Ukraine conflict
VW boss: War could hit the economy harder than Corona
VW stopped doing business in Russia last week. (Pictured: CEO Herbert Diess) Photo: Carsten Koall/dpa
© dpa-infocom GmbH
“Huge price increases, energy shortages and inflation”: VW boss Diess is concerned about the long-term consequences of Putin’s attack on Ukraine. He still advocates “maximum sanctions”.
According to VW CEO Herbert Diess, Russia’s war against Ukraine could have even more severe effects on the European economy than the Corona crisis.
A prolonged military conflict would probably hit the region “much worse” than the spread of the Covid 19 pathogen, said the manager of the “Financial Times”. Global supply chains that are permanently damaged are likely to lead to “huge price increases, energy shortages and inflation,” warned the CEO of Europe’s largest car company. “That could be very risky for the European and German economy.”
Diess presented himself as a supporter of “maximum sanctions”, which would have to be supplemented by negotiations. VW stopped doing business in Russia last week. Production in and export of vehicles to Russia has been suspended until further notice. The manufacturer operates its own car production facilities in Kaluga, southwest of Moscow, and in Nizhny Novgorod further east.
turmoil in the commodity markets
In many countries, the consequences of the attack on Ukraine have already slowed down the production of car manufacturers. After the corona and chip crisis, there are further major work stoppages at VW in plants such as Zwickau, Wolfsburg or Hanover because supplier parts are missing. The war also led to distortions on the raw materials markets. Oil and gas and raw material prices continued to rise, with companies fearing shortages of critical parts and supplies.
The corona pandemic had already thrown the auto industry out of step beforehand. In the spring of 2020, the German car companies were often in the red after weeks of lockdowns prevented production. The lack of chips, which paralyzed production in many places in 2021, can also be seen, at least in part, as a result of the pandemic. However, car manufacturers have recently benefited greatly from rising sales prices thanks to continued high demand.
In a task force, VW is analyzing the imminent consequences for its own procurement as well as the economic problem scenarios in connection with the Ukraine war.
“The war in Ukraine upsets us all,” wrote Purchasing Manager Murat Aksel, Human Resources Director Gunnar Kilian and Works Council President Daniela Cavallo in a letter to the workforce. “After the Russian attack, Volkswagen is hoping for a quick cessation of hostilities and a return to diplomacy.”