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Renault, Hyundai and VW have most exposure to Russian car market

Cars sit at a standstill as people try to leave the city on February 24, 2022 in Kyiv, Ukraine.

Chris Mcgrath | Getty Images

New U.S. sanctions and Moscow’s invasion of the Ukraine could have a wide-ranging impact on the already constrained automotive global supply chain, but only a few automakers have notable exposure in Russia.

France-based Renault Group, which has a controlling stake in Russian automaker AvtoVAZ, accounts for 39.5% of the country’s vehicle production, followed by South Korea-based Hyundai Group at 27.2%.

German automaker Volkswagen has a 12.2% share, according to research firm IHS Markit, while Toyota Motor follows at 5.5%. Others follow at low single digits.

“The biggest global [automakers] aren’t making tons of money out of Russia,” said Tim Urquhart, a European principal automotive analyst at IHS. “But Renault is obviously the biggest company in terms of exposure.”

Renault will suspend production at its assembly plant in Moscow next week due to “forced change in existing logistic routes” that are causing component shortages, Reuters reported Friday.

Among the Detroit Three automakers, General Motors ceased production operations in Russia seven years ago and ended a joint venture in 2019, but it continues to operate a sales office for imported vehicles. Both Ford Motor, which largely exited the country in 2019, and Stellantis, formerly Fiat Chrysler, each operate a factory through joint ventures. Stellantis represents only 1.6% of the country’s vehicle production, IHS reports.

Russian car market

Parts problems

The U.S. neon supply, which is used for lithography processes for chip production, comes almost entirely from Ukraine and Russia, according to Techcet, a California-based market research firm that specializes in critical supply chain materials and components.

Russia also is a key palladium supplier, along with South Africa, and supplies approximately 33% of global demand, according to Techcet. Palladium is used for catalytic converters in automobile manufacturing.

“It’s just one more thing that is going to force prices up,” said Techcet CEO Lita Shon-Roy. “The automotive market is going to feel that to be sure.”

Shon-Roy said the pricing increases likely won’t be felt for six months, if not a year, because most chip manufacturers have long-term agreements for such raw materials.

Read More: Renault, Hyundai and VW have most exposure to Russian car market

2022-02-25 14:44:24

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