Volkswagen CEO forecast
Unfortunately, the automobile industry has been severely affected in recent times by various temporary events. Herbert Diess, CEO of the Volkswagen Group, has been blunt: the war in Ukraine could be much worse for the economy than the pandemic and the shortage of semiconductors.
The head of one of the most important construction groups in the world has granted an interview to the Financial Times in which he has been quite resounding, given the situation that is being experienced in Eastern Europe and the consequences that it could have on an industry like that of the automobile, very touched by the pandemic and the semiconductor crisis.
According to Diess, disruptions in global supply chains “could lead to huge price increases, energy shortages and inflation.” This statement comes as the pro-Ukraine bloc, led by the United States and including many European countries, is imposing severe sanctions on Russia.
Russia bans car exports as Stellantis and Hyundai suspend operations
The war in Ukraine could be much worse for the economy than the pandemic and the shortage of semiconductors
European powers, however, have so far chosen not to join the Joe Biden administration in imposing an embargo on oil from Russia. This is because Europe is heavily dependent on Russian oil, as well as the gas that comes from that country.
However, the energy markets are agitated and last February inflation reached its all-time high in the eurozone, reaching 5.8%, and is forecast to reach 7% throughout this year.
“For a country like Germany, which is highly dependent on Russian energy and raw materials, if we were to cut off trade relations with Russia because of the protracted conflict, something we would have to do, it would lead to a very problematic situation in Germany and in Europe,” said the CEO of Volkswagen.
Outside of Russia
Volkswagen suspended production in Russia last week, as other manufacturers have announced. Meanwhile, a member of Russia’s main party threatened to nationalize the plants of foreign manufacturers to continue production.
Supply chain disruptions caused by war in Ukraine have had an impact on European manufacturing facilities. The longer the war lasts, the greater the negative effects on world production.