Ukraine

Business

Journal

8:33 AM Friday, December 15, 2017
Transport
Ukraine's Demand for Wheels Partially Sated by Illegal Car Imports
Ukrainians want cheap, good quality cars
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk

By Volodymyr Verbyany

KYIV -- Take a close look at the cars crawling through Kyiv’s traffic-laden streets and you’ll notice something odd: a surprisingly large number of them aren’t registered in Ukraine.

The explanation isn’t a sudden inflow of tourists, but rather a work-around by local drivers who crave foreign-made vehicles, but refuse to pay restrictively high import duties to buy them. Instead, schemes have popped up where buyers effectively acquire cars from nearby nations and bring them across the border on temporary arrangements. They must then leave and re-enter Ukraine every year, or sometimes more frequently.

“It’s amazing,” said Oleksandr Zadnipryaniy, a 30-year old entrepreneur who paid about $3,000 for a second-hand Opel Vectra from Lithuania. “Taxes are exorbitant. Why must poorer Ukrainians pay three times as much as richer Europeans?”

Such cars represent a headache for the government. Dodging import duties trims budget revenue and complicates tracking vehicles’ de facto owners -- for instance, after an accident -- because they officially belong to foreign companies. Also, some cars are older than permitted for official import, while many drivers flout the requirement to periodically leave the country.

Cracking down is also tricky. Many Ukrainians suffered severe economic hardship in the wake of the country’s pro-European revolution in 2014 and most aren’t prepared to stump up import tariffs or pay over the odds for what they deem inferior locally made vehicles.

Drivers blame the government, accusing it of pandering to local car lobbies by setting high import duties. Zadnipryaniy was part of a small group of drivers who congregated outside parliament last month to warn the authorities against punishing them. With the 2019 election cycle starting, a delicate solution may be required.


To contact the reporter on this story:
Volodymyr Verbyany in Kyiv at vverbyany1@bloomberg.net


Slider photo: The next time you are in a Kyiv traffic jam, reflect on the fact that many -- if not most -- of the cars around you may be imported illegally. (UNIAN/Aleksandr Sinitsa)

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