• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Renault Has No Good Options as Other Automakers Turn on Russia

Renault Has No Good Options as Other Automakers Turn on Russia

Renault
An employee inspects a rear axle fitting on a Renault electric automobile at the Renault SA factory in Flins, France. Photo: Bloomberg.
March 4, 2022
Bloomberg

Elon Musk told attendees of a Kremlin-sponsored event just nine months ago that Tesla would look into building a factory in Russia. In 2019, President Vladimir Putin took part in opening a Mercedes-Benz factory near Moscow. A year earlier, Renault took majority control of Lada maker Avtovaz after pouring more than $2 billion into the former state-owned company.

Following the invasion of Ukraine, international carmakers are winding down Russian operations in droves, and it’s difficult to imagine they’ll invest again anytime soon.

The toll the war is inflicting, including on civilians, has spurred wide-ranging sanctions, contributed to a record plunge for the ruble and rendered doing business in Russia all but untenable.

Volkswagen announced Thursday it will stop production at two factories until further notice. The Mercedes plant Putin frequented also has paused output. Renault, the European auto company most exposed to Russia, has idled one facility due to supply issues while resuming work at one of the world’s largest car-making complexes, run by Avtovaz.

Renault has a lot at stake and no good options. Russia accounted for about €5 billion ($5.5 billion) of its revenue last year, and roughly €315 million of operating profit could be at risk, Bloomberg Intelligence estimates. Renault shares have plummeted since last week, trading at their lowest since November 2020.

Daimler Truck has halted all business activities in Russia and said it will review ties with its local venture partner. Untangling from such ventures at a time when virtually no one wants Russian assets will come at a steep price. BP, for instance, will take a hit of as much as $25 billion dumping its shares in oil giant Rosneft.

The war will have ripple effects elsewhere in Europe, just as carmakers were already struggling to bounce back from the pandemic and a crippling shortage of semiconductors.

Raw materials sourced from Russia include nickel for electric-vehicle batteries and palladium for catalytic converters. Ukraine is a key supplier of neon gas used in chipmaking, as well as cable harnesses. German parts maker Leoni, which has two cable-harness plants in Ukraine employing some 7,000 workers, is trying to mitigate disruptions by adding capacity at other sites. But automakers have hardly any harnesses in stock and can’t easily source them elsewhere, according to the VDA, Germany’s car lobby.

“The secondary impacts from parts production in Ukraine and potential disruptions of the supply chain could shape up to hit production in Europe notably,” Deutsche Bank analysts Hanswolf Hohn and Jenny Voigtlaender said in a note published Thursday. “Our channel checks suggest VW might be hit the most by supply chain issues.”

VW — which just had some 4,000 of its cars sink to the bottom of the Atlantic after a burn-out cargo ship went under in rough seas — said Tuesday it will idle some production lines at the world’s largest auto plant in Wolfsburg, Germany, next week before a broader shutdown the following week. Other German sites affected include Emden and Hanover, where VW makes commercial vehicles, as well as factories making Porsches and Audis in Germany and Hungary, respectively. The manufacturer had already warned last week that it would stop making EVs at its German plants in Zwickau and Dresden because of the cable-parts shortage.

Now, to Russia itself. Car sales may initially spike in the country as consumers look to store value in autos as the ruble depreciates and inflation soars, Fitch analysts said this week. They may be on to something — sales of jewelry and watches have risen the last few days as the nation’s wealthy look to preserve the value of their savings.

Still, Fitch is expecting a 10% contraction in auto sales this year, rather than the 2.6% growth it was anticipating prior to the war. There’s risk of a much bigger drop if the conflict is prolonged.

German auto analyst Ferdinand Dudenhoeffer projects a steeper drop of at least 34% under his optimistic scenario, in which China steps in with loans and technology assistance. Sales will be cut by more than half if China stays neutral.

Foreign manufacturers pulling out of the country could set Russia back to USSR standards. Only 5% of new vehicles sold in the country are made using Russian technology, with the remainder representing design and engineering from U.S., European or Asian manufacturers, Dudenhoeffer said in a note this week. 

“No matter how this year shapes up, Russia faces a very slow and long recovery process in the car world,” he said.

RELATED CONTENT

RELATED VIDEOS

Automotive Europe
  • Related Articles

    Amazon, Other Foreign Online Retailers Have 'No Chance' to Succeed in Russia

    As Coal Use Declines, Natural Gas Has Been Good to U.S. Railroads

Bloomberg

Amazon Aims to Sublet, End Warehouse Leases as Online Sales Cool

More from this author

Wake up to live
“Supply Chains in Crisis”
updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Medical drone

    Amazon May Be Proof That Delivery Drones Aren’t Practical

    Last Mile Delivery
  • ESG Guide

    Confronting the ESG Imperative in Supply Chains

  • SEC building seal

    Get Ready for the Next Phase of ESG: Mandatory Corporate Due Diligence

    Regulation & Compliance
  • Heat Wave Triggers Blackouts

    Vast Swath of U.S. at Risk of Summer Blackouts, Regulator Warns

    Supply Chain Security & Risk Mgmt
  • Worker using tablet

    Podcast | Stitching Together the Physical and Digital Supply Chain

    Technology

Digital Edition

Scb may 2022 sm

2022 Supply Chain ESG Guide

VIEW THE LATEST ISSUE

Case Studies

  • 3PL Doubles Productivity With Robots to Fulfill Medical Supply Orders

  • E-Commerce Company Cuts Order Fulfillment Time by 40%

  • Fashion Retailer Halves Fulfillment Time With Omichannel Automation

  • Distributor Scales Business by Integrating Warehouse Automaton Software

  • Fast-Growing Fashion Brand Scales E-Commerce Fulfillment With Whiplash

Visit Our Sponsors

Yang Ming Alithya Barcoding
Blue Yonder BNSF Logistics Generix
GEP GIB USA GreyOrange
Here Honeywell Intelligrated Inmar
Keelvar Kinaxis Korber
Liberty SBF Locus Robotics Lucas Systems
Nvidia Old Dominion Parsyl
Redwood Logistics Saddle Creek Logistics Schneider Dedicated
Setlog Holding AG Ship4WD Shipwell
Tecsys TGW Systems Thomson Reuters
Tive Trailer Bridge Vecna Robotics
Whiplash    
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2022 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing