing market dynamics, similar to 2021.
 
According to Philip Nothard, Insight and Strategy Director at Cox Automotive, despite the rapidly-changing global political situation, there are reasons to be optimistic, with healthy order banks for March registrations, albeit for specific manufacturers and particular models.

Writing in Cox Automotive’s new Q1 2022 edition of AutoFocus magazine, Nothard said: “It’s increasingly likely that we will see a continuation of many of the market dynamics we saw in 2021.

”However, although there are signs of new vehicle supply returning, it is currently very dependent on those manufacturers who have managed to secure the necessary materials to build vehicles and therefore keep production lines running. And even then, those manufacturers can only fulfil quotas on select models and derivatives.

“While manufacturers are slowly getting to grips with their production issues, and the situation will improve as the year progresses, this will be a prolonged and gradual process.

”As a result, we will not see a flood of stock enter the market, but rather a gradual increase as the backlog of orders for new vehicles gets cleared, in turn generating much needed stock for the used market.”