BMW, VW say Russia invasion is causing reduced vehicle production in Europe

The war in Ukraine has slowed vehicle production in Europe and caused shortages for integral parts, BMW and Volkswagen said this week.

The German automakers are particularly struggling to get wiring harnesses because Ukraine is a major supplier of the parts.

Nicolas Peter, a member of the board of management for BMW, on Wednesday said “supply restrictions” had resulted in “production interruptions at several BMW Group plants.”

Volkswagen expressed similar concerns last week, saying in an outlook report that it was unclear what the impact would be but that the war would create “bottlenecks in the supply chain.”

The Associated Press reported Volkswagen was shifting some auto production out of Europe and into other regions like South America and China.

On Tuesday, IHS Markit, a research firm with S&P Global, downgraded its 2022 forecast by 2.6 million vehicles because of Russia’s invasion of Ukraine.

The research firm said Ukraine is a major supplier of the wiring harnesses, which are complex assemblages of wires and cables, while Russia supplies about 40 percent of the world’s palladium, a metal primarily used for vehicle production.

A shortage of semiconductor chips that began before the invasion of Ukraine is also continuing to compound the issue.

BMW’s Peter said it was unclear how production might fare if the war drags on even longer.

“Further significant price increases in connection with the war in Ukraine and the related sanctions are not part of the forecast,” he said. “Possible longer-term effects of the conflict in Ukraine cannot be estimated at the present time and are therefore also not reflected in our outlook.”