The carmaker said on Wednesday that production at its two Russian plants in Nizhny Novgorod and Kaluga “is still running, but the effects of possible supply chain outages are being analyzed on an ongoing basis”. According to the E15 daily, however, Škoda has already suspended production at both plants due to a critical shortage of parts. This was stated by an official of the VW Group, who previously worked in Škoda and did not want to be named.
In response to the war and Western sanctions, companies from many industries, from logistics to the financial sector, are cutting themselves off from business in Russia. Container transport to Russia is suspended, for example, by the world’s two largest shipping companies, the Mediterranean Shipping Company and Maersk. The crowd of other major companies is proceeding in a similar way.
The consequences of the sanctions and the resulting consequences are fundamentally disrupted supplies to and from Russia, which also has a severe impact on the automotive industry. In addition, carmakers lack supplies of parts from Ukraine. According to an official of the VW Group, it is possible that the Group or some of its brands will leave the Russian market altogether.
“The topic of all business activities in Russia is currently being addressed at the level of the management of Škoda Auto and the Volkswagen Group. At the moment, we will not provide further information, “said Škoda, adding that impacts on the company’s economic operation can be expected. The VW Group did not answer questions from the E15 newspaper until the article was published. The Rapid, Octavia, Karoq and Kodiaq models have so far rolled off Škoda’s production lines in Russia.
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Russia has long been one of Škoda’s most important markets. Last year, it sold about every tenth car here, ie 90,400 new cars. She reported more only in Germany. In Ukraine, it has consistently sold about six thousand cars a year.
Russia accounted for “only” about two percent of the group’s sales last year – Volkswagen, Škoda, Audi, Lamborghini, Bentley and Ducati sold 199,200 here. The competition feels even worse.
Especially the French Renault, one of the most affected Western companies in Russia ever. Renault controls Russia’s largest carmaker, AvtoVAZ. The group accounts for 39.5 percent of all car production. South Korean Hyundai follows with a 27 percent share. Renault has announced that it will suspend some operations at Russian plants next week due to logistics.
Last year, 1.67 million cars were sold in Russia – over two percent of global sales – but now the market is shaking to its foundations and may shrink by more than half. It may be mitigated by possible Chinese aid, said Ferdinand Dudenhöffer, head of the Duisburg Automobile Research Center.
Russia has already experienced similar shocks during the financial crisis in 2008 and 2009 and after the annexation of Crimea. Manufacturers in Russia usually assemble cars locally to avoid high import duties. If the Western partners withdrew, production could be suspended quickly, Dudenhöffer said, adding that only every twentieth vehicle sold has its own technology from Russia.
In the case of Ukraine, the biggest problem for car manufacturers is the disruption of parts supplies. Due to their critical shortage, Škoda has been reducing production since this week, which will also affect prioritized flagship electric car Enyaq. Other manufacturers are doing the same. Maybe BMW has discontinued production in addition to the German plants in Oxfordwhere he assembles Mini cars.
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Chips and semiconductors will again be affected by fate. Palladium and neon are among the most endangered supplies for chip production. Over 90 percent of neon semiconductors come from Ukraine, more than a third of all palladium from Russia, Techcet saidwhich analyzes supply chains. “It’s another factor that will increase prices,” said Techceto boss Lita Shon-Roy.
Through its business partner Eurocar, Škoda produced the Superb, Kodiaq, Karoq and Fabia Combi models at its Ukrainian plant in Solomonov, but suspended production. Since 2002, it has produced about 190,000 Škoda cars here.
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