Energy issues involving the European auto industry will have an impact globally, S&P Global said in a report.
A “harsh winter could place certain automotive sectors at risk of being unable to keep their production lines running,” S&P Global said.
The COVID-19 pandemic and Russia’s invasion of Ukraine “have already stretched the automotive supply line,” S&P added. “Now some OEMs and suppliers with energy-intensive manufacturing processes face extensive pressure in terms of energy costs in the coming months.”
Russia invaded Ukraine early this year. But the attack hasn’t yielded a victory. Western nations implemented sanctions against Russia. In response, Russia is moving to cut off natural gas supplies to Europe.
S&P said European production losses may reach more than 1 million vehicles per quarter, starting with 2022’s final quarter.
That impact may go beyond the region, S&P said.
“Losing one crucial piece in the global supply chain can bring the global manufacturing industry to a crunching halt,” the report added.
S&P forecasted “significant supply chain disruption from November through spring,” it said in the report. “We consider mandatory energy rationing” in Europe “to be the basis for a pessimistic scenario for the region’s auto producers and suppliers.”
That may make things worse for the auto industry generally, S&P said.
“For an industry already struggling with low inventories of vehicles in dealer showrooms, an additional crisis could be incapacitating on a global scale,” the firm said.
European suppliers send parts and modules globally, S&P said. As a result, the impact may extend beyond Europe, S&P said.
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