Mazda Motor is considering halting production of vehicles in Russia as supply chain disruptions caused by the situation in Russia and Ukraine make it increasingly difficult to resume production. Mazda Motor is discussing stopping production at a joint venture plant in Vladivostok (Vladivostok) in eastern Russia. The plant is reportedly operated by Mazda in partnership with Russian automaker Sollers.
Since the escalation of the situation in Russia and Ukraine, many Russian factories have shut down and workers have been forced to take vacations due to sanctions and a shortage of high-tech equipment as a result of the mass withdrawal of Western manufacturers. Toyota Motor also said on Sept. 23 that it had decided to stop producing cars in Russia due to disruptions in the supply of key materials and components.
Although Toyota’s withdrawal from the Russian market will incur a one-time cost expense, the impact on its earnings will be negligible. Toyota’s new car sales in Russia account for only 1% of its total sales.
At the same time, Toyota’s withdrawal will have a ripple effect on parts suppliers. Toyota Boshoku, a seat supplier that entered the Russian market with Toyota, will be forced to withdraw from the Russian market. The company has not yet announced its plans, but there are rumors that it is preparing to withdraw from the Russian market. Toyota said, “We will negotiate with each component company separately and consider supporting its withdrawal.”
In addition, the Japanese automaker’s decision to withdraw from the Russian market and its transition to electric vehicles could lead to a restructuring of European auto parts production.
Toyota’s Russian plant is also reportedly sourcing parts from Europe. “We will have to rethink our production system,” said an executive at a Toyota supplier. “This could lead Toyota to restructure its production arrangements in Europe.”
The transition to electric vehicles has already prompted Nissan, Honda and other automakers to cut production in Europe. The situation in Russia and Ukraine could be a catalyst for the Japanese automaker to retool its European production network.
