The car sharing culture in Ukraine is in embryonic stage, but at least one Turkish company wants to change that. Automotive giant Otokoç has entered Ukrainian market with its Budget car rental service. The goal is to become the market leader in five years.
Founded in 1928, Otokoç is the oldest automotive company in Turkey and a part of the country’s largest industrial conglomerate Koç Holding. Today it combines a wide range of car-related services including dealership, spare parts wholesale, repairing, leasing and rental.
Since the mid‑2000s. Otokoç holds a license agreement with an American car rental corporation, Avis Budget Group, and has been operating dozens of offices with a fleet of 35,000 vehicles in Turkey alone.
Ukraine has become the sixth destination of Otokoç’s expansion abroad, in addition to car rental services under the Avis and Budget brands in Hungary, Azerbaijan, Kazakhstan, Georgia and northern Iraq.
“Although Ukraine’s car market isn’t big, we see that the automotive sector will steadily grow in the future,” general director of Budget Ukraine Murat Gürünlü said in an interview with the Kyiv Post.
According to the data by Auto-Consulting analytics group, some 9.3 million cars are currently registered in Ukraine. Over the past two decades, the number of car owners in Kyiv has doubled. It now stands at more than 200 cars per 1,000 citizens. Notably, Ukrainians drive old cars. The average age of their vehicles is 19 years.
This year Ukraine has seen some growth in new car sales since they hit bottom in the previous two years. caused by political calamities and the massive hryvnia devaluation in 2014. However, car sales are far from pre-crisis volumes.
In Ukraine, Gürünlü said, owning a car is still a status symbol. But that will change soon.
Car ownership is likely to become less convenient and more expensive due to the higher degree of urban mobility and changing city landscape. Municipalities in major cities seek ways to battle congestion and air pollution by creating car-free zones, imposing additional taxes on old cars, and raising parking fees. Moreover, younger generations are likely to move from city to city and postpone settling down and buying a house or a flat.
While Ukraine is years away from these trends, Budget wants to be number one when the country catches up.
The initial investment of Otokoç into opening a company in Ukraine amounted to $2.5 million, Gürünlü said. This money went to start off with the fleet of 120 vehicles and offices in Kyiv and Lviv cities as well as in Boryspil and Zhulyany airports and airports in Lviv and Odesa.
“Ukrainians aren’t accustomed to hiring cars, so our primary task is to explain to them the advantages and convenience of renting over owning a car,” Gürünlü said. “So far we have seen the highest demand on sedans and 4×4 cars among local customers. We also provide minivans for larger groups and luxury cars.”
In addition to short-term car rental, Budget Ukraine is developing other business lines, such as offering to lease and manage automotive fleets for corporate clients.
It also partners with hotels and airlines seeing opportunities in growing tourism to Ukraine. Earlier this year Ukraine approved passport-free travel with Turkey allowing nationals of both countries travel with ID-cards. Kyiv will also host the 2018 UEFA Champions League next May which is expected to attract many first-time visitors to the city.
“Koç Group is interested in Ukraine. There’s a lot of potential for our business here,” Gürünlü said.
