Ukraine Autos Report Q1 2013
Business Monitor International, January 2013, Pages: 56
Ukraine intends to raise tariffs across a range of imported goods, including cars and trucks. BMI believes this measure is designed to protect domestic production from increasing levels of foreign competition.
Ukraine's car association Ukrautoprom has said the introduction of the car recycling tax will allow domestic manufacturers to double their share of the market from 18% at present.
Three years ago, the share was around 50%, and in October 2012 it fell to 18%, so the recycling tax could be the first step of the state to overcome the downward trends in the sector, the association told Interfax-
Ukraine.
However, we have long maintained a relatively bearish outlook for passenger car production, and manufacturing more generally, in the country. Due to the unattractive business environment and weakened sales, therefore, we do not think these higher taxes will incentivise auto manufacturers to produce in the country.
In the first eight months of 2012, vehicle production in Ukraine declined 19.8% year-on-year (y-o-y). In this period, passenger car production declined 21.7% y-o-y, to 49,226 units, and commercial vehicle (CV)
production increased 8.1% y-o-y, to 4,592 units. In the first six months of 2012, vehicle sales in Ukraine increased 24.3% y-o-y, to 109,700 units. Imported foreign brands continue to dominate.
In August, we revised our passenger car production forecast, believing the market would drop some 18
%over the year, a more bearish outlook than the 8.5% decline previously forecasted. Our CV production forecasts also became more bullish at this time, revising our 2012 production forecast for this segment to an 8.8.% increase, up from a 0.5% increase previously (see our online service, August 14 2012, 'Production Slides In Weak Market').
These forecasts are playing out, and we maintain this outlook for now. BMI has long maintained that passenger car production will remain subdued on the back of a weak market dominated by foreign players.
Conversely, we believe that the CV segment will continue to develop, although remain small for some time,
on the back of (modest) export growth.
Indeed, BMI has long maintained a bearish outlook on the business environment and overall manufacturing and productive capacity in the country (see our online service, September 13, 'Grinding Slowdown In 2013'). We believe this will deter foreign auto manufacturers from investing in the market. Further, we maintain a relatively bearish outlook for production over the remainder of our 2106 forecast period, and believe it will take a long time before production returns to 2008 levels (see graph).
In the first eight months of 2012, vehicle sales in Ukraine increased 18.5% y-o-y, to 150,768 units.
Imported foreign brands continue to dominate. We believe the segment will grow 14% over the year; the domestic market, although resurgent from 2011, is still considerably below levels seen in 2008 (see graph).
BMI believes that auto manufacturers are increasingly looking to produce vehicles where they sell them.
We believe that the weakened domestic market makes Ukraine an unattractive investment choice.
We think much of this resurgence in vehicle sales is the result of 'pent-up demand' from several years of declining sales, and not a sign of an underlying improvement in the market. BMI expects weak liquidity conditions to continue, which will restrict credit growth to the real sector in Ukraine (see our online service,
July 18, 'Monetary Loosening To Prove Ineffectual'). We believe this will abate vehicle sales growth somewhat (particularly in the passenger car segment, which is much larger than the CV segment).
BMI Industry View 7
BMI Industry View 7
SWOT 9
SWOT 9
Political 11
Economic 12
Business Environment 13
Industry Forecast 14
Industry Forecast 14
Table: Ukraine Vehicle Production, 2011-2017 14
Table: Ukraine Vehicle Sales, 2011-2016 15
Production 15
Sales 17
Macroeconomic Forecasts 19
Economic Analysis 19
Table: Ukraine - Economic Activity 22
Industry Risk Reward Ratings 23
Industry Risk Reward Ratings 23
Table: BMI Industry Risk/Reward Ratings For Autos In Europe 26
Competitive Landscape 28
Competitive Landscape 28
Shipping Boom 30
Company Profile 32
Company Monitor 32
AvtoKrAZ 34
AvtoZAZ 35
Regional Overview 37
Regional Overview 37
Global Industry Overview 45
Global Industry Overview 45
Table: Passenger Car Sales 8M12 45
Incentive Boom For Japan, US Powers On 45
UK Leads As Germany Falters 47
Russia And Brazil Go From Strength To Strength 49
Demographic Forecast 51
Demographic Forecast 51
Table: Ukraine's Population By Age Group, 1990-2020 ('000) 52
Table: Ukraine's Population By Age Group, 1990-2020 (% of total) 52
Table: Ukraine's Key Population Ratios, 1990-2020 53
Table: Ukraine's Rural And Urban Population, 1990-2020 54
Methodology 55
How We Generate Our Industry Forecasts 55
Automobile Industry 56
Sources 56
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