Tokyo-based giant Mitsubishi Motors Corporation, or MMC, a Japanese company and leading automobile manufacturer internationally, seriously intends to take root in Ukraine.
But there is still a lot of work to become a market leader.
Currently, Mitsubishi Motors has only a 2.9 percent share on the Ukrainian market. But that is still double what it was in 2016.
Last year, sales of 2,129 Mitsubishi vehicles in Ukraine put the company in 14th place, between French Peugeot and German BMW, according to the Autoconsulting analytical group.
It’s a tiny fraction of the 1.2 million units sold by Mitsubishi Motors worldwide through 2018.
Sales reached 118,000 in the U.S., 178,000 in western Europe. Mitsubishi Motors even sells 45,000 units per year in Russia, the country that started a war with Ukraine in 2014 and damaged the Ukrainian automotive market in the process.
For Keisuke Nishino, general manager of MMC Ukraine, the sales here are lower than he expected due to weak recovery of the car market. That usually mirrors what is happening in the larger economy, which in Ukraine has also grown at a sluggish 2–3 percent in recent years.
“Unfortunately, the development of the car market is slower than expected. We were expecting that the total market will become at least 100,000 (sales of new cars) last year. In fact, it was 80,000,” said Nishino, who has been working in Ukraine for two years since April 2017, following a merger with local dealership Niko Group. “So, it is 20 percent less than expected.”
To be exact, 78,387 new cars were sold in Ukraine in 2018, while in 2012 the number was almost three times higher — 217,581, according to Autoconsulting.
Another factor influencing Mitsubishi Motors in Ukraine is the huge number of used cars coming to the country, reducing sales of new cars. In 2018, primary registrations of used cars in Ukraine, mainly cheap imports from the European Union, doubled compared with 2017. The figure reached 116,800 units, according to the Center for Transport Strategies.
Nishino thinks it is a problem not only for his company, but for Ukraine’s economy in general.
“There are many cases when the value of the imported used cars is not properly declared to the tax authority, which will cause a decrease of tax income for Ukraine,” he said.
Of course, the low number of new car sales is linked to low purchasing power. According to the State Statistics Service, the average monthly salary in Ukraine was $386 — making it difficult for the average person to afford even the cheapest Mitsubishi ASX model, which costs $20,770. Meanwhile, the most expensive vehicle on the lot, the Mitsubishi Outlander PHEV, costs around $61,500.
Tired of bureaucracy
Before moving with his family to Ukraine, Nishino worked for Mitsubishi Motors in Japan and Vietnam for 19 years. Neither of these countries have a level of bureaucracy comparable to Ukraine, he said.
“I didn’t have a big shock (when coming to Ukraine) but what I was surprised at is the control of the documents in the company,” said Nishino. “Due to requirements of the legislation we have to make probably triple numbers of the documents to operate a business in Ukraine in comparison to Japan or Vietnam.”
Moreover, for Nishino, Vietnam is very similar to Ukraine in terms of car markets since both countries are post-communist. Now, after President Volodymyr Zelensky’s election on April 21, he expects more changes from the government on digitalization to cut unnecessary paperwork.
“I expect that the government will help companies to make the documentation of the company easier. For example, digital signature,” said Nishino.
To his great frustration, in Ukraine everything has to be printed with company CEO’s signature. “I think most of the companies in Ukraine have access to the internet and it’s possible to make everything in digital,” he said.
Plans for car production
With 30,000 employees and production facilities in Japan, Thailand, China, Indonesia, the Philippines and Russia, so far Mitsubishi Motors doesn’t have any plans to produce cars in Ukraine.
But it might become possible if the total sales volumes hit 200,000 units per year, Nishino believes.
“Ukraine needs to expand the market. This is crucial,” he said.
Another painful problem — Ukrainian infrastructure, especially roads.
“The roads between cities in Ukraine in general are not very good and there are big traffic jams in big cities like Kyiv. I think these things should be also improved,” said Nishino.
At the same time, he is sure that currently Ukraine has great potential to be a car part supplier, like wire harnesses.
“These parts produced in the western part of Ukraine. I think it’s quite cost-competitive,” Nishino said.
A drop of nostalgia
Coming to Ukraine wasn’t stressful for Nishino and his family.
“They love this country and enjoy the life, both in summer and winter,” he said.
But there is still one thing that Nishino misses a lot.
“I miss Japanese food so much. Especially, sushi,” he said. On the other hand, Nishino tried Ukrainian salo (lard) and it became his favorite Ukrainian dish.
Just one thing is missing for him to feel more comfortable in the country.
“If English language was more common for Ukrainian people in general it would make our life easier,” said Nishino.
