Car supplies worsen as Ukraine crisis closes German plants

The possibilities of any return to normality of automobile supply look to had been scuppered through the Russian invasion of Ukraine.

Car makers in Germany – which include Audi, VW, Mercedes and BMW – have closed factories because they can not access wire harnesses which are produced in Ukraine.

It comes as a further shock to the leasing broker industry having navigated the pandemic and the semiconductor shortage. With bulging order banks but no vehicles to supply and consequently no payout, it's going to place further strain on stretched broker finances.

As well as producing cord harnesses, Ukraine is likewise a key provider of a gas utilized in chipmaking.

Stefan Nikola, writing in today’s Bloomberg Hyperdrive publication said:

“Raw materials sourced from Russia include nickel for electric-vehicle batteries and palladium for catalytic converters. Ukraine is a key supplier of neon gas used in chipmaking, as well as cable harnesses. German parts maker Leoni, which has  cable-harness plants in Ukraine employing some 7,000 workers, is trying to mitigate disruptions by adding capacity at other sites. But automakers have hardly any harnesses in stock and can’t easily source them elsewhere, according to the VDA, Germany’s car lobby.”

He goes on to write that in line with Deutsche Bank analysts, Volkswagen could be the OEM most affected.

It comes against the background of promising new automobile sales, according to data from the SMMT, which has seen the marketplace for electric powered motors accelerate further to take 17.7% of February registrations in a marketplace that’s up 15.0% on locked-down 2021, but almost 26% below pre-pandemic February 2020.

Meryem Brassington, electrification propositions lead at broker funder Lex Autolease said:

“After a record-breaking year for zero-emission vehicles, there appears to be no signs of the market slowing down, with EVs now accounting for 14.3% of all new motors bought in the UK. The outlook for EVs looks exceptionally bright.”

While the prospects for EVs is immensely encouraging, what absolutely seemed like the beginning of an easing of automobile supply, has quickly tightened and pushed back automobile delivery dates further. Including broker cash flow.

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