ISMR June 2022 - Page 7


Light vehicle production outlook

The conflict in Ukraine has exposed the fragility of the world ’ s economy and automotive supply chains . The damaging war and severe sanctions against Russia are already having a serious effect on energy prices , raw materials and agricultural goods . On top of this is the disruption of the automotive supply chain due to logistical challenges and production stoppages relating to operations on the West Ukrainian border .
As a result , S & P Global Mobility ( formerly the automotive team at analyst IHS Markit ) has downgraded its 2022 and 2023 global light vehicle production forecast in its latest update by 2.6 million units for both years , to 81.6 million units for 2022 and 88.5 million units for 2023 .
“ In 2022 , 1.7 million units are cut from Europe alone , which broadly includes just under one million units from lost demand in Russia and Ukraine . The remainder is split between 1 ) worsening semiconductor supply issues and 2 ) loss of Ukraine-sourced wiring harnesses and other components , both of which will impact production in other markets . In addition , the complete loss of Russian palladium is a tail risk with the potential to become the industry ’ s biggest supply constraint ,” commented the analyst .
The outlook for North America light vehicle production was reduced by 480,000 units and by 549,000 units for 2022 and 2023 , respectively . Amid the backdrop of the
Russia / Ukraine conflict , the March 2022 forecast update for North America reflects broad-based reductions spanning virtually every automaker amid the potential for the conflict and subsequent sanctions to impact the production of semiconductors in the second half of 2022 . Lingering supply chain , labour and logistics challenges remain material concerns .
“ With the March forecast release , we removed 2.6 million units from our 2022 and 2023 outlook , but the downside risk is enormous . Our worst-case contingency shows possible reductions of up to four million units for this year and next year ,” said Mark Fulthorpe , Executive Director for Global Production Forecasting , S & P Global Mobility .
In total , nearly 25 million units were removed from the S & P Global Mobility light vehicle production forecast between now and 2030 .
“ Before the Ukraine invasion on 24 February 2022 , the global automotive industry had spent more than a year under capacity-constrained conditions , with estimated pent-up consumer demand of up to 10 million units ( or 12 %) above this year ’ s achievable production , based on S & P Global Mobility forecasts . The sudden loss of economic confidence ( via high oil and raw material prices , weak equity markets and tightening interest rates ) is dampening demand and could now reduce that shortfall by roughly one third – although significant pent-up demand remains ,” added S & PGM .
While the macro concerns are significant , the supply chain ( and not underlying consumer demand ) will continue to set the upper limit for vehicle unit sales in the medium term . The key crunch points weighing on production levels post invasion fall into two broad categories : semiconductor materials supply ( specifically via Ukrainian neon and Russian palladium ) and electrical wiring harness sourcing .
“ While low probability as things stand , palladium has the potential to become the industry ’ s biggest supply constraint . Russia produces 40 % of the world ’ s mined palladium according to the United States Geological Survey . Around two thirds of palladium use is in vehicles , where it is the active element in catalytic converters for exhaust after-treatment . If Russian palladium supply were suddenly interrupted ( due to a western boycott , or Russia stopping supply ), production of all vehicles using such sourcing ( including hybrids ) could potentially stop . Although platinum is an alternative element , it is similarly expensive and also largely Russia-originated . Substitution of any kind is a regulatory minefield since design changes require regulatory re-homologation , which can take months ,” cautioned the analyst .
However , at this time , S & P Global Mobility does not currently incorporate major palladium disruptions in its forecast . n

ŠKODA ENYAQ iV resumes production

After several weeks ’ downtime , ŠKODA AUTO has resumed production of its all-electric ŠKODA ENYAQ iV at its main plant in Mladá Boleslav , Czech Republic . Initially , around 1,000 units per week will run off the production line , and capacity will gradually be increased . Production was suspended for several weeks due to supply bottlenecks for cable harnesses .
The manufacturer has now managed to restore the supply of essential components , enabling production to be restarted . ŠKODA AUTO ’ s longterm goal is to maintain full production capacity . However , this is dependent on the availability of specific parts , and it is currently not possible to make predictions about supply chains .
Around 1,000 ENYAQ iVs per week can be
The ENYAQ production line .
produced now that production has resumed , and capacity will gradually be increased over a two-month period . In the long term , the plant in Mladá Boleslav will be producing up to 370 ENYAQ iVs and ENYAQ COUPÉ iVs per day .
The first all-electric ŠKODA SUV represents the Czech carmaker ’ s biggest step to date in implementing its electromobility strategy . The ENYAQ iV is based on the Volkswagen Group ’ s Modular Electrification Toolkit ( MEB ). It is built at ŠKODA ’ s main plant in Mladá Boleslav , making it the only MEB model in Europe to be manufactured outside Germany .
The company converted an existing production line to manufacture the ENYAQ iV , expanding it to handle MEB vehicles . This makes it possible to produce models based on the MEB and the MQB ( Modular Transverse Toolkit ) alongside each other – the only European plant in the Volkswagen Group capable of doing so . In addition to the all-electric SUV , the bestselling OCTAVIA is also produced there . n
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