Skoda, the Czech automobile maker that Germany’s Volkswagen has owned since 2000, says it is committed to Ukraine and won’t exit the country despite the current economic crisis.
Armed conflict in the Donbas and the hryvnia’s 40 percent nosedive so far this year are not critical to Skoda’s business model in Ukraine, says Miroslav Kroupa, the car manufacturer’s chief for the Commonwealth of Independent States region.
“We have been in Ukraine for a long time, since 2002, and we feel a commitment to the Ukrainian market and to Ukraine, because we have a lot of customers here …it means we believe in a positive future,” Kroupa said in an interview with the Kyiv Post.
The company’s Ukraine sales are down 50-60 percent compared to last year, he adds. “That’s maybe something we don’t see in Western Europe, but that’s what our experience from the 2007-2009 economic crisis (is about) – it’s fast decrease and (then) fast increase,” said Skoda’s regional manager.
In August alone, new-car sales in Ukraine were 3.5 times down from a year ago, reports Ukravtorpom, an industry association. Only some 6,400 vehicles were purchased. Meanwhile, Skoda is the ninth most popular car brand among new car buyers, while Toyota, Hyundai and ZAZ are in the top three.
In August, only 436 cars and buses rolled off assembly lines, marking a 15-year low, while production in the first eight months fell by 15 percent over the same period last year. Ukravto, the largest local producer, cut production by 98 percent in August to just 33 vehicles. And prices for imports have risen mostly in line with the hryvnia’s devaluation.
Eurocar Plant, Ukraine’s second biggest car producer located in Zakarpattya Oblast, has been assembling Skodas since 2002 after $250 million was invested. In August, 157 new cars were made here. Meanwhile, Kremenchuk Car Assembly Plant in Poltava Oblast, a cradle for new Chinese Geelys and Korean SsangYongs, has halted production completely, according to Interfax Ukraine news agency. Bogdan, which assembles Hyundais and Ladas, followed suit.
Kroupa sees presenting new products, which are sometimes derivatives of older models, as a key measure to boost sales. Skoda’s Octavia New, the manufacturer’s flagship auto, which entered the assembly line in Zakarpattya in July 2013, is a part of this policy. It sells for approximately $21,400.
Skoda’s senior executive says the association agreement between Ukraine and the European Union, which includes a far-reaching trade deal, is a sign of stability in bilateral political and business relations. But from his personal point of view, it’s not that important for Ukraine to be in the EU. “If you look at my home country (the Czech Republic) – we had a revolution in 1989 when a gap between us and the EU was 50 years. It took us 15 years to become a member of the EU, which we entered in 2004,” he says. “It’s not so important to enter the union as quickly as possible, it’s much more important to makes some changes in three major areas: legislation, easing business and people.”
As Ukraine prepares for the Oct. 26 parliamentary elections, the business community’s expectations of economic improvements are high. “We believe that the new approach which is now being applied by President Petro Poroshenko will continue after the elections. We believe the new parliament will be stable, there won’t be as many (critical) shifts (similar to those that we’ve experienced recently),” says Kroupa. “Our future challenge is to be not only a seller of the cars in Ukraine, but to manage a full production cycle – from the very beginning to the sales point.”
Kyiv Post staff writer Iana Koretska can be reached at [email protected].
