Ukrainian wire harness factory shuts down Europe may lose 15% of car production this year

According to foreign media reports, the escalation of the situation in Russia and Ukraine may cause European automakers to lose the production of hundreds of thousands of vehicles. Ukraine is a key producer of car wiring harness, and analysts estimate that wire harness supply problems could cost Europe 10 to 15 per cent of car production this year.

Colin Langan, an automotive analyst at Wells Fargo's (Wells Fargo), said in a report that the closure of the wiring harness plant in Ukraine could lead to a loss of production of up to 700000 vehicles in Europe in the first and second quarters. Volkswagen and BMW have already suspended production at some European plants due to supply disruptions, and Mercedes-Benz has cut production at a German plant.

Ukraine is a key producer of car wiring harness, with 17 wiring harness production facilities, and it is cheaper for companies to operate local factories, Langan said. He also thinks it is possible for Europe to make up for lost production this year.

Before the escalation of the situation in Russia and Ukraine, Leoni, a German auto parts supplier, produced wire harness at two factories in western Ukraine and employed about 7000 people. On March 14th Leoni cut its sales and profit forecasts for 2022 and said it would not be able to make up for lost production this year. Although Leoni plans to double production at some other factories, it may take at least two to three months to adjust.

The impact of wire harness shortage on car companies is not limited to car production. Herbert Deiss (Herbert Diess), chief executive of Volkswagen Group, said on March 15 that if Volkswagen could not restart production within three to four weeks, it might need to readjust its 2022 performance forecast. As a result of disruptions in the European supply chain, Volkswagen has forwarded 50 to 100000 semiconductors for cars to assembly plants in China and the US.