Volkswagen, BMW to idle plants on parts shortages from Ukraine

[NEW YORK] BMW joined Volkswagen in warning of production outages because Russia’s war in Ukraine is disrupting car-parts supplies from the country.

VW will idle some production lines in Wolfsburg – the world’s largest car plant – next week before a broader shutdown the following week, the company said Tuesday (Mar 1). BMW said in a separate statement it expects temporary shutdowns because of parts shortages and announced it’ll suspend vehicle exports as well as local assembly in Russia because of the invasion.

Russia’s invasion is sparking repercussions for manufacturers already facing significant parts bottlenecks and fallout from the coronavirus pandemic. Even before these latest supply-chain setbacks, automakers had been forced to curb production over the past year because of a chronic shortage of computer chips.

German cable maker Leoni, with 2 plants in Ukraine employing some 7,000 workers, said it’s intensifying efforts to help offset the disruption in Ukraine by adding capacity at other sites while prioritising the safety of its employees.

“Logistics in and out of Ukraine are a particular challenge, especially because of the partly chaotic situation at the border points with the EU,” a Leoni spokesman said in a statement.

German automotive companies and suppliers maintain some 49 production sites in Russia and Ukraine, according to the German car lobby group VDA.

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Other sites to be affected include Emden and Hanover, where VW makes commercial vehicles, as well as component factories. There may be further cuts to production, the company said. BMW didn’t specify which plants would be hit by outages.

VW said last week it would halt production in Zwickau and Dresden at plants that make electric cars because of shortages of parts including cable sets. On Tuesday, VW’s Russia unit said it had suspended deliveries of vehicles to dealers until further notice as sanctions imposed on the nation take effect.

General Motors, Harley-Davidson and Jaguar Land Rover were also among carmakers halting shipments to Russia in recent days.

Last year, BMW sold around 49,000 vehicles in Russia, about 2 per cent of global car sales. Last year, it assembled about 12,000 vehicles at factory in the Russian exclave of Kaliningrad that BMW has operated with local partner Avtotor for more than 20 years. BLOOMBERG