What was the impact of the Russian invasion on…

In the past few years, used car markets have faced problems as the semiconductor crisis has put the car buying chain at risk. Many automakers felt the problems had already peaked, and 2022 appeared to be the year auto supplies would return to pre-crisis levels.

However, those plans were thwarted by Russia’s invasion of neighboring Ukraine, leaving the auto industry facing a larger crisis that would be much more difficult to resolve. Matas Puzelis, automotive expert and director of communications for car company CarVertical, shares his views on the situation.

Damaged supply chains

Buzelis, an expert in the automotive industry, notes that although the Russian new car market is not the largest in the world, it plays an important role in the automotive supply chain.

Russia exports important components for the auto industry. Germany, for example, relies on titanium, iron and Russian palladium. With 108 million tons of iron ore produced in 2021, Russia is the world’s fifth largest iron ore producer, supplying European steel producers who are now facing higher prices and potential difficulties in extracting the metal elsewhere.

Matas Puzelis, Automotive Expert and Director of Communications at CarVertical

The Russian invasion also affected the automobile industry in Ukraine. German automakers such as BMW and Volkswagen, for example, use a large Ukrainian supplier of cable assemblies. In addition, Ukraine is the world’s third largest producer of nickel and aluminum, which are very important and indispensable suppliers of components for batteries and electric vehicles.

Ukraine produces nearly 70% of the world’s neon gas needed for components such as microchips, which are already in short supply.

It’s hard to get a good used car

Buying a used car was already difficult and expensive in 2021, but it looks like it will be even more difficult in 2022. While the used car market is growing, used car dealers are facing a shortage of cars.

One of the main reasons for the current situation is the crisis in the new car market. Manufacturers began to reduce vehicle production in order to maintain lower but more stable production. This change in the production of new cars is slowing the flow of cars into the used car market. Therefore, car owners are late in selling their cars or not at all.

“Those who want to buy a used car are now choosing between the limited and most expensive offers in the used car market. However, the limited supply of used cars does not mean that buyers have to forgo measures that protect them from fraud. On the contrary, customers should check History of each used vehicle, because the choice is very limited,” says Mr. Bozelis.

As carVertical’s head of communications explains, used car dealers can buy whatever is offered to them, with less regard to the condition of the vehicle. The risks of buying a used car in poor condition can be much higher than, say, a year or two ago.

Unexpected prices for used cars

In 2021, used car prices are already at an all-time high. Although it stabilized and even began to decline towards the end of the year, the Russian invasion of Ukraine created an unprecedented situation in the used car market in Eastern Europe.

Used car buyers from Ukraine have been coming to Poland, Lithuania, Slovakia and Hungary for years. While there was a growing demand for newer cars in the domestic markets of these countries, Ukrainians bought much more ten-year-old cars, especially those with economical but “dirty” diesel engines.

On the other hand, a decrease in the flow of customers will change the used car market in countries neighboring Ukraine. Older car prices are likely to fall as dealers seek to cut their losses to adapt to current conditions.

The effect of fuel prices

Fuel prices have crossed the critical 2 euro per liter limit in many European countries, sparking interest in changing daily habits.

“Due to higher fuel prices, some drivers will drive less to work. They can reduce annual mileage by choosing public transportation or other alternative modes of transportation. “Mileage means fewer accidents, which will save operating costs,” says an expert from CarVertical. “.

This will reduce the number of vehicles on the roads, but higher fuel prices also increase interest in fuel-efficient vehicles.

This means that vehicles powered by diesel engines can spark interest due to the unprecedented fuel consumption on the highway. However, this trend will be limited to countries that do not tax vehicles with higher CO2 emissions.

Increased fuel prices will encourage people to invest in used electric cars. Despite higher energy prices, the total cost of owning electric vehicles is still lower, and may be lower if solar energy is used for charging. Solar charging is expected to save between 600 and 800 euros annually.

Before every purchase of a used car, check its history to avoid any possible inconvenience..

Article author: CarVertical

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