I had been warning about an overexposure of carmakers to China, and of severe consequences if China’s saber-rattling over the island issue would give way to the rattling of tank tracks. Well, wrong country. OEMs are looking with apprehension towards Russia, where sanctions have already been threatened over the Russia’s crypto-invasion of parts of Ukraine. “Russia is an important market for foreign car brands,” writes Financial Times. Sure is. Let’s take a look.
|Top car companies Russia|
“Imported and locally made foreign brands accounted for nearly four-fifths of sales of light vehicles (cars, SUVs and pickups) in 2012, of a total market worth $75bn,” writes the FT, citing an Ernst & Young study.
The by far biggest exposure to Russia has Renault-Nissan. It controls Avtovaz, maker of Lada, and by far the biggest player in Russia.
Hyundai-Kia, with 12 percent of the market, also is very engaged in Russia. Next up: GM with 7 percent and Volkswagen with 6 percent. All would be in serious trouble would there be sanctions with bite. GM did bet big on Russia to help it get out of the European quagmire. Volkswagen needs the Russian sales for world domination purposes.
This picture shows why the reaction from the west will be limited to tough talk, and why there won’t be sanctions with bite any time soon: No, these are not Russian tanks rolling to Europe. It’s a much better weapon: Pipelines. Europe is very much dependent on Russian oil and gas. More or less all of Finland’s energy comes from Russia. Germany gets about half of its oil and gas out of pipelines from Russia.
The map shows another problem: A large part of the Russian oil and gas flows to Europe via pipelines that go through – Ukraine.
In 2009, Ukraine pilfered gas from the pipeline that was meant to be sent westward. Russia turned off the spigot to slap the Ukrainians around, and the Germans had to turn to reserves. Now imagine what will happen if the war of the green men without insignia turns real nasty. According to Der Spiegel, Russian navy issued an ultimatum to Ukrainian military on the Crimean peninsula: Surrender by 4am GMT tomorrow, or else. Tanks are massing on the other side of the border.
Suddenly, I feel much safer In Tokyo.