KAPITANIVKA – A white surfboard signed by company emplyees may seem out of place in the lobby here of Winner Group Ukraine, national distributor for six brands of foreign car imports.
But Petro Rondiak, a veteran of Ukraine’s retail ups and downs since 1995, uses the surfboard to signal his conviction that Ukraine is embarking on a new wave of consumer spending.
Ukraine’s latest car sales number confirm this wave.
Sales of new cars were up by 36 percent across Ukraine during the first half of this year, to 35,700.
Car sales reflect a wider growth in consumer confidence. According to Ukraine unit of GfK, the German market research group, Ukraine’s consumer confidence index rose in June to 59.4, the highest level since the summer of 2014.
Similarly, the State Aviation Service announced Wednesday that Ukrainian airlines carried 40 percent more passengers during the first half of this year, compared to the same period last year. Domestic and international traffic added up to 4.556 million from January through June.
Air traffic and new car sales followed a similar U-shape graph after Russia’s 2014 attack on Ukraine.
New car sales hit a modern low in 2015. The rebound started in 2016, with a 41 percent, year over year jump, to 65,562 cars.
“Car registrations look like a wave,” Rondiak said reviewing growth charts. “We want to be ready for them when the wave comes back.”
Historically, new car registrations peaked in Ukraine in 2008, hitting almost 600,000. Sales then tanked with the world economic crisis. They rebounded a bit, stabilizing in 2012-2013 around 225,000 a year.
But with the outbreak of the conflict with Russia, Ukraine’s new car sales plummeted to 46,546. If growth holds up this year, national sales should recover to 95,000.
Winner’s investment plans reflect confidence that Ukrainians will buy more cars in the future.
“We are opening four dealerships this year,” said Rondiak, whose company distributes Ford, Volvo, Jaguar, Land Rover, Porsche and Bentley. “We are opening 10 dealerships next year.”
Sales of Winner’s brands during the first half of this year more or less track the national trend: Ford up 37 percent to 1,954 cars; Volvo up 20 percent to 353; Porsche up 50 percent to 196; Land Rover down 8 percent to 381; Jaguar doubling to 88, and Bentley rising from zero cars to 9.
Nationwide, the leading brand, Renault, saw its sales jump by 54 percent, to 4,683 cars. In second place, Toyota was up 33 percent to 4,055 cars. Coming in third, South Korea’s Kia sold 2,606 cars up by 76 percent.
Currently, about one third of cars sold in Ukraine are sold in the Kyiv and Kyiv Oblast, home to about 10 percent of the nation’s population of 40 million.
“We are investing more than $20 million in the greater Kyiv area,” Rondiak said in an interview in the company’s headquarters, here in Kapitanivka. Opened in 2009, the Distribution Center is 25 km west of Kyiv center, just off the E-40 highway to Lviv. “We are investing millions of dollars in the Jaguar Land Rover center in Boryspil.”
Starting next year, owners of Jaguars and Land Rovers will be able to drop their cars off servicing at a new Winner JLR center on the highway to Boryspil, Kyiv’s busiest airport. While they travel, their cars will be serviced and stored in an underground garage. For pickups on return, Winner will offer round the clock car service from the airport terminal to the car service center.
Drivers stuck in Kyiv traffic jams may think there is no more for more cars. But auto analysts believe that Ukraine, a nation larger than California, has room for real growth.
Poland, often held up as the regional benchmark, has 537 motor vehicles per 1,000 inhabitants. Ukraine has 202 per 1,000 people.
“That is what is gets us out of bed in the morning,” Rondiak said of Ukraine’s lag in car ownership. By comparison, car ownership rates for Russia is 293 and for Belarus is 362.
To ease demand, Ukraine’s government lowered import duties last year on used cars. During the first six months of this year, 22,800 used vehicles were registered for the first time in Ukraine. According to Ukravtoprom, a car dealers association, this is 6.5 times more than during the same period last year.
For used cars, the five most popular makes this year are: Renault, Volkswagen, Skoda, Opel and Nissan.
This summer, AIS Market started importing into Ukraine used Nissan Leaf electric cars. Prices start at UAH 299,000, or $11,500. Rondiak said he would start selling new Ford ‘electrified’ cars in 2020.
For car thieves in Kyiv, the most popular brands during the first six months of this year have been Toyota, Daewoo and Honda, according to the National Police. Of the 745 car thefts reported in the capital this year, most cars were stolen off streets between midnight and 3 am, according to police spokesman Dmitry Sirak.
Ukraine, which once produced 200,000 cars a year a decade, has seen its production steadily decline. Last year, only 5,264 cars were made. The most active manufacturer today is PJSC Eurocar, which has a plant in Solomonovo, a Zarkarpattia oblast village that borders both Slovakia and Hungary. Here Skoda Superb B8s stood on the assembly line in March. (UNIAN/Yanosh Nemesh)
Ukraine’s car shortage seemingly makes the nation an attractive target for car manufacturers.
Mass production of Ukrainian brands started here half a century ago, with production hitting 200,000 cars a year in the late Soviet era. Since then, production steadily declined, hitting 5,264 cars.
By contrast, Ukraine’s neighbors recorded these production figures last year: Russia – 1.3 million; Slovakia – 1 million; Poland 681,000; Hungary – 472,000; Romania – 359,000; and Belarus – 17,000.
In a sign that the seeds are being planted for a modern automobile industry in Ukraine, 43,000 Ukrainians now work in about 20 foreign owned car parts factories, largely in Western Ukraine. In the last decade, about $500 million has been invested in car parts manufacturing, often seen as a first step toward car manufacturing.
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