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Ukraine Autos Report Q1 2013

Ukraine Autos Report Q1 2013

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Price	$1,175.00
Meta Description	Ukraine Autos Report Q1 2013
Publisher	Business Monitor International
Date of Report	Jan 1, 1970

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Quick Overview

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).

Table of Contents

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