• 4 minutes Energy Armageddon
  • 6 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 12 minutes "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 27 mins Is Europe heading for winter of discontent with extensive gas shortages?
  • 2 days Wind droughts
  • 6 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 15 hours Kazakhstan Is Defying Russia and Has the Support of China. China is Using Russia's Weakness to Expand Its Own Influence.
  • 10 hours ""Green" Energy Is a Scam. It Isn't MEANT to Work." - By James Corbett of The Corbett Report
  • 4 days Oil Prices Fall After Fed Raises Rates
  • 5 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 12 days "Russian oil executive and Putin critic Ravil Maganov dead after mysterious six-story fall" - The New York Post
  • 3 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 9 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 11 days The Federal Reserve and Money...Aspects which are not widely known
  • 13 days How Far Have We Really Gotten With Alternative Energy

Breaking News:

Gasoline Draw Sends Oil Prices Higher

Safehaven.com

Safehaven.com

Safehaven.com is one of the most established finance and news sites in the world, providing insight into the most important sectors in the business and…

More Info

Premium Content

Russia’s War Is Intensifying The Auto Industry’s Supply Worries

  • Compounding ongoing supply chain concerns, Russia’s war on Ukraine is posing a major problem for the auto industry.
  • The industry has already spent the past two years trying to catch up with demand.
  • Though Biden has pledged to help ease the semiconductor squeeze, the industry is still facing soaring metals costs and a lack of other key metals and materials needed to thrive.

Russia’s war on Ukraine is dealing a fresh blow to a global auto industry that is now fearful its production capabilities will fail to meet a demand by an even worse margin than supply chain challenges were posing prior to March.

Compounding the existing supply chain woes, pre-invasion, Vladimir Putin’s war on Ukraine means no more precious palladium from Russia, which could end up being the biggest supply chain problem the auto industry has faced yet.

It also means difficult securing components sourced from Ukraine, Reuters reports, noting that German carmakers are dangerously exposed because they obtain nearly half of their wiring harnesses from Ukrainian factories.

Against this backdrop, S&P Global Mobility has now lowered its 2022 and 2023 forecasts by 2.6 million light vehicles produced, each year. Though that may be a modest downgrade, with the agency’s executive director for global production forecasting, Mark Fulthorpe, writing that “the downside risk is enormous. Our worst-case contingency shows possible reductions up to 4 million units for this and next year.” 

The global auto industry just can’t catch a break. It has spent the last two years trying to catch up with demand.

Just for 2022, consumer demand for new vehicles was much higher than this year’s achievable production, with supply some 10 million units short of demand. That’s a 12% gap in supply vs demand, and that was before the Russian war in Ukraine.

On top of that, the semiconductor shortage continues to taunt the industry. The global semiconductor shortage is forecast to continue for two more years. 

Last year, U.S. President Joe Biden prioritized domestic semiconductor manufacturing and signed an executive order meant to address the global chip shortage. 

Last month, the U.S. Senate passed the America COMPETES Act, which includes $52 billion in grants and subsidies for the semiconductor industry and $45 billion to improve supply chains.

In the meantime, vehicle prices continue to climb, both for new and used cars. 

Now, as automakers face soaring metal costs as Russian supplies are at risk, consumers are likely to face even higher car prices soon.

According to CarGurus, values have gone up 40% on average compared to the last year. As for the new vehicles, the U.S. Bureau of Labor Statistics' Consumer Price Index Summary customers paid 12.2% more for new vehicles in January 2022 compared to January 2021–without the pressure of a metals supply crunch. 

By Fred Dunkley via Safehaven.com  

 


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News