Abstract
The Ukrainian automotive industry faces a tough year as the country' s severe
economic downturn reduces
demand and forces manufacturers to lower
output.
Consumer confidence in Ukraine has been devastated by the global
financial crisis, which led to a near
collapse of the country' s banking
system. According to news agency Interfax, new passenger cars sales in
Ukraine declined by 78.3% year-on-year (y-o-y) to 10,902 units in February
2009, pushing the Ukrainian
car market down from seventh to 14th place in
Europe. Automakers are responding to the recession by
implementing drastic
output cuts.
Our economic outlook indicates further depreciation of the
Ukrainian hryvnia in 2009, which will further
reduce demand for imported
vehicles. The government is increasing import duties on cars in a bid to
bolster the domestic industry, but such a protectionist measure could
undermine trade in the longer term.
Even if consumers are moved to buy a
new car, consumer financing remains difficult to secure. There are
other
significant risks ahead, especially the political uncertainty resulting from
the struggle between
President Viktor Yushchenko and Prime Minister Yulia
Timoshenko.
Given these conditions, we see total vehicle sales falling to
559,400 units in 2009, down from an
estimated 658,500 units last year. We
forecast that manufacturers will reduce production to 396,670 units
this
year - from 452,530 units in 2008. However, strong export growth -
particularly to Russia - is
expected from 2010, with output likely to
reach around 730,000 units by 2013.
However, Ukraine has untapped growth
potential due to low rates of car ownership, which bodes well for
the
long-term outlook for the industry. BMI believes that over the course of the
next five years, the
Ukrainian market will be influenced by three main
factors: income growth, the exchange rate and loan
rates. Although the
falling hryvnia is lowering demand for imports, if it recovers and strengthens
too
much against the euro, Ukrainian-made vehicles could lose price
competitiveness in the EU. Ukrainian
autos growth, therefore, depends on
EU integration and exchange rate stability.
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