Market Report, "Ukraine Autos Report Q3 2010", published

July 7, 2010 - PRLog -- Ukraine's auto sector has been hit hard by the country's deep recession, but is stabilising in 2010. Sales fell around 74%, to 182,062 units, in 2009, after 687,028 units were shifted in 2008, according to BMI estimates. Production, previously very strong, plummeted from 400,467 units in 2008 to 65,677 in 2009. This was primarily caused by the deep recession felt by the country, with GDP falling 15% in 2009.

However, economic data in March painted an encouraging picture of economic recovery. Industrial output rose 13.8% on the year, with manufacturing growing 18.2%. Real wages rose 4.7%, giving Ukrainians significantly more disposable income, an important factor in vehicle sales. However, credit remains very tight, keeping sales historically low.

According to estimates from the Ukrainian Motor Vehicle Manufacturers Association (Ukrautoprom), the industry currently has a production capacity of nearly 350,000 units a year, which more than exceeds the local market demand. Although BMI expects recovery in domestic demand to begin from as early as 2010, a complete resurgence to pre-crisis levels is likely to come no sooner than 2014, meaning that Ukrainian carmakers will have to rely on export markets in the meantime.

Not only has the sector not received any support from the government during the national budget, industry participants believe that the 13% import duty on cars is too low to deter car imports into the country, thereby increasing competition for its domestic carmakers. As a result, Ukrautoprom expects production to remain unchanged this year.

BMI, however, leans more on the positive side. We expect recovery in vehicle demand in Russia - led by the vehicle scrappage scheme - to help drive export demand for Ukrainian carmakers. Based on this and the low base from last year's production, BMI is currently forecasting production to reach 86,235 units this year, up nearly 24.4% y-o-y. In the medium term, however, much will depend on the pace of Ukraine's recovery and how successful its carmakers are in marketing their products in newer export markets. By the end of 2014, we expect production to reach 303,800 units, still far below the maximum output capacity.

Government purchasing is an important part of the market. In May 2010, the Kyiv Post reported the government had purchased 1,000 Opel Combos worth UAH100mn using state-secured credit. The purchase was made by Ukrmedpostach, a state company under the Health Ministry, to equip rural doctors with special Combos, which were acquired from Austria. There has been some controversy as the purchases added to the country's budget outlay, and was made without tender. As Ukraine increases its efforts to promote openness and transparency, with the goal of EU accession in mind, open tenders could become more likely. However, this will depend on the pace of political reform and will among the leadership.

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Report Table of Contents:

Executive Summary
SWOT Analysis
- Ukraine Auto Industry SWOT
- Political SWOT Analysis
- Economic SWOT Analysis
- Business Environment SWOT Analysis
Regional Overview
- Crisis At Toyota
- Toyota Vehicle Recall Timeline
- Toyota's European Dream
- Opportunities For Some
- Risk To The Industry
Business Environment Ratings
- Table: Western, Central And Eastern Europe Business Environment Ratings
Industry Forecast Scenario
- Production And Sales
- Table: Ukraine Auto Sector - Historical Data And Forecasts
Macroeconomic Forecast Scenario
Competitive Landscape
- Market Overview
- WTO Accession And The Car Market
- 'Grey' Market
- Table: Ukraine - Proportion Of 'Grey' Sales By Brand, 9M08
- Manufacturing
- Commercial Vehicles
- Table: Ukraine - Commercial Vehicle Production
- Regulatory Developments
Company Monitor
- PSA Peugeot Citroen Regional Profile
- Financial Woes
- Focus On Faurecia
- Merger Opportunity
- Eye On Eastern Europe
Company Profiles
- Luckiy Avtomobilniy Zavod (LuAZ)
- AvtoZAZ
- Eurocar
- AvtoKrAZ
Country Snapshot: Ukraine Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2012
BMI Methodology
- How We Generate Our Forecasting Model
- Sources

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