Car manufacturing in Ukraine Number of units
But drivers want reliable and preferably cheap cars, wherever they come from. Sales figures show motorists overwhelmingly prefer foreign-made cars over domestic-made ones. This leaves the few existing Ukrainian car producers on the brink of survival, with their share of the domestic market dropping from 47 percent in 2008 to just 10 percent in 2015. Khazan, vice president of Ukrautoprom, the Ukrainian motor vehicle manufacturers association.
Khazan blames the industry’s decline on the lack of government support.
Ukraine's automobile industry lost its competitiveness after Ukraine joined the World Trade Organization and import duty on automobiles fell from 25 to 10 percent. The market share dropped further after parliament canceled a car recycling fee in 2014.
The government also did not protect the domestic market against cheaper subsidized Russian vehicles. Until 2016, they were imported to Ukraine without any import duty under a trade agreement.
At the same time, new car sales in Ukraine are shrinking as buyers opted for used ones, a byproduct of the financial crisis and expensive loans. New car sales accounted for only for 9 percent of personal vehicle sales in 2015.
The luxury segment remained stable, nonetheless, with the low-cost segment suffering the most.
Sales of used cars filled the void. In 2015, there were 500,000 such sales, including 10 percent imported.
Car dealers expect growth in used cars sales after VAT changes that reduce taxes to the amount paid on resale profit, rather than on the entire value of the vehicle.
"It is a good start for official dealers to take part in the used car industry, which helps the government, because the taxes get paid and helps the customer because they can go to an official dealer whom they can trust better," says Petro Rondiak, the general director of Winner Imports Ukraine, the official dealer of Ford, Volvo, Jaguar, Land Rover and Porsche in Ukraine.
Used car imports have also seen big changes this year after Kyiv introduced European emission standards in 2016, prompting customers and dealers to import newer cars.