Automakers Retreat from Russia Amid Sanctions and Crisis

    Nine months ago, Elon Musk had told in a Kremlin-sponsored event that he would build a factory in Russia. President Putin had inaugurated a Mercedes Benz factory near Moscow in 2019. A year later, Renault took control of the majority stake in Lada maker, Avtovaz after investing more than $2 billion into the government-owned car company. 

    International car manufacturers halting their operations

    International car manufacturers are winding down their operations in Russia following their invasion of Ukraine, and it looks difficult for them to reinvest soon.

    The war has resulted in widespread sanctions against Russia, causing a record plunge in its currency ruble and untenable business.

    As per Bloomberg News, Volkswagen announced halting production until further notice. The Mercedes plant also paused, and Renault, the European automaker with most exposure in Russia, has slowed down on facility due to supply constraints at the largest car-making complex run by Avtovaz. 

    Renault has plenty at stake and no alternative options. Russia accounted for $5.5 billion of its revenue last year, and around €315 million operating profit may be affected as per estimates by Bloomberg intelligence. 

    Renault shares plummeted to their lowest since November 2020 last week. 

    Daimler Trucks has stopped its business operations in Russia and said it would review its tie-up with a local partner. Coming out of such a venture when no one wants to buy Russian assets will cost heavily, and BP, for example, will lose around $25 billion if they dump their stakes in Russian oil giant Rosneft

    The war will have a rippling effect in Europe even as carmakers were making a comeback after struggling with a shortage of chip supplies and pandemics. 

    Russia supplies raw materials such as palladium for catalytic converters and nickel for EV batteries, among others. Ukraine is a critical supplier of neon gas used for cable harnesses and chipmaking.

    German parts manufacturer Leoni has two cable harness plants in Ukraine and employs about 7000 workers. It is trying to add capacity to other sites to overcome the problem.

    Analysts Jenny Voigtlaender and Hanswolf Hohn at Deutsche Bank said that parts production in Ukraine might disrupt the supply chain and hit Europe. Volkswagen may be hit the most.

    VW, which recently lost around 4000 cars when its cargo ship burnt and the most went down the Atlantic Sea, said on Tuesday that it was idling its production in its largest factory in Wolfsburg, Germany, before a broader shutdown next week. Other German sites affected include Hanover and Emden, the commercial vehicle facility for VW, and factories in  Germany and Hungary that make porches and Audis, respectively.

    VW had warned last week that it would stop making EVs at its plants in Dresden and Zwickau in Germany due to cable parts shortage.

    Car sales also spiked initially as consumers looked for value deals in auto as the ruble depreciated and inflation soared. 


    RELATED ARTICLES

    OTT platforms

    OTT Platforms: Reviving Local Languages, Culture, and Heritage in India

    OTT systems have revolutionized content material intake in India, presenting audiences with admission to numerous...
    mental health

    Mental Health Awareness In India: Breaking The Stigma In 2025

    One of the aspects of our overall well-being is mental health, and it should not...
    women safety in India

    Women Safety in India: Key policy changes and ongoing challenges

    For an extended period, Indian society has maintained women's safety as both domestic and international...
    New Education Policy 2024

    New Education Policy 2024: Learning is Being Transformed

    Education in India has long been dependent on traditional methodologies that emphasize rote learning and...
    what is one way that technology can improve the distribution of goods?

    What is one way that technology can improve the distribution of goods?

    Technology has transformed almost all sectors, and logistics is no exception. To answer the question,...
    Pennsylvania Tornado

    Tornado Watch Issued for Several Counties in South-central PA

    Even though Pennsylvania is celebrated for its picturesque hills, forested landscapes, and historic background, it...
    crypto 30x.com

    Crypto30x.Com: Multiply Your Crypto Profits!

    crypto30x.com in 2025: where do we go from here? It's the question buzzing in every...
    censure meaning in Congress

    Censure Meaning in Congress: What Does It Mean To Be Censured?

    Censure Meaning in Congress can be a confusing concept for many. The issue is, how...
    chipotle honey chicken

    Chipotle Honey Chicken: Sweet, Spicy & Smoky Delight

    Chicken dishes are a staple in many families, supplying versatility, flavor, and ease of guidance....
    Wellhealthorganic.Com effective natural beauty tips

    Well Health Organic Skin Care: Effective Natural Beauty Tips

    Today, one of the challenges in this fast world is caring for glowing, beautiful skin....
    School Spirits Season 3

    School Spirits Season 3: Is the Paranormal Mystery back

    School Spirits is a well-loved show that blends high school drama with ghost stories, creating...