13/08/2022

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Ukraine conflict reasons closure of 10 main car factories in Russia

MOSCOW, Russia: As the economic fallout from Moscow’s invasion of Ukraine intensified, ten major car and motorcycle manufacturers announced the closures of their factories or the suspension of sales in Russia.

Toyota, Mercedes-Benz and Hyundai said they would cease manufacturing in Russia, and Porsche and BMW closed their plants due to a lack of parts from Ukraine. Ford, Renault, and BMW have already closed their Russian plants.

Adding to a growing list that includes Volvo, Jaguar Land Rover and Volkswagen, automakers Mercedes-Benz, Toyota, Honda, Bentley, Aston Martin, Harley-Davidson and Rolls-Royce all stopped sales to Russia.

Only a handful of brands, including Hyundai and Nissan, were still importing vehicles to the country.

Renault has stopped sales and closed its Moscow plant due to difficulties in sourcing parts from Europe.

This week, Carlos Tavares, chief of Stellantis, which owns brands such as Jeep, Peugeot and Fiat, said he aims to keep selling into Russia as long as sanctions allow.

Essential parts from Ukrainian plants have begun to dry up, forcing carmakers across Europe to halt production, while an increasing number of car brands that import to Russia are canceling sales because of sanctions.

In 2020, Honda, which canceled sales this week, said that it planned to leave the Russian market this year, while Porsche said it will close its factory in Leipzig, Germany.

Meanwhile, BMW said its factories in Germany and the Mini plant in the UK would be forced to close next week, and VW, which owns Porsche, has already closed two facilities in Europe, warning of further cuts due to difficulties in obtaining parts.

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However, Stellantis’ Tavares said the impact on the company’s plants in France, Italy, Germany, Spain and the UK is currently “very limited,” because it sourced fewer parts from Eastern Europe than its rivals.

Ukraine is a key producer of wiring harnesses that hold the electronic cables within a car, and parts manufacturer Aptiv, which has two Ukrainian facilities, has already moved some equipment to other sites to try to maintain production.