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Volvo and Renault say war in Ukraine making semiconductor shortage worse

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Employees of the Avtoframos automobile plant assemble a Renault Logan model in Moscow (AFP via Getty Images)
Employees of the Avtoframos automobile plant assemble a Renault Logan model in Moscow (AFP via Getty Images)

Two of Europe’s biggest car makers sounded the alarm on the global semiconductor shortage blighting the auto industry today, warning that war in Ukraine had made the problem worse.

French car maker Renault said its order backlog hit a 15-year high in the first quarter as a semiconductor shortage held up production. Volvo boss Martin Lundstedt warned of a “strained” supply chain, with war in Ukraine and the spread of Covid-19 in China making existing problems worse.

Renault’s first quarter revenue dropped 2.7% as production issues weighed and the company estimated a production loss of 300,000 vehicles in 2022.

Sweden’s Volvo held up better, with sales up 12% in the first quarter led by a 6% increase in truck sales. The manufacturer said it had been stock piling parts, which helped it navigate shortages in the first few months of the year.

CEO Martin Lundstedt warned that continued disruptions and soaring costs were making life difficult.

“The situation in the global supply chain for semiconductors and other components remains unstable, characterized by disruptions, unpredictability and lack of freight capacity,” he said.

“The continued spread of covid-19 particularly in China and the war in Ukraine are putting additional pressure on the already strained supply chain and production system.”

Sales in China were down 9% after rising coronavirus infections led to lockdowns in Shanghai, with many automakers forced to temporarily suspend operations.

Renault’s Russian first quarter car sales were down 15.7% compared to the previous year, after the company suspended operations at its Moscow car plant and mulled selling its two-thirds stake in Russian car maker Avtovaz.

Russia is Renault’s second biggest market with over 75,000 vehicles sold in the first quarter of 2022. The company announced it was re-commencing car production in Russia in late-March before reversing its position only a day later.

Renault said it would introduce additional cost-cutting programmes in a bid to stay competitive.

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