Industry Topics

Ukraine Crisis

SMMT statement from Mike Hawes, Chief Executive:

We condemn the Russian state’s aggression against Ukraine. The UK Automotive industry supports the actions of the international community to bring an end to the conflict through all diplomatic, financial and trading mechanisms as well as the provision of specific support to the people of Ukraine. Inevitably, there will be an impact on the sector and SMMT will support its members in their efforts both to protect their staff who may be affected as well as with the pressures it will put on their business.

In response to the crisis, SMMT will provide regular updates to members, with intelligence on the UK and international responses, including the latest sanctions imposed by UK and global governments, and assessments on the impact on automotive businesses and their staff.

We are working closely with UK Government and sister associations, to provide guidance and information to assist members with their ongoing handling of the crisis and impact on business, and to feedback industry intelligence to help Government understand the impact on the sector.

If you have questions or feedback, please email them to Andrew Harries or Alessandro Marongiu at policy@smmt.co.uk

SMMT Activity

SMMT is working closely with UK Government Departments (BEIS, FCDO, DIT, Cabinet Office) to obtain the latest information and to provide feedback on how the crisis is impacting UK Automotive. We are also engaging with other major business representative bodies in the UK and EU, to share intelligence.

We are convening a member taskforce and hosting a series of webinars, to provide updates to members and answer questions. We will provide further updates on these plans in due course.

  • Ukraine Crisis – update 9 May 2022

    Palladium and Platinum included in latest round of UK sanctions on Russia and Belarus

    The UK has announced a further package of sanctions on Russia and Belarus, targeting £1.7 billion worth of trade, including import tariffs and export bans. The new import tariffs will cover £1.4 billion worth of goods – including 35% tariffs on platinum and palladium. Russia is one of the leading platinum and palladium producing countries and is highly dependent on the UK for exports of platinum and palladium products.

    Read the full release here: https://www.gov.uk/government/news/uk-punishes-putin-with-new-round-of-sanctions-on-17-billion-of-goods

    Meanwhile, the planned export bans intend to hit more than £250 million worth of goods in sectors of the Russian economy most dependent on UK goods, targeting key materials such as chemicals, plastics, rubber, and machinery.

    This is the third wave of trade sanctions announced by the UK government and, excluding gold and energy, will bring the proportion of goods imports from Russia hit by restrictions to more than 96 percent, with more than 60 percent of goods exports to Russia under whole or partial restrictions.

    Last week, the International Trade Secretary hosted international trade ministers and officials from 23 countries, including the Ukrainian first Deputy Prime Minister, to discuss how best to provide trade and economic support to Ukraine. She also signed a formal exchange of letters to liberalise all tariffs on imports from Ukraine under the UK-Ukraine Free Trade Agreement.

    N.B. Legislation will be laid in due course to implement these measures. These estimates assume the full value of trade within a commodity code is subject to a restriction. The true value may be subject to licensing and exemptions. The UK Government is encouraging all importers that use Russian imports to source alternative supplies. As with all sanctions, these measures will be kept under review.

    Ukraine Crisis – update 26 April 2022

    UK announces new trade measures to support Ukraine

    On Monday 25 April, the UK announced new measures to support Ukraine in its conflict with Russia by removing all tariffs covered by the existing UK-Ukraine trade deal, as well as introducing further sanctions on Russia.

    • All tariffs on goods imported from Ukraine will now be reduced to zero and all quotas will be removed under the free trade agreement.
    • In addition, the UK has announced an export ban on products and technology, including interception and monitoring equipment.

    Last week (21 April) the UK also announced it was bolstering its current tariff sanctions against Russia, by increasing the list of products facing import bans and increased tariffs, including applying new import bans to silver and wood products and increasing tariffs by 35 percentage points on products such as diamonds and rubber.

    Click the link for the updated list (including commodity codes) for imports requiring additional duties: Further Russian and Belarusian imports requiring additional duties: 21 April 2022

    Ukraine Crisis – update 14 April 2022

    UK Government publishes legislation banning imports of steel and iron, plus export ban on luxury goods

    The UK government has published secondary legislation – SI 2022/452 – The Russia (Sanctions) (EU Exit) (Amendment) (No. 8) Regulations 2022 – which bans the import of iron and steel products from Russia, as well as the export of quantum technologies, advanced materials and luxury goods to Russia. These Regulations come into force on 5.00 p.m. on 14th April 2022.

    The relevant descriptions and commodity codes are published in the Schedule.

    Schedule 3B provides the commodity codes for the iron and steel products banned from import.

    Schedule 3A Part 2B 18 provides details, including commodity codes, on vehicles (and spare parts) included under the luxury goods export ban:

    18. Vehicles, except ambulances, for the transport of persons on earth, air or sea, teleferics, chairlifts, ski-draglines, traction mechanisms for funiculars and motorbikes, as well as their accessories and spare parts, meaning any thing which falls within the commodity codes set out in the following table, provided that the sales price exceeds—
    (a)£42,000 per vehicle,
    (b)£4,200 per teleferic, chairlift, ski-dragline, traction mechanism for funiculars or motorbike, or
    (c)£420 per accessory or spare part,
    as applicable—

    Businesses impacted by these import and export bans can contact the UK Export Support Service with any queries – use the dedicated online service or call 0300 303 8955.

    SMMT will provide further updates and guidance when available.

    Ukraine Crisis – update 8 April 2022

    EU agrees fifth package of restrictive measures against Russia

    The fifth package of measures adopted by the EU contains the following six elements:

    1) Coal ban

    • An import ban on all forms of Russian coal. This affects one fourth of all Russian coal exports, amounting to around €8 billion loss of revenue per year for Russia.

    2) Financial measures

    • A full transaction ban and asset freeze on four Russian banks, which are now totally cut off from the markets. They represent 23% of market share in the Russian banking sector and will, therefore, further weaken Russia’s financial system.
    • A prohibition on providing high-value crypto-asset services to Russia. This will contribute to closing potential loopholes.
    • A prohibition on providing advice on trusts to wealthy Russians, making it more difficult for them to store their wealth in the EU.

    3) Transport

    • A full ban on Russian and Belarusian freight road operators working in the EU. Certain exemptions will cover essentials, such as agricultural and food products, humanitarian aid as well as energy.
    • An entry ban on Russian-flagged vessels to EU ports. Exemptions apply for medical, food, energy, and humanitarian purposes, amongst others.

    4) Targeted export bans

    • Further targeted export bans – worth €10 billion – in areas in which Russia is vulnerable due to its high dependency on EU supplies. This includes, for example, quantum computing, advanced semiconductors, sensitive machinery, transportation and chemicals. It also includes specialist catalysts for use in the refinery industry. This will continue to degrade Russia’s technological base and industrial capacity.
    • Adding jet fuel and fuel additives, which may be used by the Russian army, to the existing export ban.

    5) Extending import bans

    • Additional import bans – worth €5.5 billion – including cement, rubber products, wood, spirits (including vodka), liquor, high-end seafood (including caviar), and an anti-circumvention measure against potash imports from Belarus. These measures will also help to close loopholes between Russia and Belarus.

    6) Excluding Russia from public contracts and European money; legal clarifications and enforcement

    • Full prohibition on the participation of Russian nationals and entities in procurement contracts in the EU. Limited exceptions may be granted by the competent authorities where there is no viable alternative.
    • Restriction on financial and non-financial support to Russian publicly owned or controlled entities under EU, Euratom and Member State programmes. For instance, further to measures previously announced in research and education, the Commission will terminate participation in all ongoing grant agreements to Russian public bodies or related entities, and suspend all related payments, under Horizon 2020 and Horizon Europe, Euratom, and Erasmus+. No new contracts or agreements with Russian public bodies or related entities will be concluded under these programmes.
    • Addressing various overlaps between export restrictions on dual-use items and advanced technologies and other provisions.
    • Extending to all official EU currencies the prohibitions on the export of banknotes and on the sale of transferrable securities.

    Ukraine Crisis – update 7 April 2022

    Latest UK sanctions target banks, coal, oil, iron, steel and further 8 oligarchs

    On Wednesday 6 April, the UK announced further sanctions on Russia’s economy, industries and targeted individuals. Key sanctions announced include:

    • asset freezes against Sberbank and Credit Bank of Moscow. Sberbank is Russia’s largest bank and this freeze is being taken in co-ordination with the US
    • an outright ban on all new outward investment to Russia. In 2020 UK investment in Russia was worth over £11 billion.
    • by the end of 2022, the UK will end all dependency on Russian coal and oil, and end imports of gas as soon as possible thereafter. From next week, the export of key o refining equipment and catalysts will also be banned, degrading Russia’s ability to produce and export oil – targeting not only the industry’s finances but its capabilities as a whole
    • action against key Russian strategic industries and state-owned enterprises. This includes a ban on imports of iron and steel products, a key source of revenue.
    • Russia’s military ambitions are also being thwarted by new restrictions on its ability to acquire the UK’s world-renowned quantum and advanced material technologies

    UK sanctions also target a further eight oligarchs active in the abovementioned industries. They include:

    • Viatcheslav (Moshe) Kantor, the largest shareholder of fertilizer company Acron with vital strategic significance for the Russian government
    • Andrey Guryev, known close associate of Vladimir Putin and founder of PhosAgro – a vital strategic company that produces fertilizers
    • Sergey Kogogin, director of Kamaz – manufacturer of trucks and buses, including for the Russian military
    • Sergey Sergeyevich Ivanov, President of the world’s largest diamond producer Alrosa, which the UK also sanctioned
    • Leonid Mikhelson, the founder, and CEO of leading Russian natural gas producer Novatek, with a net worth of £18billion
    • Andrey Akimov, the CEO of Russia’s third largest bank Gazprombank
    • Aleksander Dyukov, the CEO of Russia’s third largest and majority state-owned oil producer GazpromNeft
    • Boris Borisovich Rotenberg, son of the co-owner of Russia’s largest gas pipeline producer SGM. The Rotenberg family are known for their close connections to Putin and a number of them have already been sanctioned

    UK launches review of steel tariff quotas for imports from Russia and Belarus

    The Trade Remedies Authority (TRA) has initiated a Tariff Rate Quota (TRQ) review of steel imports that are part of the UK’s safeguard trade remedy measures. The TRA will assess whether the tariff rate quotas for Russia and Belarus should be re-allocated to avoid a potential shortage of steel in the UK.

    Read the full press release here: https://www.gov.uk/government/news/uk-launches-review-of-steel-tariff-quotas-for-imports-from-russia-and-belarus

    Points to note:

    • According to the press release, the review should not concern category 4 (hot dipped galvanised steel), which is the steel gradient most used by automotive that is currently subject to a tariff-rate-quota under the current safeguard. However, both category 1 and category 13 can have automotive applications.
    • The EU has already adopted the decision to redistribute the quotas on imports of steel from Russia and Belarus through its own safeguard regulations.

    G7 issues joint statement

    G7 foreign ministers and the High Representative of the European Union issued a joint statement on Russia and Ukraine following a meeting at NATO (7 April). The full statement is available here:

    https://www.gov.uk/government/news/statement-of-the-g7-foreign-ministers-on-russias-war-of-aggression-against-ukraine-april-2022

    Ukraine Crisis – update 24 March 2022

    UK announces further 65 sanctions against Russia

    Foreign Secretary Liz Truss has announced 65 new Russian sanctions today (Thursday 24 March) against a range of key strategic industries and individuals.

    Today’s sanctions target key industries supporting Russia’s illegal invasion, including Russian Railways and defence company Kronshtadt, the main producer of Russian drones. The Wagner Group – the organisation Russian mercenaries reportedly tasked with assassinating President Zelenskyy – has also been sanctioned.

    Six more banks are targeted, including Alfa Bank whose co-founders include previously sanctioned oligarchs Mikhail Fridman, Petr Aven and German Khan. The world’s largest diamond producer Alrosa is also sanctioned.

    Individuals sanctioned include the billionaire oil tycoon Eugene Shvidler, founder of Tinkoff bank Oleg Tinkov, Herman Gref, the CEO of Russia’s largest bank Sberbank, and Polina Kovaleva, Foreign Minister Lavrov’s stepdaughter. Galina Danilchenko, who was installed by Russia as the ‘mayor’ of Melitopol is also sanctioned – the first time an individual has been sanctioned for collaboration with Russian forces currently in Ukraine.

    Ukraine Crisis – update 10 March 2022

    UK, US and EU to target Russian oil and gas

    Following this week’s announcement by US and UK governments, the Business Secretary has set out more detail on how the UK will phase out the import of Russian oil and oil products by the end of 2022. This includes the establishing of a new joint taskforce with industry to work on an orderly transition. The US expects to cut imports immediately.

    Read the press release here: https://www.gov.uk/government/news/uk-to-phase-out-russian-oil-imports

    Read the Business Secretary’s statement to Parliament here: https://www.gov.uk/government/speeches/statement-on-the-phasing-out-of-russian-oil-imports

    Ukraine Crisis – update 3 March 2022

    Latest UK and International Sanctions

    Following Russia’s illegal invasion of Ukraine, the UK, EU and other international governments have been coordinating on a wide range of sanctions against Russia. Below are links to information on the latest sanctions from key governments.

    UK

    The UK government has announced sanctions including:

    • the freezing of assets from all of Russia’s major banks
    • targeted sanctions on Russian individuals (including President Putin, Russian MPs who voted in favour of military action and a number of Russian
    • businessmen associated with President Putin’s inner sanctum)
    • export controls on hi-tech and dual-use good/services
    • a ban on all Aeroflot flights in UK air space
    • a ban on finance and trade with the separatist regions of Donetsk and Luhansk similar to that already in place for the region of Crimea

    The UK Government has published the legislation and full list of export controls, including for dual-use goods: The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 (legislation.gov.uk)

    For the latest consolidated list of UK sanctions visit GOV.UK ‘UK Sanctions against Russia

    Following the UK government announcing sanctions, guidance on the UK’s sanctions regime relating to Russia has been published. The guidance includes information on the suspensions of dual use goods for those who use export licenses.

    Furthermore:

    • the FCDO now advises against all travel to Russia and Ukraine.
    • the Home Office has published guidance on ‘support for family members of British nationals in Ukraine, and Ukrainian nationals in Ukraine and the UK’.

    EU

    The EU has set out a similar range of sanctions, targeted at Russia’s economy and key individuals.

    Updates on EU sanctions are available here:

    EU Council website: https://ec.europa.eu/commission/presscorner/detail/en/fs_22_1402
    European Commission website: https://ec.europa.eu/info/strategy/priorities-2019-2024/stronger-europe-world/eu-solidarity-ukraine_en

    US

    The latest updates from the US Government are available from the US Department of the Treasury website:

    https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220225_33
    https://home.treasury.gov/news/press-releases/jy0608
    https://home.treasury.gov/news/press-releases/jy0607

    Other countries

    Canada – https://laws.justice.gc.ca/eng/regulations/SOR-2014-58/FullText.html

    Other Updates

    Below are highlights of the latest updates on other Government and industry responses to the ongoing crisis.

    • UK Transport Secretary, Grant Shapps MP, has written to all UK ports asking them not to provide access to any Russian flagged, registered, owned, controlled, chartered or operated vessels. The enacting legislation will follow shortly.
    • Global shipping company, A.P. Moller – Maersk, has announced that new Maersk bookings within ocean, air and intercontinental rail to and from Russia will be temporarily suspended, with the exception of foodstuffs, medical and humanitarian supplies (bar dual-use items).

  • UK Government Support and Contacts

    Below are links and contact details where businesses can obtain additional information:

    • Export Support Service – if you have a question about trading with Ukraine or Russia use the dedicated online service or call 0300 303 8955.
    • The Business Partnership team at the Cabinet OfficeBusinessPartnerships@CabinetOffice.gov.uk – on sanctions and impact of these on UK businesses.
    • National Cyber Security Centre (NCSC)enquiries@ncsc.gov.uk – for guidance and support on cyber security and resilience.
    • Embassy support for British Nationals in Ukraine or Russia, refer to the linked embassy pages for more information – Ukraine and Russia.

    Cyber Security

    In response to the events in Ukraine, the National Cyber Security Centre (NCSC) has published information to help businesses to improve their cyber resilience during periods of heightened threat. The NCSC has set out a number of critical actions businesses can take to protect themselves quickly, as well as support long-term planning.

    Below are links to relevant NCSC guidance to help your business’s cyber resilience:

    If you have any questions, please contact enquiries@ncsc.gov.uk who will be happy to assist.

  • Latest Market Intelligence

    Below are some of the latest key economic developments associated to the ongoing Ukraine crisis, which will be updated as necessary

    Global Automotive Forecasts

    The unfolding situation in Ukraine has given rise to questions concerning the likely impact on the automotive industry.

    • LMC & J.D. Power have cut their global sales forecast by 400,000 to 85.8 million units, also due to rising oil and aluminium prices that could discourage buyers from spending on new cars and trucks.
    • However, the volume of global light-vehicle sales is expected to rise 5% in 2022.

    Commodities and Markets

    Palladium prices rise: Palladium prices soared in early trading on Monday (9 May), rising 4% to $2,105 a troy ounce after the U.K. government introduced GBP1.7 billion worth of sanctions on Russia. The U.K. government announced a 35% increase in tariffs on products such as chemicals, platinum, and palladium. Previously, the London Platinum and Palladium Market announced a ban on Russian refined material from two key refiners as a response to the country’s invasion of Ukraine.

    Global markets drop: A slowdown in China’s export growth has fuelled concerns over the global economy. With inflation pressures high, investors continue to worry that central banks will push economies into recession by hiking interest rates to slow inflation. In London, the FTSE 100 index has dropped to a seven-week low, down 120 points, or 1.6% at 7264 points, with mining stocks among the fallers. European stocks also hit two-month lows, as a slowdown in China’s export growth worried the markets. And in New York, stocks have extend their recent selloff, with the tech-focused Nasdaq Composite index falling another 2.5%, and the S&P 500 hitting its lowest point for the year.

    Bank of England on inflation: BoE policymaker Michael Saunders is worried that inflation could be even higher than the Bank’s latest forecasts. Last week, the Bank predicted the inflation could hit 10% before the end of the year, the highest level since 1982, as it lifted interest rates by a quarter-point to 1%. But in a speech this afternoon (9 May), Saunders warned that the cost of living squeeze on British households from high inflation could be bigger and last for longer than expected. That’s why he was one of three policymakers to vote for a half-point rise, he explains.

    Germany’s new car registrations fall: Germany’s new car registrations fell by -22% to 180,264 last month, according to KBA motor transport authority data. Registrations of full-electric cars fell by -6.9% to 22,175 for a 12.3% market share. Plug-in hybrid registrations dropped by -20% to 21,697 for a 12% share.

  • Date: Tuesday 8 March 2022
    Time: 10:00 – 11:00am

    SMMT and invited speakers provided an overview of industry impacts and emerging issues in the developing Ukraine crisis. Topics discussed included sanctions, supply-chain disruption and other emerging challenges.

    Chair: Mike Hawes, Chief Executive, SMMT

    Speakers:

    • Andrew Hood, Partner, Regulation, Trade and Public Policy, Fieldfisher LLP
    • SMMT Policy & Economics team

    LISTEN HERE