What side­lined the Kharkiv Trac­tor Plant?

Kyiv Post Legal Quarterly - - Contents -

By 2015 the truck sales mar­ket had plum­meted last new 2016 But year — trucks pur­chas­ing to de­spite the about — mar­ket an fears 1,400 de­ci­sions 80 of made per­cent eco­nomic units it have an­nu­ally. back in­crease in­sta­bil­ity changed. to 3,500 But on Com­pa­nies to far more more durable ex­pen­sive in Ukraine Western than are post-soviet start­ing trucks, which to brands. switch are Th­ese um trucks high-qual­ity within the trucks, in­dus­try, known are as premi- mostly made by the seven big­gest Euro­pean truck com­pa­nies — Sca­nia, MAN, Mercedes-benz, Volvo, Re­nault, DAF, and Iveco. Back in 2011, the pre­mium seg­ment ac­counted for only 25 per­cent of the mar­ket, or 1,256 units. Last year, this seg­ment had dou­bled, reach­ing half of the sales mar­ket in Ukraine. Most say that what drives this growth is a grow­ing un­der­stand­ing of the ad­van­tages of a good truck. For the past few years, busi­nesses have been think­ing longer-term, con­sid­er­ing not just the sticker price of the ve­hi­cle, but also fu­ture fuel and re­pair ex­penses, as well as the de­pre­ci­a­tion value of trucks. “If you buy a MAN truck for 100,000 eu­ros, then in five years it can be sold for 40,000–50,000 eu­ros. If you take a post-soviet truck that costs 60,000 eu­ros, then af­ter five years it has no value,” Olek­sandr Ostapovych, com­mer­cial di­rec­tor of MAN Truck&bus Ukraine, said. “It will just be scrap metal.” In 2017, MAN sold 512 trucks in Ukraine, 60 per­cent more than last year, and tak­ing a 14-per­cent share of the mar­ket. In turn, last year MercedesBenz sold 290 trucks in Ukraine, five times more than in 2015. And the same pos­i­tive trends are seen at Swedish truck com­pany Sca­nia: In 2017, it sold 330 trucks for more than $40 mil­lion, which was a 93 per­cent in­crease Håkan com­pared Jyde, the to the man­ag­ing pre­vi­ous di­rec­tor year. for Sca­nia ex­pand­ing Ukraine, its op­er­a­tions said that in the Ukraine. com­pany was in “In Poltava, 2017 we Vin­nyt­sia opened and new Mukachevo, ser­vice sta­tions and er­at­ing since the a begin­ning new deal­er­ship of 2018 of we’ve our own been in op- the city of Kram­a­torsk,” Jyde said. “We do ex­pect mod­er­ate growth in the mar­ket for heavy ve­hi­cles” this year as well, he said. An­other rea­son for en­er­getic truck sales is the Euro­pean Union’s en­vi­ron­men­tal stan­dards, which re­quire trucks to have spe­cific emis­sions stan­dards, such as the Euro 6 stan­dard. Trucks in Ukraine have to com­ply with th­ese stan­dards by 2020 as part of the coun­try’s nomic agree­ment the says But EU. po­lit­i­cal-eco- Ostapovych as­so­ci­a­tion with that many truck Ukrainian own­ers such by to lo­cal pay­ing cer­tifi­cates can en­v­i­ron- bribes buy men­tal ple, tis­tics For he reg­u­la­tors. on says, exam- trucks stathat are cur­rently switch­ing stan­dard to from the Euro the Euro 5 “are 2 mas­sively fal­si­fied, and the num­ber of im­ported, com­mer­cial, used ve­hi­cles from the EU this year will be about 12,000–13,000.”

Road con­struc­tion

For a big coun­try like Ukraine, which has a vast net­work of 170,000 kilo­me­ters of roads, the size of the truck mar­ket is still well be­low its po­ten­tial. more,” “In Europe, said Yaroslav th­ese fig­ures Pry­gara, are ten CEO times of Mercedes-benz in Ukraine. In gen­eral, the trans­porta­tion busi­ness de­pends di­rectly on the eco­nomic health of a coun­try — if mar­kets grow then the de­mand for trucks grows. “When the econ­omy works there is a grow­ing de­mand for trans­porta­tion and for new ve­hi­cles,” said Yurii An­to­niuk, a sales rep­re­sen­ta­tive for Volvo’s truck seg­ment. An­other rea­son why truck sales went up is linked to road con­struc­tion de­vel­op­ment, as the gov­ern­ment has al­lo­cated $1.8 bil­lion to up­grad­ing road in­fra­struc­ture this year. Road con­struc­tion com­pa­nies use trucks to trans­port a lot of equip­ment, driv­ing up de­mand. “Af­ter 2013, there were prac­ti­cally no road builders, while this year we sold them ev­ery­thing we had,” Ostapovych said. But while truck sell­ers are run­ning out of sup­ply, their cus­tomers are run­ning out of qual­i­fied driv­ers as more of them are mov­ing to Poland where salaries are sev­eral times higher than in Ukraine. “If be­fore it was alarm­ing, now it's a mas­sive story,” said Pry­gara. And Ukraine’s roads are still in dire con­di­tion, which is con­tin­u­ing to act as a brake on truck sales. “More than half of our ser­vice cen­ter calls are re­lated to a chas­sis break­ing,” An­to­niuk said. “This sig­nif­i­cantly af­fects de­mand, as cus­tomers are not pre­pared to buy a new ve­hi­cle and then de­stroy it on our roads.”

Olek­sandr Ostapovych, com­mer­cial di­rec­tor of MAN Truck & Bus Ukraine

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