Russia’s invasion of Ukraine will lower car production by millions of units over two years, S&P says

A worker attaches a wiring harness to the chassis of an X model SUV at the BMW manufacturing facility in Greer, South Carolina, November 4, 2019.

According to S&P Global Mobility, the war in Ukraine will lower global light-duty vehicle production by millions of units.

The global light vehicle production forecast for both years has been lowered by 2.6 million units.

Logistical and supply chain problems have been caused by the conflict. Many automakers source wire harnesses, which are used in vehicles for electrical power and communication between parts from Ukraine. The supply chain has been strained due to the coronaviruses and an ongoing shortage of chips.

S&P cut 1.7 million units from its forecast for Europe because of lost demand in Russia and Ukraine. The war caused shortages of chips and wiring harnesses.

S&P cut its North America light-duty vehicle production by 549,000 units for the years of 2022, and 2023.

About 45% of the wiring harnesses built in Ukraine are exported to Germany and Poland, placing German carmakers at high risk, according to S&P.

Herbert Diess, the CEO of Volkswagen, said this week that the war has put the company's outlook into question. He said that the company was moving some of its production to North America and China because of supply-chain disruptions.

BMW cut its car division's profit margin forecast on Wednesday due to the crisis in Ukraine.

Frank Weber, the company's chief technology officer, said that BMW's plants will be back to full production next week.

Weber said the company tried to keep jobs in the country by working with suppliers to duplicate production.

Weber said that the wire harness industry in Ukraine gives work to 20,000 people.

S&P removed nearly 25 million units from its global light-duty vehicle production forecast.