The UK government has said Jaguar Land Rover’s decision to suspend exports to Russia will help to isolate the country’s economy, after Britain’s largest carmaker said it would pause deliveries.
JLR is owned by India’s Tata but builds most of its cars in the UK. It said on Monday night it would pause deliveries to Russia because of “trading challenges” related to the “current global context”, without mentioning Russia’s invasion of Ukraine explicitly.
The UK business secretary, Kwasi Kwarteng, said JLR was one of “a rapidly growing number of companies and governments joining the whole international community in isolating Russia, both diplomatically and financially”, in a Twitter post on Tuesday.
Carmakers – along with companies across almost every industry – are scrambling to assess their exposure to Russia as the US, EU and UK work together to cut it off from the global economy via sanctions. While the movement of non-military cars or parts has not been blocked, several Russian banks are subject to blocking sanctions which could complicate cross-border trade.
The conflict has added yet another difficulty for the global car industry, which has been crippled by disruption over the last two years – to the point that JLR was forced to fly in crucial key fobs in suitcases at the start of pandemic. Production has been held back most notably in recent months by shortages of semiconductor computer chips.
Japanese carmaker Toyota suffered a different problem this week, when its production across Japan was halted owing to an alleged cyberattack on a supplier to all of its factories. Toyota is a leader in lean manufacturing to cut costs, meaning it does not have stockpiles of components to fall back on.
The supplier, Kojima Industries, said on Tuesday it had found an undisclosed threatening message written in English on one of its systems, Reuters reported. Japanese prime minister, Fumio Kishida, had said on Monday that the government would investigate whether Russia was involved.
The Russia conflict has already had serious knock-on effects for carmakers. Germany’s Volkswagen has had to pause production at two German plants for days this week because of shortages of components from Ukraine, while its Skoda brand has also had to limit production for the same reason.
Russia is a relatively minor market for UK car plants, whose exports are predominantly aimed at EU countries. It is thought that the UK exports fewer than 10,000 cars a year to Russia out of an annual production on 860,000 in 2021.
However, there are Aston Martin, Bentley and Rolls-Royce showrooms in Moscow and St Petersburg, as well as dealers stocking cars from BMW-owned Mini.
A JLR spokesman said: “Jaguar Land Rover’s first priority is the wellbeing of our entire workforce and their families, as well as those within our extended network. The current global context also presents us with trading challenges so we are pausing the delivery of vehicles into the Russian market and continually monitoring the situation on behalf of our global customer base.”
Other UK factories have so far been less affected. Nissan’s Sunderland factory, the largest single plant in the UK, does not export to Russia. Nissan supplies the Russian market with cars made at its plant in St Petersburg, which is still operating.
A Nissan spokesman said: “We continue to monitor events closely and we remain focused on supporting our employees and partners.”