Ukraine war could have worse impact than pandemic, VW boss says Car News

Russia’s invasion of Ukraine could have more serious implications for Europe’s car industry and economy than the pandemic, Volkswagen Group boss Herbert Diess has said.

Diess told the Financial Times that disruptions to supply chains ‘could lead to huge price increases’ and ‘energy scarcity and inflation’, with the potential for a ‘much worse’ situation. .

Europe’s largest automaker has been hit hard by war-induced supply problems. It was forced to halt production at its Zwickau and Dresden factories in Germany, which produce its MEB-based electric vehicles.

Audi and Cupra were also affected by the shutdown.

volkswagen recently stopped taking orders for several plug-in hybrid models, due to “demand and semiconductor supply limitations”, including the Golf, Passat and Tiguan.

“The threat of this war for Germany and Europe is huge,” said Diess, who pointed to Germany’s dependence on Russian energy and raw materials.

“If you imagine a scenario in which we cut trade relations with Russia, which we would probably have to do if this conflict [doesn’t cease]you could no longer buy energy, and that would lead to a situation that could have a huge impact on Europe and Germany,” he said.

The Volkswagen Group recently suspended production of its Plants in Kaluga and Nizhny Novgorod in Russia and stopped selling cars in the country.

The Kaluga plant employs 4,000 people and builds the Volkswagen Tiguan, Volkswagen Polo, Skoda Rapid, Audi Q7 and Audi Q8 from knockdown kits for the Russian market.

The Nizhny Novgorod plant builds the Volkswagen Taos, Skoda Kodiaq, Skoda Karoq and Skoda Octavia.

Porsche halted production at its factory in Leipzig, Germany, for two weeks after the invasion. Skoda has also cut production due to supply shortages, prompting it to limit production of the Enyaq iV electric SUV.

“Due to the current situation in Ukraine, Skoda Auto is facing critical parts supply shortages from several local suppliers which have an effect on some of our models,” the Czech company said. “This is the reason why we will limit the production of the Enyaq iV from this week.”

The Financial Times reported that Diess favored “maximum sanctions” but called for negotiations to prevent an “endless war in Ukraine”.