BMW has halted production at two German factories. Mercedes is slowing work at its assembly plants. Volkswagen, warning of production stoppages, is looking...
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.
Now, a new factor — Russia’s war against Ukraine — has thrown up yet another obstacle. Critically important electrical wiring, made in Ukraine, is suddenly out of reach. With buyer demand high, materials scarce and the war causing new disruptions, vehicle prices are expected to head even higher well into next year.
In the United States, the average price of a new vehicle is up 13% in the past year, to $45,596, according to Edmunds.com. Average used prices have surged far more: They’re up 29% to $29,646 as of February. “Until inflationary pressures start to really erode consumer and business capabilities,” Fulthorpe said, “it’s probably going to mean that those who have the inclination to buy a new vehicle, they’ll be prepared to pay top dollar.”
Wiring harnesses are bundles of wires and connectors that are unique to each model; they can’t be easily re-sourced to another parts maker. Despite the war, harness makers like Aptiv APTV and Leoni LEO have managed to reopen factories sporadically in Western Ukraine. Still Joseph Massaro, Aptiv’s chief financial officer, acknowledged that Ukraine “is not open for any type of normal commercial activity.
Likewise, Russia is a key supplier of such raw materials as platinum and palladium, used in pollution-reducing catalytic converters. Russia also produces 10% of the world’s nickel, an essential ingredient in EV batteries.
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