The war between Ukraine and Russia, which is slowly fading in our memories, continues to exert its influence on various industries, with the automotive sector being one significantly affected.
Russia’s invasion of Ukraine began in 2022, and it is persisting for two years now. As the war continues, overseas companies in Russia face economic challenges, such as difficulties in international money transfers due to Europe’s economic sanctions and exclusion from the SWIFT (Society for Worldwide Interbank Financial Telecommunication) payment network.
Russia heavily depends on imports for 70-80% of the components used in the production of passenger cars. If the supply of components from abroad is not smooth, local car production becomes challenging. As a result, Russian domestic car manufacturers also faced difficulties in car production and compliance with emission standards.
Hyundai-Kia went on to sell its plant in Saint Petersburg, Russia, for 140,000 won. BMW, Audi, and Mercedes-Benz halted deliveries and production, while Volkswagen, Nissan, and Toyota ceased production before ultimately withdrawing from their factories.
According to statistics released by the Russian Federal State Statistics Service in 2023, due to the suspension of production and factory withdrawals by foreign automakers, Russia‘s new car production in 2022 decreased by 67%. It is no surprise that new car sales in Russia for 2022 also decreased by 58.8%, compared to the previous year.
The war also had a significant impact on the global economy and international trade. The global economy and international trade slowed down, and there has been a sharp increase in the prices of raw materials and food, contributing to inflation in many countries. The uncertainty of the prolonged war remains the most significant challenge.
Jo Hee (ST Cub-Reporter)
joheesoongsil@soongsil.ac.kr
