The fixed assets of Russian automakers and suppliers may lose considerable value."
Fire at the city gates hit the pond fish
Today, when the global industrial chain is highly embedded, the Conflict between Russia and Ukraine and the temporary instability in the industrial chain of the two countries have had an impact on the global automobile industry. As a neighbor of Ukraine, the European Union, which has many car manufacturers, is clearly the first to feel the impact, and Volkswagen is one of them.
Wolfsburg has announced that the Zwickau plant and the Dresden glass plant were shut down for four and three days respectively this week, affecting nearly 10,400 employees. The daily output of the Zwickau plant is about 1,200 units, which also means that the output of the Volkswagen ID family will shrink by more than 5,000 vehicles this week. Considering that there is no sign of a peace agreement in the Russian-Ukrainian conflict for the time being, the two factories cannot guarantee that the wiring harness supply problem will be resolved next week.
Specifically, the huge gap in European manufacturers represented by Volkswagen comes from Leoni's Ukrainian subsidiary. As one of the world's top suppliers of automotive wiring harnesses and communication networks, LEONI has two sub-plants with a total of more than 7,000 people in the southwest region of Ukraine, and supplies automobile plants in almost all countries in Eastern Europe. At present, Leni's two Ukrainian factories have been closed indefinitely.
In addition to Leoni, Japanese supplier Sumitomo Electric also has a 6,000-person wire harness factory in Ukraine, which has also been stopped. Aptiv also announced that it will transfer all production capacity of its Ukrainian plant in the coming months. Other suppliers with production bases in Ukraine include Fujikura in Japan and Kromberg & Schubert in Kobschut in Germany, which have not yet made a statement.
What makes the public feel a little "fortunate" is that the two factories that have been shut down have been unable to produce at full capacity for a long time, because of the chip crisis that has never stopped since the outbreak of the new crown epidemic. In addition to playing a certain role in the processing end of the automotive industry chain, Russia and Ukraine are also exporters of important raw materials such as neon, krypton, xenon, palladium, nickel, aluminum, and platinum.
Among these raw materials, neon, krypton, xenon and other electronic special gases are called chip-made blood, of which neon is one of the raw materials for excimer laser gas, krypton is used for KrF lithography process, and xenon gas is used for semiconductor etching. Specific to automotive chips, electronic special gas is indispensable in the production of power management chips, MEMS for microelectromechanical systems, and IGBT power semiconductor components.
About 70% of the world's krypton, 40% of krypton and 30% of the world's krypton are supplied by Ukraine. Both micron micron in the United States and Dutch lithography giant Asmail are heavily dependent on neon gas exported from Ukraine.
In fact, the price of neon gas has always been strongly related to the situation in Ukraine. As early as the Crimean crisis in 2014, the price of neon gas rose 6 times.
The most affected by the soaring price of neon gas is not European and American manufacturers, but Japan and South Korea, which are "two ends away" in raw materials and terminal markets. According to the Korea Herald, South Korea imports 30.7 percent of krypton, 23 percent of the neon and 17.8 percent of the rare gas of xenon from Ukraine. South Korea-based automaker SsangYong Motors also imports raw materials such as aluminum from the region.
In addition, due to the core position of the three brothers of "platinum rhodium and palladium" in the automotive three-way catalyst, Russia, which accounts for 45% of the world's palladium production, will directly push up the price of palladium after being sanctioned.
The Russian-Ukrainian conflict south And france were injured
If the impact of Ukraine's outage on the global industrial chain is relatively controllable, the greater impact undoubtedly comes from the strict economic sanctions imposed on Russia by European and American countries. With several of Russia's largest banks kicked out of the SWIFT system, it will become increasingly difficult for international automakers to carry out related businesses at their manufacturing bases in Russia.
According to the German Association of the Automotive Industry (VDA), German companies have production sites for 49 suppliers and manufacturers in Russia and Ukraine.
Since the Russian automotive industry relies heavily on imports, for automakers, the importance of Russia itself as the eighth largest automobile sales market in the world is obviously better than the significance of production bases. After all, Ukraine's annual sales of 100,000 vehicles are too chicken.
In 2019, the Russian automotive industry exported a total of $3.3 billion and imports of more than $20 billion. In 2021, Russia sold around 1.67 million passenger cars (2020: 1.6 million) and light commercial vehicles, surpassing the UK and France.
Although Russia has always had the closest economic and trade ties with Germany, the auto kingdom, at least in the Russian auto market, South Korea and France are the biggest beneficiaries.
Since the Crimean crisis, annual sales of passenger cars in the Russian market have remained at around 1.5 million units, of which Hyundai and Kia have annual sales of about 380,000 units (23% market share); followed by the local brand АвтоВАЗ (in the popular sense of Lada, now parent company of France Renault), with sales of about 350,000 units (21% market share), followed by the Renault-Nissan-Mitsubishi Alliance's 210,000 units (13% market share) and volkswagen Group's 200,000 units.
According to the Russian business newspaper Vedomosti Knowledge, several global automakers have stopped shipping to local dealers, including Audi, Chevrolet, Volkswagen, Skoda, Land Rover and Porsche.
For Hyundai Group and Renault, the shrinking or even loss of the Russian market will be a heavy loss.
Hyundai first established its own plant in St. Petersburg, Russia, in 2010 and took over GM's old plant a few years ago to expand production of Hyundai Tucson, Hyundai Palisade and Kia Sportway, which were scheduled to be exported to North America and Europe this year. Hyundai Group's St. Petersburg plant produces nearly 230,000 units a year.
According to the Korea Times, South Korean companies exported $2.5 billion worth of cars to Russia in 2021, along with $1.45 billion worth of auto parts, accounting for 44 percent of South Korea's annual exports to Russia.
In addition to the Hyundai Group, France's Renault, Stellantis, Toyota, Volkswagen and Mercedes-Benz all have factories in Russia.
Renault's revenue in Russia accounts for 8% of its core business revenue, and Russia is also Renault's second largest market after mainland France. Renault has announced that its Moscow plant will cease production between February 28 and March 5, citing "stricter border controls in transit countries, forcing some established logistics routes to change."
The Stellantis Group has a factory in Kaluga, which is responsible for the production of Mitsubishi brand light commercial vehicles. CEO Carlos Tavares has said: "If Western sanctions affect production in Russia, the company will be prepared to transfer those production to other factories." ”
Also having a factory in Kaluga is Volkswagen. Volkswagen produces about 11 Skoda-brand passenger cars a year at the 4,000-person plant, as well as a plant in Nizhny Novgorod with a capacity of 60,000 units.
Regardless of how the Russian-Ukrainian conflict ends, as Stefan Bratzel, director of the Automotive Management Center at the German research institute, says, "the fixed assets of Russian automakers and suppliers may lose considerable value." For Russia, a traditional automobile industrial country that once had famous brands such as Gorky and Lada, its decline process may not be over, after all, one of russia's auto parts exports to the United States is even a carburetor.