The Russian foray into Ukraine will no doubt have deep ramifications for European history and world peace. One key question is: what impact it will have on the European auto market due to Russian sanctions. What will be the consequences for the global car trade, prices, and part availability? A lot depends on how long the war will last and more ominously, how far will it escalate. Will it spread to other countries? So far, this seems unlikely, thankfully. 

Global Effects of War in Ukraine 

 A protracted war will likely have stronger repercussions on the global vehicle trade, prices, and supply chain. As the war grinds on, shockwaves are being felt across the globe for various reasons. Commodities like oil and gas will certainly be impacted since Russia is a major producer. Another commodity that is being deeply impacted to the surprise of many is sunflower oil. That’s because Ukraine and Russia both produce over 80 percent of the world’s sunflower crop.

Information is emerging that since Ukraine produces some parts for German Volkswagen, the production of this leading automaker will be adversely affected at least temporarily by the ongoing conflict in Ukraine.

Toyota in Japan has also taken the unexpected step of temporarily ceasing its operations due to a cyberattack on its IT infrastructure that is suspected to be of Russian origin. Japan had joined other Western nations in imposing sanctions on Russia, hence, such cyberattacks are to be expected.

There is a lot of talk about imposing sanctions on Russia to force it to stop its interference in Ukraine. However, what is less well understood by the public is that sanctions imposed on Russia will also impact countries that impose such embargoes. More specifically, companies that are stopped from doing business in Russia will take a hit on their revenue.

Russia, in turn, could retaliate by halting the supply of oil and gas to Western Europe which depends on it for its production activities. The effects of tit-for-tat sanctions could be dramatic. As it is, the effect on the oil and gas market is being felt by ordinary consumers across the world. This could have a direct impact on the vehicle market.

When considering the numerical strength of Russian forces, it seems almost inevitable that Ukraine will be occupied. A pro-Russian proxy government seems imminent. The West will certainly counter with strong sanctions. This will lead to the strongest economic effects, especially for Russia. There will be almost no effect on the US since it does not depend on Russian oil. The Western European car market will likely be affected. But the strongest affected will be the East European car market. The rise in oil and gas prices could also impact the number of vehicles being sold in the European auto market. 

Bottom Line 

This means that the European car market could be entering a period of significant change in the coming months and years. There is a strong possibility that the auto market could take a big hit from the ongoing conflict in Ukraine, especially if it drags on and if a puppet government is installed in the country.