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(Reuters) – 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 off supply chains, deepening the country’s economic isolation.
Toyota Motor (NYSE:TM) Corp also said its vehicle exports to Russia had stopped indefinitely, following similar moves by local rivals Honda Motor and Mazda Motor (OTC:MZDAY).
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. Autos and auto parts made up more than half of Japan’s exports to Russia in 2020, according to the finance ministry.
Global car companies including Mercedes-Benz Group, 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.
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.
Fitch and Moody’s (NYSE:MCO) 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 “demilitarisation” and denies targeting civilians.
Corporate condemnation for Russia has come thick and heavy.
U.S. energy firm Exxon Mobil (NYSE:XOM), which will exit Russia like British energy firms BP (NYSE:BP) and Shell (LON:RDSa), said: “We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people.”
“We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence,” said Apple (NASDAQ:AAPL), which stopped sales of iPhones and other products in Russia.
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”.
Boeing (NYSE:BA) suspended maintenance and technical support for Russian airlines.
European planemaker Airbus SE (OTC:EADSY) said while it was halting supplies of parts and services to Russia, it was also analysing whether its Moscow engineering centre could continue providing services to local customers.
Citigroup Inc (NYSE:C), which said it could face billions of dollars in losses on its exposure to Russia, said it was looking to exit Russian assets and trying to sell its Russian consumer business.
Cruise operators Royal Caribbean (NYSE:RCL) Group and Viking Cruises cancelled sailings to Russia on Wednesday, joining many Western cruise companies that have taken St Petersburg off their summer itineraries.
