The Ukraine War will lower global light-duty vehicle production through next year by millions of units, predicts S&P Global Mobility.
The automotive research firm, formerly known as IHS Markit, recently downgraded its 2022 and 2023 global light vehicle production forecast by 2.6 million units for both 2022 and 2023, to 81.6 million and 88.5 million units respectively.
The company sites logistical and supply chain problems as well as parts shortages as the reason. Many automakers source vehicle’s wire harnesses from Ukraine. The shortage adds to the ongoing shortage of semiconductor chips.
S&P Global Mobility forecasts European auto production will experience the most disruption. The firm expects 1.7 million fewer units in Europe, including just under 1 million units from lost demand in Russia and Ukraine.
S&P also cut its forecast for North America light-duty vehicle production by 480,000 units for 2022 and by 549,000 units for 2023.
Nearly half of Ukraine-built wiring harnesses are exported to Germany and Poland, putting German carmakers most at risk, according to S&P. Volkswagen and BMS have been hit the hardest since Russia’s invasion of Ukraine.
Volkswagen CEO Herbert Diess reported the war has put the company’s 2022 outlook into question, as the automaker experiences parts problems. The company plans to move some of its production out of Europe to North America and China in response.
BMW cut its car division’s 2022 profit margin forecast from 8%-10% to 7%-9% as a result of the conflict.
BMW plants will resume full production next week following halts and cuts of production output at some German plants after the invasion.
The automaker is working with suppliers to duplicate, not relocate, wire harness production to keep jobs in the country.
In total, S&P reports it has removed nearly 25 million units from global light-duty vehicle production from its forecast between now and 2030.