THE prospects of any return to normality of vehicle supply look to have been scuppered by the Russian invasion of Ukraine.
Car makers in Germany – including Audi, VW, Mercedes and BMW – have closed plants because they cannot access wire harnesses which are produced in Ukraine.
It comes as a further shock to the leasing broker sector having navigated the pandemic and the semiconductor shortage. With bulging order banks but no vehicles to deliver and therefore no payout, it will place further stress on stretched broker finances.
As well as producing wire harnesses, Ukraine is also a key supplier of a gas used in chipmaking.
Stefan Nikola, writing in today’s Bloomberg Hyperdrive newsletter said:
“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.”
He goes on to write that according to Deutsche Bank analysts, Volkswagen will be the OEM most affected.
It comes against the background of promising new car sales, according to data from the SMMT, which has seen the market for electric vehicles accelerate further to take 17.7% of February registrations in a market that’s up 15.0% on locked-down 2021, but nearly 26% below pre-pandemic February 2020.
Meryem Brassington, electrification propositions lead at broker funder Lex Autolease said:
“After a record-breaking year for zero-emission vehicles, there appears to be no signs of the market slowing down, with EVs now accounting for 14.3% of all new motors bought in the UK. The outlook for EVs looks exceptionally bright.”
While the prospects for EVs is immensely encouraging, what certainly looked like the beginning of an easing of car supply, has quickly tightened and pushed out vehicle delivery dates further. Including broker cash flow.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
