Car man­u­fac­tur­ing in Ukraine Num­ber of units

Kyiv Post Legal Quarterly - - Automotive -

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.

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