Russia's invasion of Ukraine recently affected the global automotive world as well as both countries. Several brands have expressed their steps regarding this issue that has caught the attention of various countries.
The latest news, Toyota revealed its steps towards their business in both countries. The Japanese company prioritized handling the temporary crisis to ensure the safety of team members, retail staff and supply chain partners in the two warring countries.
Toyota has 37 dealerships in Ukraine that handle sales and after-sales services. Since February 24, Toyota has stopped all its activities there. While in Russia, Toyota also has a sales and after-sales network with a total of 168 locations.
Toyota also has a factory in St. Petersburg which produces the RAV4 as well as the Camry which is primarily for domestic production. Production at the St Petersburg plant ceased on March 4 and suspended all import activities until further notice. Toyota said the termination was due to disruptions in the spare parts supply chain. It is claimed that sales activities in the Blue Continent are not disturbed by the conflict in Eastern Europe.
Other Automotive Manufacturers
Ford's step is following that taken by General Motors. The Detroit automaker has stopped its activities in Russia, including stopping all exports there. In Russia alone, GM only sells about 3,000 vehicles a year, not a huge market for the American brand.
The latest news is also disclosed Harley-Davidson (HD). The well-known motorcycle brand has stopped their business activities in Russia. HD has 10 outlets in Russia out of about 369 dealers in the European Union. Like other automotive brands from the United States, the motorcycle manufacturer from Milwaukee also revealed that Russia is not a significant market for them.
Several premium car manufacturers were also affected. Aston Martin, BMW and Mini announced the termination of their business activities in Russia. Although Aston Martin only has one percent of the vehicle market in Russia. Meanwhile BMW and Mini stopped their production because many spare parts came from Ukraine. BMW has suspended export and production activities at its Kaliningrad plant, which produces around 12,000 vehicles in 2021.Several manufacturers have already expressed their steps regarding this Russia-Ukraine conflict. Ford recently revealed it would suspend its auto business in Russia. Ford, which has a 50 percent stake in Ford Soller, a Russian auto company. But Ford did not stop their production process at the St. plant. Petersburg, Elabuga and Naberrezhnye Chelny.
Ford has around 4,000 employees working in their factories producing the Ford Focus, Ford EcoSport, Transit, Kuga, Explorer, S-Max and Galaxy models. Ford donated $100,000 to help Ukrainians and families affected by the invasion.
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Hyundai and Kia are also affected by this Russian-Ukrainian condition. A South Korean brand that has a factory in St. Petersburg, Russia is very dependent on the supply of scarce gas from Ukraine. Materials such as neon, krypton, xenon and others are needed to manufacture their electric vehicle battery cells. Whereas the factory for export of Tucson, Palisade, and Kia Sportage is also used to ship to North America and Europe, in fact it was only inaugurated in 2010 ago.
This South Korean brand managed to sell 373,132 vehicles in the Russian market last year and holds the largest market share there. It is said that the Russia-Ukraine crisis will affect the South Korean economy because this giant company managed to sell 2.5 billion US dollars of vehicles last year. Still added to the amount of 1.45 billion US dollars for spare parts. It is likely that Hyundai and Kia's sales will drop 29 percent this year due to the incipient Russia-Ukraine crisis.
Russia itself is not without influence in the automotive world. The country is the world's third largest supplier of nickel and provides 40 percent of palladium for global needs. This material is used to manufacture catalytic converters used in all vehicle products. Russia also relies on 25 percent of its domestic automotive production. Various global sanctions received by Russia will disrupt the automotive production process in various countries.
These various possibilities have an impact on the forecast for world automotive sales to decline. This coupled with the problem of scarcity of chips that forced some manufacturers to reduce production even though car prices increased to compensate for the shortage.
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