The global auto industry is closely watching what’s going on in Ukraine, and there is considerable concern about what could happen if this conflict lasts for a long time or spreads.
What has automakers on edge? For example, the average late-model vehicle has a catalytic cover in its exhaust system that uses palladium. Much of the palladium used within the auto industry is obtained from Russia, and now those executives have to start thinking about looking elsewhere. That can often be expensive.
The good news for the industry: There currently aren’t any plants or vehicle production sites that might shut down as a result of the invasion.
The concern is more on the supplier side of the industry.
“This level of instability adds to the ongoing issues that the auto industry and most manufacturing industries have been struggling with over the last couple of years,” IHS Markit auto analyst Stephanie Brinley said.
She’s referencing the pesky semiconductor shortage problem and its increased costs.
“There’s a potential of a restriction of neon gas that comes out of Ukraine that is used in production of semiconductor chips, which could then theoretically slow down semiconductor chip production, which is an ongoing issue,” Brinley said.
Automakers depend on and lean on the supplier base in crisis, so Julie Fream, CEO of the Original Equipment Suppliers Association in Metro Detroit, released a statement saying, “In the wake of Russia’s invasion of Ukraine, OESA is closely monitoring associated actions, such as sanctions and debt restrictions that may have an impact on automotive suppliers and the supply chain.
“Things are moving rapidly, and as they continue to evolve, we are working to keep suppliers aware of the changing situation and potential implications for their businesses.”
For now, all automakers can do is closely monitor the situation and look for areas where problems could quickly appear.