Japan automakers join global firms in stopping production, exports to Russia

Author of the article: Reuters Satoshi Sugiyama and Jamie Freed Top Japanese automakers including Toyota were forced to halt production in Russia as Western sanctions that followed its invasion of Ukraine scrambled logistics and cut supply chains, deepening the country’s economic isolation. Toyota Motor also said its vehicle exports to Russia had stopped indefinitely, following…
Japan automakers join global firms in stopping production, exports to Russia

Author of the article:

Reuters

Satoshi Sugiyama and Jamie Freed

Top Japanese automakers including Toyota were forced to halt production in Russia as Western sanctions that followed its invasion of Ukraine scrambled logistics and cut supply chains, deepening the country’s economic isolation.

Toyota Motor also said its vehicle exports to Russia had stopped indefinitely, following similar moves by local rivals Honda Motor and Mazda Motor.

Many Western companies have spurned Russia following its attack, with some saying they would exit investments there, but some Japanese firms have taken a more equivocal stance.

“Toyota is watching the ongoing developments in Ukraine with great concern for the safety of people of Ukraine and hopes for a safe return to peace as soon as possible,” it said in a statement.

Toyota is Russia’s top Japanese brand, producing about 80,000 vehicles at its St. Petersburg plant which employs 2,000 staff.

Global car companies including Mercedes-Benz, Ford and BMW have also stopped making and exporting cars to Russia and the world’s biggest shipping lines, MSC and Maersk suspended container shipping to and from the country.

Maersk said on Wednesday that shipments of foodstuffs and medical supplies to Russia risk being damaged or spoiled due to significant delays at ports and customs.

Western sanctions, including shutting out some Russian banks from the SWIFT global financial network, have led dozens of global companies to stop exports and pause operations in the country, hammered the rouble and forced the central bank to jack up interest rates.

Amazon.com Inc said on Wednesday it is using its logistics capability to get supplies to those in need and cybersecurity expertise to help governments and companies as part of its support for Ukraine.

Supply chains, already disrupted by the pandemic, are facing more stress as airspace closures affect the air freight industry, and airlines responsible for moving around an estimated fifth of the world’s air cargo are affected by sanctions.

Japan Airlines and ANA Holdings, which normally use Russian airspace for their Europe flights, said they would cancel all flights to and from Europe on Thursday, joining other carriers that have canceled or rerouted flights between Europe and north Asia.

Fitch and Moody’s on Wednesday each downgraded Russia’s sovereign credit rating by six notches to “junk” status, saying Western sanctions threw into doubt Russia’s ability to service its debt and would weaken its economy.

CORPORATE ACTION

Moscow has responded to the growing exodus of Western investors by temporarily restricting Russian asset sales by foreigners.

Russian firms, meanwhile, have felt increasingly squeezed.

Sberbank, Russia’s largest lender, said on Wednesday it was leaving the European market because its subsidiaries faced large cash outflows.

Russia has continued what it calls a “special operation” in Ukraine even as its week-long invasion was denounced by the United Nations in a historic vote and dozens of countries referred Moscow to be probed for potential war crimes. Moscow says it is seeking Ukraine’s “demilitarization” and denies targeting civilians.

Corporate condemnation for Russia has come thick and heavy.

U.S. energy firm Exxon Mobil, which will exit Russia like British energy firms BP and Shell, said: “We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people.”

Swedish fashion group H&M which paused sales in Russia, said it was deeply concerned about the tragic developments in Ukraine and “stand with all the people who are suffering.”

Spotify said it has closed its office in Russia indefinitely in response to what it called Moscow’s “unprovoked attack on Ukraine.”

Apple has stopped sales of iPhones and other products in Russia. Boeing suspended maintenance and technical support for Russian airlines.

Airbus SE said while it was halting supplies of parts and services to Russia, it was also analyzing whether its Moscow engineering center could continue providing services to local customers.

Citigroup Inc, which said it could face billions of dollars in losses on its exposure to Russia, said it was looking to exit Russian assets.

Cruise operators Royal Caribbean Group and Viking Cruises canceled sailings to Russia, joining many Western cruise companies that have taken St Petersburg off their summer itineraries.

(Reporting by Satoshi Sugiyama in Tokyo and Jamie Freed in Sydney; Additional reporting by Jamie Freed in Sydney, Mehr Bedi in Bengaluru, Megan Davies in New York; Writing by Sayantani Ghosh; Editing by Lincoln Feast & Simon Cameron-Moore)

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