Audi expects war in Ukraine to cause ‘tremendous interference’

DETROIT – Audi expects the war in Ukraine to result in “tremendous interference” to the world wide provide chain, an executive with the German luxurious brand stated Thursday.

The reviews arrive as automakers globally, such as Audi and its Volkswagen father or mother business, attempt to manage supply chains of very important components this kind of as semiconductor chips and wire harnesses that are getting impacted by the war.

Automakers have warned that the conflict is generating extraordinary uncertainty this calendar year relating to vehicle creation, revenue and economical forecasts.

“We will see tremendous interference with all the provide chains, not just the chip company, but any source chains internationally,” Hildegard Wortmann, head of the car firm’s sales and advertising, reported through a media roundtable Thursday. “The effects will be incredible out of this on the total offer situation.”

Even though Russia and Ukraine account for a modest total of automobile creation globally, they provide key raw components for the production of semiconductor chips, which have been in small supply for additional than a year now because of to disruptions triggered by the coronavirus pandemic. Ukraine also is a noteworthy supplier of wire harnesses and other materials, mainly for European automakers.

Wortmann explained in addition to wire harnesses, which are utilized in vehicles for electrical ability and communication involving elements, the carmaker also sources fabrics for seats from the place.

Audi on Thursday said it was modifying manufacturing at a Hungarian production plant due to supply chain challenges, Reuters noted. Other automakers these types of as Mercedes-Benz and BMW have declared production adjustments or cuts thanks to the war.

Wortmann declined to forecast how the war is envisioned to effect the firm’s sales in 2022, citing fluidity of the predicament.

S&P Global Mobility, previously acknowledged as IHS Markit, on Wednesday downgraded its 2022 and 2023 worldwide light-weight car generation forecast by 2.6 million units for both equally years, to 81.6 million for 2022 and 88.5 million models for 2023, because of to the war.

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