War in Ukraine hampers global automotive industry

4 April 2022
2022-04-04 15:34

BMW has halted production at two German factories. Mercedes is slowing work at its assembly plants. Volkswagen, warning of production stoppages, is looking for alternative sources for parts.

For more than a year, the global auto industry has struggled with a disastrous shortage of computer chips and other vital parts that has shrunk production, slowed deliveries and sent prices for new and used cars soaring beyond reach for millions of consumers. With buyer demand high, materials scarce and the conflict causing new disruptions, vehicle prices are expected to head even higher well into 2023.Supply problems have bedeviled automakers since the pandemic erupted two years ago, at times shuttering factories and causing vehicle shortages. S&P Global had predicted that global automakers would build 84 million vehicles this year and 91 million in 2023. By comparison, the industry built 94 million vehicles in 2018.

Compounding the problem, buyers who are priced out of the new-vehicle market will intensify demand for used vehicles and keep those prices elevated, too — prohibitively so for many households.

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