BMI's Executive Summary

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Ukraine's automotive sales and output are set to continue their upward trend over the next five years, supported by rising wages and strong investment.

In the first three quarters of 2007, Ukraine's car sales totalled 366,000 units, which was in line with BMI expectations. Monthly year-on-year (y-o-y) sales growth ran at over 25% throughout 2007. BMI estimates growth at around 28.3% for the whole year, with total sales worth US$13.88bn. Car sales growth is estimated at 30%, while commercial vehicle sales growth is estimated at 9.9%. In H107, the total value of the Ukrainian car market was EUR3bn, according to Auto Consulting Ukraine. Toyota had the largest share of the Ukrainian car market in terms of value, with a 10.9% share of sales (EUR330mn), followed by Russia's AvtoVAZ (9.9%, EUR300mn), Daewoo (9.3%, EUR280m), Mitsubishi (8.7%, EUR262mn) and Chevrolet (6.3%, EUR190mn). However, in terms of the number of cars sold, AvtoVAZ was the most popular brand.

BMI broadly agrees with the trends forecast by UkrAvto's Vice President Vyacheslav Povroznik in September 2007. He predicted automotive sales of 500,000 units by the end of 2007, rising to 600,000 units in 2008 and 1mn units 'in the long-term'. Growth will be fuelled by the increase in numbers of people able to afford a car and the replacement of the national car stock, currently estimated at 4mn units. While BMI's forecast for 2008 is slightly above Povroznik's estimates, we do not envisage sales reaching 1mn units within the next five years. We believe that sales are likely to reach just over 838,000 units by 2012, with the Ukrainian market likely to be worth around US$22.3bn in 2007 prices.

The high rate of domestic sales and strong inward investment coupled with the depreciation of the hryvnia, which has made Ukrainian manufacturers more competitive on European markets, helped boost automotive manufacturing in 2007. In the first three quarters of 2007, by Zaporizhzhia Automobile Building Plant (AvtoZAZ) and Kremenchuk Auto Assembly Plant (AvtoKrASZ), LuAZ and Eurocar reported year-on-year car production output growth rates of 48.6%, 43.1%, 14.4% and 45% respectively. Car output figures in the first three quarters of 2007 confirm BMI's estimate of 385,000 units for the year, raising total automotive output by 38.7% to 409,460 units. BMI believes automotive production will exceed 700,000 units by 2012, an increase of over 80% compared to estimates for 2007. Ukraine is establishing itself as a manufacturing hub, exporting to other markets in the CIS.

This quarter, BMI examines the Ukrainian 'grey market', which represents nearly 18% of total new car sales in Ukraine and affects the profitability of dealerships. Loopholes in import duties have enabled cars to be imported in 'incomplete' form, thereby incurring lower levels of duty, with final modifications to the cars made ahead of sale. BMI research finds that the 'grey market' is fuelled by a shortage of popular models in the formal sector, but varies according to region and brand. But the root cause is a lack of regulatory enforcement, which is partly related to corruption.

Contents

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Chapter 1 – SWOT Analysis

Ukraine Auto Industry SWOT

Ukraine Economic SWOT

Chapter 2 – Europe Regional Market Overview

Production

Table: European Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: European Autos Production By Group, H1 2006

Table: CEE Car Assembly Plants, 2006 (Countries under review)

Table: The Rise In CEE Production And Average Wages

Sales

Table: Europe Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: EU And EFTA Autos Sales By Group, H1 2006

Table: New Vehicle Registrations By Market In Europe (EU and EFTA), 2006

Table: New Car Registrations By Market In Europe (EU and EFTA), 2005

Competitive Landscape

Table: EU-15 And EFTA, Car Registrations, 2005

Table: Top 10 Best Selling Models In Europe, Jan-May 2006

Suppliers

Table: Top Five OEM Parts Suppliers, 2005

Regulation

Chapter 3 – Business Environment Rankings

Table: CEE Business Environment Rankings

Economics – Long-Term Risk

Politics – Long-Term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Production And Sales

Table: Ukraine Autos Sector – Historical Data & Forecast

Economic Contribution

Table: Ukraine Autos Sector – Historical Data & Forecasts (CBUs unless otherwise stated)

Chapter 5 – Macroeconomic Forecast Scenario

Table: Growth And Output

Country Snapshot: Ukraine Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Year

Chapter 6 – Special Focus: Commercial Vehicles

Regional Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company Ranking Of Significant Regional Manufacturers

Table: Recent And Planned Investments In CEE

Ukraine Market Overview

Sales

Table: Top 10 brands, Commercial Vehicle Sales, 2004

Table: Size Of Commercial Vehicle Market

Table: Sales Forecasts For Ukraine

Production

Table: Production In Ukraine

Table: Production In Ukraine

Table: Production Forecasts For Ukraine

Chapter 7 – Competitive Landscape

Market Overview

Regulatory Developments

Chapter 8 – Company Monitor

Regional Case Study: Kia

Sales

Table: Kia Sales In Europe (EU and EFTA), By Model

Production

Table: Kia Production In Europe (EU, EFTA, Romania and Turkey), By Model

Company Profiles

VAZ

AvtoZAZ

Eurocar

AvtoKrAZ

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

Table: Wages (ave. labour force per annum), US$ PPP

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for European Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's European Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: