How will the war in Ukraine hit car prices and availability?

The Russian invasion of Ukraine has had a dramatic effect on the global car industry. After it broke out, Porsche and BMW quickly had to suspend production of their cars because they couldn’t get wiring harnesses – the 5km bundle of electrical cables that’s crucial to the operation of the modern car. Many of these are produced in western Ukraine where factories have been shuttered.

Car makers are also suffering from increasing steel prices. Russia and Ukraine are important suppliers of pig iron, which is then refined to produce steel. This is rocketing in price as quickly as oil is.

We’ve already seen that nickel prices have gone up by a third. Russia is also a large producer of aluminium, prices of which the Economist Intelligence Unit (EIU) expects to see increase by 40 per cent. Nearly half of the world’s palladium (46 per cent), vital for the catalytic converters of internal combustion engines, comes from Russia. And it, along with Ukraine, also supplies noble gases such as C456 and neon, which semiconductor production needs.

“All of this will have an impact on supply and make cars more expensive,” said the EIU’s Ana Nicholls. “We are seeing a real change in the world order. Things aren’t going to return to ‘normal’. We’ll go into an uneasy peace if we’re lucky.”

And that’s on top of an increase in average car running costs by £291 this year, according to the Comparethemarket comparison website.