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Day by day, the negotiations between Russia and Ukraine have made no progress and a ceasefire agreement has never been reached. At the same time, the Russian side adopted a major decision: the nationalization of foreign company assets in Russia (the act of nationalizing property).

According to the Russian media "Izvestia" ("Izvestia" is the former Soviet Supreme Soviet organ newspaper) reported on the 10th, oleg Pavlov, head of the Russian "Social Consumption Initiative" organization, said that the list of foreign enterprises that may be nationalized in the future has been sent to the government and the office of the attorney general, listing a total of 59 foreign companies that may face nationalization due to stopping operations in Russia or withdrawing from the Russian market. Experts believe that if foreign companies have already decided to leave Russia, the threat of nationalization is unlikely to deter foreign companies.

The list includes not only consumer and technology brands such as McDonald's, Coca-Cola, Apple, Microsoft, IKEA, H&M, etc., but also the automotive industry, such as Volkswagen, Porsche and Toyota. Among them, Volkswagen and Toyota also have local production plants. It is worth mentioning that the list is in an "open state", and more foreign companies in Russia will be included in the future.

Fast forward to March 7, when Turchak, secretary of the General Committee for a United Russia, Russia's ruling party, proposed that Russia should nationalize the Russian assets of companies that had withdrawn from the Russian market. On March 9, United Russia also added a statement that the Russian Legislative Council supports a bill that allows companies from "unfriendly countries" with more than 25 percent foreign ownership to be included in external management mechanisms if they stop operating in Russia. Under the proposal, if a company that had previously announced its withdrawal from Russia resumes operations or sells its shares within five days, it may be exempted from external management mechanisms, provided that both the company's business and employees are retained. Otherwise, the court will establish a three-month interim management and the company's assets will be auctioned or liquidated.

Since February 24, 2022, a number of car companies around the world have announced their withdrawal or suspension of operations in Russia. For example, Germany's Volkswagen Group said it would stop exporting vehicles to Russia in addition to suspending production at its two factories in Russia, a decision that affected the Group's Volkswagen, Skoda, Audi, Porsche and Bentley brands. A Volkswagen spokesperson said Volkswagen delivered 216,000 vehicles to customers in Russia in 2021, accounting for about 2.4 percent of the company's global sales.

On March 3, Japan's Toyota Group issued a statement saying that it would suspend production in Russia due to supply chain disruptions, while no longer exporting cars to Russia until further notice. Toyota motor is understood to manufacture Camry cars and Rongfang models at its St. Petersburg plant, producing as many as 80,000 cars a year, most of which are sold in Russia.

In addition to the closure of Toyota's St. Petersburg plant, most Of the European brands, including Honda, Volvo, Mercedes-Benz, BMW and Jaguar Land Rover, have announced the suspension of exports and sales to Russia. Earlier this month, BMW suspended production at its Russian plant, but said its production in Germany and other European countries would also be affected to varying degrees. It is understood that BMW is the top luxury brand in the Russian market in 2021, with a total of 46,800 cars sold. Previously, BMW has been cooperating with russia for more than 20 years, has just completed a new round of cooperation renewal until 2028 and is investing 350 million euros in the expansion of the factory.

Volvo Cars also announced a moratorium on exports to Russia. Volvo Cars said on Monday it would stop exporting vehicles to the Russian market until further notice. The move made Volvo the first international automaker to stop selling cars in the country after the Russian-Ukrainian conflict. Volvo automakers export cars to Russia from factories in Sweden, China and the United States, and about 9,000 cars will be sold in Russia in 2021.

Although the market share of cars in Russia and Ukraine is not high, many automakers have a layout of auto parts and key products, and the Russian-Ukrainian conflict will also affect automobile production. It is understood that Ukraine is the supplier of wiring harnesses for the entire European automaker, but many factories in Ukraine have suspended production, resulting in an urgent shortage of wiring harnesses for European automakers. In addition to automotive wiring harnesses, key products offered by Ukraine include neon gas for the manufacture of chips, as well as palladium for catalytic converters. The same is true of Russia, which accounts for about 9% of the world's nickel production, which has a significant impact on the development of the automotive industry. In addition, Russia is the world's largest producer of palladium, accounting for about 40% of global production.

Although the Russian-Ukrainian market is not large, because it is an important supplier of wire harnesses and neon, palladium, nickel and other elements, the "butterfly effect" caused by the Russian-Ukrainian conflict in the automobile industry has begun to appear and gradually expand. Jeff Schuster, president of LMC Automotive Consulting Global Forecasts, said, "After the Russian-Ukrainian conflict, we have lowered our global new car sales forecast for 2022 by 400,000 units, and will then make new judgments based on the severity and duration of the conflict. ”

The latest data shows that Russia sold a total of 114349 vehicles in February 2022, down 4.8% year-on-year. Among them, the Lada brand is the largest car company in the Russian market, with sales down 21% year-on-year to 22,378 units in February, ranking second with Kia, down 9% year-on-year to 15,001 units, and third with Hyundai Motor, down 1% year-on-year to 13,761 units. In addition, the top ten best-selling brands in February include Renault (10,382 units/+2%), Toyota (7,568 units/-1%), Volkswagen (5,631 units/-18%), Skoda (5,438 units/-23%), Nissan (4,192 units/-12%), GAZ (3,791 units/+17%), and Haval (3,569 units/+65%).

Source: Automotive Industry Concerns