Jaguar Land Rover Suspends Sales To Russia Jaguar Land Rover has suspended sales to Russia following the invasion of Ukraine. The firm announced that it made the decision due to the “wellbeing” of its workforce and those “within our extended network”. Sanctions imposed on Russia have heavily restricted the ability of companies to sell goods there.
“We are pausing the delivery of vehicles into the Russian market”. “The current global context also presents us with trading challenges so we are pausing the delivery of vehicles into the Russian market and continually monitoring the situation on behalf of our global customer base.” JLR JLR did not mention Russia’s invasion of Ukraine explicitly. However the UK Government welcomed JLR’s announcement stating that Jaguar Land Rover’s decision to suspend exports to Russia will help to isolate the country’s economy, after Britain’s largest carmaker said it would pause deliveries. The UK business secretary, Kwasi Kwarteng, said JLR was one of “a rapidly growing number of companies and governments joining the whole international community in isolating Russia, both diplomatically and financially”.
A view of workers on the Jaguar XF production line in Castle Bromwich, Birmingham
Carmakers – along with companies across almost every industry – are scrambling to assess their exposure to Russia as the US, EU and UK work together to cut it off from the global economy via sanctions. While the movement of non-military cars or parts has not been blocked, several Russian banks are subject to blocking sanctions which could complicate cross-border trade. Russia is a relatively minor market for UK car plants, whose exports are predominantly aimed at EU countries. It is thought that the UK exports fewer than 10,000 cars a year to Russia out of an annual production on 860,000 in 2021.
However, there are Aston Martin, Bentley and Rolls-Royce showrooms in Moscow and St Petersburg, as well as dealers stocking cars from BMW-owned Mini. Russia’s invasion of Ukraine has abruptly transformed the world. Millions have already fled. A new Iron Curtain is grinding into place. An economic war deepens, as the military conflict escalates and civilian casualties rise.
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Information for this story from Jaguar and ‘The Guardian’.
Ukraine War Leaves Car Supply Recovery ‘Off The Cards’ Long-lasting automotive supply chain issues look set to be triggered by Russia’s invasion of the Ukraine as Jaguar Land Rover feels the conflict’s impact. Reassurances to car retailers that vehicle supplies triggered by shortages of semiconductor microchips could recover by Q3 or Q4 this year were in grave doubt as the implications for Ukraine’s heavy industry and of sanctions on Russia became clearer. One big issue for manufacturers and retailers will be that further rises to gas and oil prices will affect manufacturing and cost of living, and the impact on manufacturing – coming in the wake of pre-existing semiconductor shortages – could be far greater than currently experienced. PAGE 23
Ukraine supplies about 50% of the world’s neon gas, which is used to produce semiconductor chips, and Russia supplies around 45% to 50% of the Palladium used to produce catalytic converters. Ukraine has its own automotive industries, working in the highly intensive production of components. The impact on this production will be seen very soon and is likely to be ongoing. For example, Volkswagen and BMW have been closing assembly lines in Germany due to the shortage of wiring looms from Ukraine by the German company Leoni. And tire manufacturer Michelin has recently announced it could close some plants in Europe due to logistics issue created by Russia’s invasion of Ukraine.
There is no doubt that car companies will be taking a hard look at the risks associated with international suppliers and consider buying more locally, even if this results in price increases. This could provide an opportunity for European and other countries to strengthen its internal manufacturing sector.
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Information for this story from Harvard Business Review.
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