A closely watched auto industry forecaster has cut more than 5 million cars from its global production projections this year and next, largely due to the expected fallout from Russia’s invasion of Ukraine.
S&P Global Mobility, formerly known as IHS Markit, lowered its estimates for 2022 and 2023 each by 2.6 million vehicles. The forecaster now expects auto companies to make 81.6 million cars worldwide this year and 88.5 million next year.
“The downside risk is huge,” Mark Fulthorpe, S&P Global Mobility’s executive director for global manufacturing forecasts, said in a statement Wednesday. In the company’s worst-case scenario, production each year would be as much as 4 million vehicles lower than previous projections.
S&P Global Mobility cites the effect the war in Russia is having on energy and commodity prices, the expectation that the semiconductor shortage will worsen, and disruptions to power wiring harnesses from Ukraine. Suppliers may have trouble sourcing neon gas used to make chips from Ukraine, as well as palladium from Russia. The platinum group metal is a basic element of catalytic converters, which convert engine exhaust gases into less toxic emissions.
The outbreak of Covid-19 cases in China is also leading to factory closures in manufacturing hubs, including Shenzhen and Changchun. Toyota Motor Corp., Volkswagen AG and Tesla Inc. are among the companies that shut down factories this week.