VW Group fights parts shortages as impacts of war 'uncertain'

The Volkswagen Group is expecting further disruption to production as a result of Russia’s invasion of Ukraine and is considering expanding production on continents, it has said at its annual conference. 

The German automotive giant – whose revenue grew by 12.3% in 2021 despite it selling 2.3 million fewer vehicles year on year – has been heavily impacted by the war creating shortages of Ukrainian-made parts.

​​Volkswagen said it's building a ”taskforce” of 150 people, which is working hard to mitigate the current situation and select alternative parts suppliers. 

The acquisition of raw materials has also been affected, particularly for EV battery production, with prices expected to rise. ICE vehicles also require elements that are impacted by the shortages. 

“We're building up additional capacities for wiring harnesses for Europe and are shifting car production to regions such as China and the Americas,” said Volkswagen Group boss Herbert Diess. 

Diess revealed that production of around 100,000 vehicles had been moved to the Americas and China and added that production outlooks for the year could be affected. 

“The dominant constraint is indeed wiring harnesses," Diess said. "We receive wiring harnesses from Ukraine from 11 plants. Nine of them are working on reduced capacity. 

“The pandemic is receding and the semiconductor supplies are expected to improve steadily throughout the year. But the war in Ukraine has put our existing outlook into question."

Volkswagen has been forced to halt production at several of its factories in Germany, including its MEB-platform-focused facilities of Dresden and Zwickau.

Other brands owned by the firm have also been affected, including Audi and Cupra, while the Volkswagen brand recently stopped taking orders for several plug-in hybrid models. 

Diess suggested the true impacts of the war on the group in the long term still aren't clear, stating “the specific effects can't be conclusively assessed at the present time”. 

Last month, he told the Financial Times that the threat of war for Germany and Europe was "huge", emphasising Germany’s dependence on Russian energy and raw materials.