Abstract
The Ukrainian automotive market finds itself in trouble amid the global
financial crisis. Sales of new cars
fell to 44,258 over 4M09 compared with
58,911 in the period last year, according to a report by Atlant-M
International Automobile Holding.
There was some evidence of a recovery,
with some automakers reporting an uptick in demand in April
following
price cuts initiated by Hyundai in February. Toyota Motor reported a 30%
improvement in
sales in April compared with the monthly average in Q109,
having cut prices by around 20%, and Nissan
Motor posted a 16% sales rise.
Premium car sales increased by 8% compared with the Q1 monthly
average,
with Lexus sales up by34%. However, these were improvements on a weak
performance in the
first quarter, and were not universal: most of the top
ten best-selling firms experienced continued decline,
with Hyundai
reporting a 19.6% drop in sales in April compared with the Q1 monthly
average.
Car dealers have still not shifted stock imported in 2008, and
analysts expect that inventories will not be
cleared until the autumn of
this year. After this, particularly if the economy is showing signs of
recovery,
manufacturers may look to increase output and importers may
order more vehicles. However, the sector’s
fortunes remain closely
tied to the state of the overall economy, which took a hit first from
inflation in
2008 and another this year from recession and political
uncertainty.
Consumer confidence in the country has been devastated by the
global financial crisis, which led to a near
collapse of the
country’s banking system. As such, a loan of US$16.4bn had to be
extended by the IMF.
Our economic outlook indicates increased depreciation
of the hryvnia in 2009, which will further reduce
demand for imported
vehicles. However, the central bank’s commitment to restore the
currency’s stability
against the US dollar (at around 7.60-7.70 per
US$) during the summer, a time when the currency usually
appreciates, may
give some respite to importers at a significant moment. However, should the
restoration
of exchange-rate targets be successful in the medium term,
Ukrainian automakers will be vulnerable to a
decline in the euro against
the dollar, making their output less competitive on eurozone and
euro-pegged
markets.
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