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Sales of new cars grow in Ukraine: Reasons and consequences

Author : Olena Holubeva

22:24, 12 February 2018
Sales of new cars grow in Ukraine: Reasons and consequences

Author : Olena Holubeva

Over the past three years, growth in sales of new cars has been noticed in Ukraine. If in 2015, 46 thousand of new cars were sold, than for the last year this amount almost doubled (80.3 thousand). However, optimistic statistics are not at all related to improving the well-being of Ukrainians. It is only a reflection of the continuing stratification of society after the crisis of 2014.

22:24, 12 February 2018

Read original article at 112.ua

112 Agency

In January of this year, Ukrainians bought 6.62 thousand of new cars, which is 40.6% more than in January last year, a CEO of the All-Ukrainian Association of Automobile Importers and Dealers Oleh Nazarenko said that "the market for new cars is growing despite the crisis. I confirm my forecast that in 2018 it will be sold at least 100 thousand new cars," Nazarenko assured.

In AUTO-Consulting, sales growth in January is explained by a course "fever": being afraid of further increase of the dollar rate, buyers who were ready to buy made decisions faster. In addition, many orders for cars were made before the New Year, and in January the deals were closed, noted the information and analysis group. The purchases of new cars in January amounted to $ 190 million excluding the cost of additional equipment, according to the RST.ua (according to this website, in January, fewer cars were sold - 6,500). "The biggest sum of money for cars was spent in the capital - more than $ 75 million. In addition, in Kyiv people bought the most expensive cars - the average cost exceeded 33 thousand dollars (890 thousand UAH)," reads RST.ua. In Kharkiv, Dnipro and Odesa, the cost of new cars exceeded $ 12 million, in other regions the number of purchases was less than $ 10 million.

It should be noted that the growth in the volume of sales of new cars over the past three years is a trend, said Oleh Nazarenko. According to him, in 2015 46,000 new cars were sold during the year, 60.5 thousand in 2016, and 80.4 for the whole 2017. "True, if we compare these data with the indicators of the past, we cannot talk about restoring the previous volumes, for example: in 2009, 631 thousand new cars were sold," said the general director of the All-Ukrainian Association of Automobile Importers and Dealers. Note that in 2012, this figure fell to 217.4 thousand cars. We also note that according to AUTO-Consulting, Ukraine in 2017 in terms of sales of new cars was only on the 23rd place in Europe: in the top five of the leading countries were Germany, Britain, France, Italy and Russia.

Import of second-hand cars against the market of new ones

Experts note that against the backdrop of growth in sales of new cars, the volume of their production in the country was declining, while the used car market, on the contrary, was growing. "Production of cars in Ukraine is declining, a number of plants have closed recently, a number of car models have been withdrawn from production, which was facilitated, in particular, because of the adoption of higher environmental requirements," said Oleh Nazarenko to 112.ua.

According to the results of 2017, 59 thousand of used cars appeared on the Ukrainian market, which is almost 3 times more than a year ago. At the same time, the market of internal resale of used cars recorded stagnation, and in many segments even a decline. If we analyze volumes and model series of transactions with used cars in the last year, then supplies of "fresh" second-hand imports significantly impede the resale of similar cars, and sometimes make it impossible without a significant reduction in prices, the information-analytical group reported. In 2017, for the first time in many years, a situation was reported when the import of used vehicles (cars with a gross weight of up to 3.5 tons) stood almost in a line with the market of new cars.

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Note that many new and second-hand cars are imported to Ukraine using euro plates, which allows import vehicles without payment of customs clearance fees. 112.ua described in detail the schemes of importing cars with the so-called "euro plates".

It is cars with such number plates and the import of used cars that actually destroyed the lower price segment of the Ukrainian car market, experts say. In addition, they are the main culprits for the stagnation of the domestic auto industry, said Oleh Omelnitsky, director of the information-analytical group AUTO-Consulting: "Domestic cars were mainly represented in the lower price segment and mainly in products of the ZAZ (ZAZ Lanos, ZAZ Forza.) Now the cars of this enterprise account show no more than 1% of the Ukrainian auto market. In 2017 ZAZ produced 1,600 vehicles and sold 1,700 cars. For an enterprise with a capacity of 150,000 cars per year, it's just ridiculous, it's at the level of 1% of the production capacity."

"Cars with euro plates make the competition for the domestic car industry because this is the price segment of the same Lanos, Cherry cars. If a person is ready to buy a new BMW, then he will not look at the segment where euro plates are sold, "agrees Oleh Nazarenko.

According to the State Fiscal Service, as of January 31, 2018, there were 425,400 vehicles with foreign registration in the country, out of the 246,400 vehicles were imported illegally. Cars with euro plates are imported mainly from Poland (110.7 thousand cars in 2017), Lithuania (51.7 thousand), Germany (19.8 thousand), Bulgaria (14.1 thousand) and the Czech Republic (13.1 thousand).

What cars do Ukrainians buy

In the volume of sales of new cars imported cars dominated - they made 90% of sales, said Omelnytsky. "Most of the cars were imported to Ukraine from the European Union, Japan, South Korea, China, the United States and from Russia (using a scheme of importing allegedly from Belarus, but Russian cars are actually being transported). There are 23 automobile plants in Russia and it’s cheaper to buy there,“ added Nazarenko.

The bulk of sales of new cars in Ukraine is grounding on the model of the average price segment, says Omelnytsky. This statement is convincingly proved by statistics. According to AUTO-Consulting, in January, when the volume of sales of new cars grew by almost 40%, the most sold model was Volkswagen Golf (the cost of a car is about 500 thousand UAH). With a small lead, Ukrainians buy Toyota RAV4 (740 thousand UAH in the base set) and Toyota Camry (820 thousand UAH).

"The sales of cars of the lower price segment (up to 15 thousand euros - about 500 thousand UAH) accounted for less than 10%.The basis of sales in this price category was Renault Duster and Renault Logan. The segment of premium cars accounted for about 8% of the sales of new cars. And the criterion, by which we refer cars to the segment, is even a brand, not a price. We are talking about Mercedes, BMW, Audi, Lexus, Infiniti, Porsche, Land Rover, Jaguar, Volvo. For example, small cars, such as the Audi 1 or Mini Cooper, could cost 30 thousand euros, and off-road cars start from 50-60 thousand dollars. But the main factor, I emphasize, is still the brand, "Oleh Omelnytsky told to 112.ua.

Note that according to RST.ua and AUTO-Consulting, Toyota was the leader in sales among new cars and throughout the year 2017. And the most sold were Toyota RAV4 and Toyota Camry. In second place was Volkswagen Golf. After Renault Duster and Skoda Rapid, Nissan Qashqai (540 thousand UAH) and Kia Sportage (625 thousand UAH) were on the 6th and 7th places in terms of sales volume.

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Director of AUTO-Consulting stressed that today it is not necessary to speak about the general welfare and improvement of the financial situation of Ukrainians. "I want to emphasize that it is indicative: in the volume of sales of new cars about 40% of sales accounted for legal entities. Private clients in the majority are oriented either on used cars or on cars with euro plates, which reflects the general unreliability of the economy",  said Omelnytsky.

Car loans froze

In previous years, a powerful driver for the development of the car market was bank lending for the purchase of new cars, experts said. "Now, new cars purchased on credit account consist no more than 15% of the market, which is certainly a rather low percentage. In 2007-2008, the figure reached 40-45%," Oleh Olenytsky said, noting that banks offer loans at high rates, plus auto loans are available only in UAH. Also, according to the expert, people have become much more cautious with loans after the 2008 year crisis.

The decrease in car loans in 2014-2016 is reflected in the statistics of the National Bank, said Plena Korobkova, executive director of the Independent Association of Banks. The main reasons, she said, were the economic crisis, devaluation of hryvnia, a decrease in real incomes of the population, and an increase in rates (of loans, - Ed.). The expert noted a certain revival in the sector of bank crediting of car purchases in 2017. In her opinion, this was due to the fact that the interest rates on loans slightly decreased.

"In connection with the gradual growth of real incomes of the population and the increase of social standards by the state, in 2018 solvency will grow, as well as demand for loans," Korobkova said. At the same time, the executive director of the Independent Association of Banks noted that if there is no drastic change, the growth rate of the sector will not be optimistic: like all types of consumer lending in the country, it will be restrained by the strict monetary policy of the National Bank.

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