Just as car manufacturers were coming to terms with supply shortages caused by the pandemic, the war in Ukraine is now creating major problems in supply chains that are having an immediate impact. Car production in Europe and elsewhere is already slowing.
This is likely to mean people ordering cars here and elsewhere will face new and even longer delays before delivery.
Reuters reports that Volkswagen and BMW are already scrambling to find alternative sources of vital parts made in Ukraine from as far afield as China and Mexico, as Russia's invasion halts assembly lines and breaks complex supply chains.
The Reuters report says the hunt for new supplies is the latest challenge for an auto industry already reeling from soaring metal and energy prices, supply chains snarled by the pandemic, and a shortage of semiconductor chips.
The fighting in Ukraine has now disrupted output of wire harnesses, which bundle up to 5 km of cables in the average car. Unique to each model, vehicles cannot be built without them.
Volkwagen and and BMW have cut output and temporarily closed some assembly lines, while Mercedes-Benz has warned its production will be affected soon.
VW's premium brand Audi said the entire Volkswagen group is working to get major suppliers to relocate their Ukrainian wire harness production to other plants, or find alternative suppliers. That search includes Eastern Europe, North Africa, Mexico and "possibly" China, it said.
BMW also said it is in "intensive talks" with suppliers to find alternative sources for parts, while the world's fourth biggest carmaker Stellantis, which produces Opel, Peugeot and Fiat, said it has already shifted its sourcing from Ukraine to elsewhere in Europe, declining to say where.
Western Ukraine, with its low-cost, highly-skilled workforce and proximity to Europe's car factories and a wealth of raw materials, has grown into a major production hub for wire harnesses.
Some manufacturers have suspended Ukrainian production altogether since the invasion, while others are operating at reduced capacity. Trying to move production elsewhere would involve buying new equipment which could take months to install.
