{"id":14088,"date":"2022-04-12T13:26:08","date_gmt":"2022-04-12T05:26:08","guid":{"rendered":"https:\/\/battery9999.com\/en\/?p=14088"},"modified":"2022-04-12T13:26:08","modified_gmt":"2022-04-12T05:26:08","slug":"russia-war-could-further-escalate-auto-prices-shortages","status":"publish","type":"post","link":"https:\/\/battery9999.com\/en\/russia-war-could-further-escalate-auto-prices-shortages\/","title":{"rendered":"Russia War Could Further Escalate Auto Prices, Shortages"},"content":{"rendered":"

April 4, 2022<\/p>\n

\"\"<\/p>\n

DETROIT \u2014 BMW has halted production at two German factories. Mercedes is slowing work at its assembly plants. Volkswagen, warning of production stoppages, is looking for alternative sources for parts.<\/p>\n

For more than a year, the global auto industry has struggled with a shortage of computer chips and other vital parts that has shrunk production, slowed deliveries and sent prices for new and used cars soaring beyond reach for millions of consumers.<\/p>\n

<\/div>\n

Now, a new factor \u2014 Russia\u2019s war against Ukraine \u2014 has thrown up yet another obstacle. Critically important electrical wiring, made in Ukraine, is suddenly out of reach. With buyer demand high, materials scarce and the war causing new disruptions, vehicle prices are expected to head even higher well into next year.<\/p>\n

\"VW<\/p>\n

Workers on the production line in 2019 at Volkswagen’s plant in Chattanooga, Tenn. (Mark Elias\/Bloomberg News)<\/em><\/p>\n

The war\u2019s damage to the auto industry has emerged first in Europe. But U.S. production likely will suffer eventually, too, if Russian exports of metals \u2014 from palladium for catalytic converters to nickel for electric vehicle batteries \u2014 are cut off.<\/p>\n

\u201cYou only need to miss one part not to be able to make a car,\u201d said Mark Wakefield, co-leader of consulting firm Alix Partners\u2019 global automotive unit. \u201cAny bump in the road becomes either a disruption of production or a vastly unplanned-for cost increase.\u201d<\/p>\n

Supply problems have bedeviled automakers since the pandemic erupted two years ago, at times shuttering factories and causing vehicle shortages. The robust recovery that followed the recession caused demand for autos to vastly outstrip supply \u2014 a mismatch that sent prices for new and used vehicles skyrocketing well beyond overall high inflation.<\/p>\n

In the United States, the average price of a new vehicle is up 13% in the past year, to $45,596, according to Edmunds.com. Average used prices have surged far more: They\u2019re up 29% to $29,646 as of February.<\/p>\n

Before the war, S&P Global Mobility had predicted that global automakers would build 84 million vehicles this year and 91 million next year. (By comparison, they built 94 million in 2018.) Now it\u2019s forecasting fewer than 82 million in 2022 and 88 million next year.<\/p>\n

Mark Fulthorpe, an executive director for S&P, is among analysts who think the availability of new vehicles in North America and Europe will remain severely tight \u2014 and prices high \u2014 well into 2023. Compounding the problem, buyers who are priced out of the new-vehicle market will intensify demand for used autos and keep those prices elevated, too \u2014 prohibitively so for many households.<\/p>\n

Eventually, high inflation across the economy \u2014 for food, gasoline, rent and other necessities \u2014 likely will leave a vast number of ordinary buyers unable to afford a new or used vehicle. Demand would then wane. And so, eventually, would prices.<\/p>\n

\n

 <\/p>\n

Host Michael Freeze discusses the future of tire maintenance with Yokohama’s Tom Clauer and Goodyear’s Austin Crane and Jessica Julian.\u00a0Hear a snippet above, and get the full program by going to\u00a0RoadSigns.TTNews.com<\/a>.<\/p>\n<\/div>\n

\u201cUntil inflationary pressures start to really erode consumer and business capabilities,\u201d Fulthorpe said, \u201cit\u2019s probably going to mean that those who have the inclination to buy a new vehicle, they\u2019ll be prepared to pay top dollar.\u201d<\/p>\n

One factor behind the dimming outlook for production is the shuttering of auto plants in Russia. Last week, French automaker Renault, one of the last automakers that have continued to build in Russia, said it would suspend production in Moscow.<\/p>\n

The transformation of Ukraine into an embattled war zone has hurt, too. Wells Fargo estimates that 10% to 15% of crucial wiring harnesses that supply vehicle production in the vast European Union were made in Ukraine. In the past decade, automakers and parts companies invested in Ukrainian factories to limit costs and gain proximity to European plants.<\/p>\n

The wiring shortage has slowed factories in Germany, Poland, the Czech Republic and elsewhere, leading S&P to slash its forecast for worldwide auto production by 2.6 million vehicles for both this year and next. The shortages could reduce exports of German vehicles to the United States and elsewhere.<\/p>\n

Wiring harnesses are bundles of wires and connectors that are unique to each model; they can\u2019t be easily resourced to another parts maker. Despite the war, harness makers such as Aptiv and Leoni have managed to reopen factories sporadically in western Ukraine. Still Joseph Massaro, Aptiv\u2019s chief financial officer, acknowledged that Ukraine \u201cis not open for any type of normal commercial activity.\u201d<\/p>\n

Aptiv, based in Dublin, is trying to shift production to Poland, Romania, Serbia and possibly Morocco. But the process will take up to six weeks, leaving some automakers short of parts during that time.<\/p>\n

\u201cLong term,\u201d Massaro told analysts, \u201cwe\u2019ll have to assess if and when it makes sense to go back to Ukraine.\u201d<\/p>\n

BMW is trying to coordinate with its Ukrainian suppliers and is casting a wider net for parts. So are Mercedes and Volkswagen.<\/p>\n

Yet finding alternative supplies may be next to impossible. Most parts plants are operating close to capacity, so new work space would have to be built. Companies would need months to hire more people and add work shifts.<\/p>\n

\u201cThe training process to bring up to speed a new workforce \u2014 it\u2019s not an overnight thing,\u201d Fulthorpe said.<\/p>\n

Fulthorpe said he foresees a further tightening supply of materials from Ukraine and Russia. Ukraine is the world\u2019s largest exporter of neon, a gas used in lasers that etch circuits onto computer chips. Most chip makers have a six-month supply; late in the year, they could run short. That would worsen the chip shortage, which before the war had been delaying production even more than automakers expected.<\/p>\n

Likewise, Russia is a key supplier of such raw materials as platinum and palladium, used in pollution-reducing catalytic converters. Russia also produces 10% of the world\u2019s nickel, an essential ingredient in EV batteries.<\/p>\n

Mineral supplies from Russia haven\u2019t been shut off yet. Recycling might help ease the shortage. Other countries may increase production. And some manufacturers have stockpiled the metals.<\/p>\n

But Russia also is a big aluminum producer, and a source of pig iron, used to make steel. Nearly 70% of U.S. pig iron imports come from Russia and Ukraine, Alix Partners says, so steel makers will need to switch to production from Brazil or use alternative materials. In the meantime, steel prices have rocketed up from $900 a ton a few weeks ago to $1,500 now.<\/p>\n

So far, negotiations toward a cease-fire in Ukraine have gone nowhere, and the fighting has raged on. A new virus surge in China could cut into parts supplies, too. Industry analysts say they have no clear idea when parts, raw materials and auto production will flow normally.<\/p>\n

\n
<\/div>\n

Want more news?<\/strong>\u00a0Listen to today’s daily briefing above\u00a0or go here for more info<\/a><\/p>\n<\/div>\n

Even if a deal is negotiated to suspend fighting, sanctions against Russian exports would remain intact until after a final agreement had been reached. Even then, supplies wouldn\u2019t start flowing normally. Fulthorpe said there would be \u201cfurther hangovers because of disruption that will take place in the widespread supply chains.\u201d<\/p>\n

Wakefield noted, too, that because of intense pent-up demand for vehicles across the world, even if automakers restore full production, the process of building enough vehicles will be a protracted one.<\/p>\n

When might the world produce an ample enough supply of cars and trucks to meet demand and keep prices down?<\/p>\n

Wakefield doesn\u2019t profess to know.<\/p>\n

\u201cWe\u2019re in a raising-price environment, a [production]-constrained environment,\u201d he said. \u201cThat\u2019s a weird thing for the auto industry.\u201d<\/p>\n

\u2014 Chan reported from London.<\/i><\/p>\n

Source:Russia War Could Escalate Auto Prices, Shortages | Transport Topics (ttnews.com)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

April 4, 2022<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[113],"tags":[],"class_list":["post-14088","post","type-post","status-publish","format-standard","hentry","category-industrial-news"],"yoast_head":"\nRussia War Could Further Escalate Auto Prices, Shortages - \u660c\u8467\u80a1\u4efd\u6709\u9650\u516c\u53f8<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/battery9999.com\/en\/russia-war-could-further-escalate-auto-prices-shortages\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Russia War Could Further Escalate Auto Prices, Shortages - \u660c\u8467\u80a1\u4efd\u6709\u9650\u516c\u53f8\" \/>\n<meta property=\"og:description\" content=\"April 4, 2022\" \/>\n<meta property=\"og:url\" content=\"https:\/\/battery9999.com\/en\/russia-war-could-further-escalate-auto-prices-shortages\/\" \/>\n<meta property=\"og:site_name\" content=\"\u660c\u8467\u80a1\u4efd\u6709\u9650\u516c\u53f8\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-12T05:26:08+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/battery9999.com\/wp-content\/uploads\/2022\/04\/2022-04-12_132443-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"475\" \/>\n\t<meta property=\"og:image:height\" content=\"259\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"DPC\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"DPC\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/battery9999.com\/en\/russia-war-could-further-escalate-auto-prices-shortages\/\",\"url\":\"https:\/\/battery9999.com\/en\/russia-war-could-further-escalate-auto-prices-shortages\/\",\"name\":\"Russia War Could Further Escalate Auto Prices, Shortages - 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