Russia’s invasion in Ukraine led to auto industry observers cutting production and sales projections over the next two-years. The Ukraine crisis has caused the closure of factories across Eastern Europe and a spike in raw material prices.

Many factories have managed to survive the invasion in Ukraine. Workers have reportedly had to break from work to flee rocket fire.

In March, S&P Global Mobility, formerly IHS Markit, cut its global auto production forecast by 2.6 million vehicles in both 2022 and 2023 because of the conflict. As many as 4,000,000 vehicles could be lost in the worst scenario. 

European auto output is expected to fall about 9% — roughly 1 million cars.

Some of that will be due directly to lost auto sales in Russia and Ukraine, but those countries together form a small share of the global automotive market — about 2% of the total in 2021.

Worst of all is the lack of parts and materials that have already hit European carmakers. The report warns that this could lead to shortages on other markets. 

Separately, credit analysts at S&P Global Ratings also forecast that in 2022 global auto sales will drop 2% below 2021 levels. This is significantly less than the predicted 4% to 6% increase in 2022 sales that S&P Global Ratings had previously forecast in October 2021. 

Reports highlighted problems in the availability of vital automotive parts. This included wire harnesses, which are mainly from Ukraine. At risk also are raw materials — Russia produces about 40% of the world’s raw palladium — which is used to clean vehicle exhaust. This region also produces nickel which is used to make electric vehicles batteries. The region is also a producer of nickel, which can be used in electric vehicle batteries.

They are all key materials that go into making automobiles. 

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