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Russia-Ukraine conflict a challenge for automotive sector

The automotive industry in Guanajuato foresees significant challenges in light of the ongoing war between Russia and Ukraine, including the search for new supplies of scrap metal, electronic components for seats and for international companies in the sector to adapt to the new policies of their countries of origin, in order to show solidarity with the invaded country, commented Rolando Alaniz Rosales, president of the Guanajuato Automotive Cluster, to El Sol de León.

From Russia, Mexico imports electronic components for the seats of vehicles manufactured in the automotive industry, which will no longer be supplied due to the international economic pressure being applied by several countries around the world, which will hinder the production of units and new suppliers will have to be sought for the industry.

From Ukraine, Mexico exports most of the mineral scrap that helped in the manufacture of steel, raw material for the bodywork of cars, which is only imported from that country or from Brazil; however, due to the war, it has not been possible to purchase this material, which is used in construction.

"Mexico in this case Guanajuato is doing everything possible to process steel, what percentage of that scrap ends up in the construction industry and in the automotive industry, all that comes from Ukraine, of course it affects us because we have to have scrap supply," he commented.

The last challenge will be that international companies will have to adapt to the new policies established by their country, in solidarity with the Ukrainians, and that is where the automotive industry will be disadvantaged, since 90 percent of the investment in the sector is capital from other nations.

"Let us not forget that the automotive industry in Mexico is mainly linked to foreign investments, so Mexican companies in the automotive sector are very few, they are foreign companies operating in Mexico", he explained.

He added that the problem between Russia and Ukraine is very unfortunate and he hopes that the war will soon end, however he said that this problem is added to the Covid-19 pandemic and the shortage of chips for the manufacturing of vehicles.

According to Rolando Alaniz Rosales, president of CLAUGTO, despite the lack of chips in 2021, 2 million 979 thousand 276 vehicles were produced nationally and the industry had an increase in sales of 6.8 percent in Mexico, so they hope that this 2022 will begin to regularize the manufacture of components, so that in 2023 vehicle production will resume as it was being handled in 2019, before the pandemic by Covid-19.

Percentage of growth of the automotive industry.