Despite government measures designed to boost the nation’s car industry, last year vehicle production fell by 34 percent – to 50,449 vehicles, the worst performance in a decade. The numbers suggest that a special car import duty and utilization tax missed its mark in helping Ukrainian producers achieve better results.
Ukrautoprom figures show production drops in
all categories — cars, vans and buses, reflecting the decline in demand.
Auto sales dropped 4.5 percent over the
previous year. 213,000 new private cars were sold in 2013, down by 10 percent. Consumers bought 16,400 new commercial vehicles and 3,179 new buses, down by 25 percent and 21 percent, respectively,
compared to 2012.
World Trade Organization rule
changes that support auto imports are one reason for the decline in output,
Ukrautoprom President Mykhailo Resnik told the Kyiv Post. Another is the introduction
of a utilization tax in Russia, which has been the destination for 90 percent
of Ukrainian car exports.
Unicredit Bank’s analyst Andriy Pryhodko
said that lowered exports to Russia hurt the nation’s auto industry.
An anticipated free trade
agreement with the European Union in November was supposed to open the door wider
for European car producers, reducing the price on European cars, which are
generally considered to be of higher quality than local ones. Fearing the decline
in demand, Ukrainian manufacturers cut production. ZAZ, a leading Ukrainian car
producer, cut its output by 51 percent, even though the EU trade deal didn’t go
through because of President Viktor Yanukovych’s opposition to it.
Car prices went up by 7-8 percent in 2013,
state agency Derzhzovnishinform said, contributing to the general malaise.
Recovery of car exports to Russia will help, Dragon
Capital’s Andrew Bespyatov said. Starting in January, the Russian utilization
tax will have to be paid by local and foreign producers, putting Ukrainian cars
on parity with Russian ones.
Ukrainian manufacturers will probably face tough
competition from Chinese companies this year. In 2013, Chinese Geely’s sales
growth was around 36 percent and ranks as the third most popular among
Ukrainian consumers, after Hyundai and ZAZ. Another Chinese brand, BYD, has
also increased its presence on the Ukrainian market.
Oleg Nazarenko, CEO of the Ukrainian
Association of Car Dealers and Importers, foresees demand possibly recovering
this year. Since closer bilateral trade is envisioned between Russian President
Vladimir Putin and Yanukovych, “people are waiting for the special duty on
imported cars to be cancelled,” he said. Nazarenko estimates that deferred
demand is around 20-25 percent. If the government does not cancel the fees, deferred
demand figures will transform into market decline.
Oleksandr Ostapovych, commercial director at MAN Truck & Bus Ukraine, is pessimistic about 2014. Loans and
leasing are expensive, Ostapovych said, and the currency exchange rate is
volatile.
Kyiv
Post staff writer Mariia Shamota can be reached at [email protected].
