Audi expects war in Ukraine to cause ‘tremendous interference’

DETROIT – Audi expects the war in Ukraine to cause “tremendous interference” to the global supply chain, an executive with the German luxury brand said Thursday.

The comments come as automakers globally, including Audi and its Volkswagen parent company, attempt to maintain supply chains of crucial parts such as semiconductor chips and wire harnesses that are being impacted by the war.

Automakers have warned that the conflict is creating extreme uncertainty this year regarding vehicle production, sales and financial forecasts.

“We will see tremendous interference with all the supply chains, not just the chip business, but any supply chains internationally,” Hildegard Wortmann, head of the car company’s sales and marketing, said during a media roundtable Thursday. “The consequences will be tremendous out of this on the whole supply situation.”

While Russia and Ukraine account for a small amount of vehicle production globally, they supply key raw materials for the production of semiconductor chips, which have been in short supply for more than a year now due to disruptions caused by the coronavirus pandemic. Ukraine also is a notable supplier of wire harnesses and other materials, largely for European automakers.

Wortmann said in addition to wire harnesses, which are used in vehicles for electrical power and communication between parts, the carmaker also sources fabrics for seats from the country.

Audi on Thursday said it was adjusting production at a Hungarian manufacturing plant due to supply chain issues, Reuters reported. Other automakers such as Mercedes-Benz and BMW have announced production adjustments or cuts due to the war.

Wortmann declined to predict how the war is expected to impact the company’s sales in 2022, citing fluidity of the situation.

S&P Global Mobility, formerly known as IHS Markit, on Wednesday downgraded its 2022 and 2023 global light vehicle production forecast by 2.6 million units for both years, to 81.6 million for 2022 and 88.5 million units for 2023, due to the war.

About 45% of Ukraine-built wiring harnesses are normally exported to Germany and Poland, placing German carmakers at high exposure, according to S&P.