German car production under threat from Russian gas supply

Senior executives from car manufacturers are warning there could be disruptions to production if Russia cuts off its supply of natural gas to Germany.

The CEO of Volkswagen Group, Herbert Diess, warned being cut off from Russian gas poses a serious threat to the German car giant, according to a report from Reuters.

During a discussion on YouTube, Diess said Volkswagen’s Wolfsburg factory was in the process of being converted to run on more environmentally-friendly natural gas, but conceded its power plant would continue to use coal for the time being.

Last week, Russia cut its gas supply to Poland and Bulgaria in retaliation to sanctions imposed on the country following its invasion of Ukraine.

"Every company is looking at options for diversifying energy sources," Mercedes-Benz CEO Ola Kaellenius told Reuters television.

"It is still too early to say exactly which scenario will happen, but of course we are carefully looking at this.”

Mercedes-Benz is said to be working closely with German authorities to secure its energy needs, Automotive News Europe reports.

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Last year, Germany imported 55 per cent of its natural gas from Russia, with Reuters reporting a reduction to 40 per cent in the first quarter of 2022.

BMW told the publication it is also working with authorities, and is “monitoring the volatile situation closely”.

If the gas pipeline is shut off by Russia, it would add insult to injury for a sector which has struggled to maintain new-car production following a global semiconductor chip shortage and parts supply issues from equipment manufacturers based in Ukraine.