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Renault, Hyundai and Volkswagen are the most exposed to the Russian car market

When people try to leave the city in Kiev, Ukraine on February 24, 2022, the car will stop.

Chris McGrath | Getty Images

New US sanctions and Moscow’s invasion of Ukraine Has a wide range of influences Regarding the already constrained global supply chain for cars, very few automakers have notable exposures in Russia.

Based in France Renault GroupHas control of Russian car maker AvtoVAZ, which accounts for 39.5% of the country’s car production and is based in South Korea Hyundai group At 27.2%.

According to research firm IHS Markit, German car maker Volkswagen has a 12.2% share and Toyota has a 5.5% share. Others follow with a low single digit.

“The largest in the world [automakers] “We’re not making huge profits from Russia, but Renault is clearly the largest company in terms of exposure,” said Tim Urkhart, IHS’s leading European car analyst.

Renault will stop production at its Moscow assembly plant next week due to a “forced change in existing distribution routes” causing a shortage of parts, Reuters reported Friday.

Among the Detroit Three car makers General Motors In Russia, production was stopped seven years ago and the joint venture was terminated in 2019, but the sales office for imported cars continues to operate.both Ford motorLeaving the country mainly in 2019, and StellantisFormerly Fiat Chrysler, each operates a factory through a joint venture. Stellantis accounts for only 1.6% of the country’s car production, IHS reports.

Russian car market

In the 2000s, automakers expected Russia to become a major car market and a hub to boost business in international markets, including Europe. However, according to IHS, the market peaked in 2008 with sales of only 2.96 million units due to factors such as national instability and economic stagnation.

“It’s been declining significantly in the last few years, and I don’t think recent events will change that,” Urkhart said.

The Russian automobile market has reached annual sales of 1.6 million to 1.75 million over the past three years. That’s only one-tenth of last year’s US market, and only about 2% of global car sales in 2021.

According to IHS, there is little Ukrainian car production and last year’s car sales were only about 100,000. However, Russia’s aggression could have spillover effects on the global automotive supply chain, especially including the supply of neon gas and palladium for semiconductor chips and catalytic converters.

“The potential impact on the automotive industry seems to focus primarily on the potential disruption in natural resource supply,” said Stephanie Brynley, IHS’s leading US-based automotive analyst. Told. “This includes neon gas from Ukraine and palladium from Russia. At this time, we don’t know how or when the impact will be felt.”

Parts problem

The US neon supply used in the lithography process for chip manufacturing is almost entirely from Ukraine and Russia. According to Techcet A California-based market research company specializing in critical supply chain materials and components.

According to Techcet, Russia is also a major palladium supplier alongside South Africa, supplying about 33% of global demand. Palladium is used in automotive manufacturing catalytic converters.

“There’s only one more thing that pushes prices up,” said Lita Shon-Roy, CEO of Techcet. “The car market will certainly feel it.”

Shon-Roy said most chip makers have long-term contracts for such raw materials, so it’s unlikely that you’ll see a price increase for six months, if not one year. Renault, Hyundai and Volkswagen are the most exposed to the Russian car market

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