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Ukraine Autos Report Q4 2008 (Business Monitor International) Market: Automotive and Parts Published Date: 02/10/2008 Market Research Report Title: Ukraine Autos Report Q4 2008 Table of Contents: View Table of Contents Report Type: Market Report Country: Ukraine Number of Pages: 47 
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Summary: The opening of a Hyundai assembly plant in Cherkassy in July 2008 will further boost Ukraine’s booming automotive industry, but production will continue to be outpaced by sales with the country’s annual sales set to exceed 1mn units by 2012, according to BMI’s latest Ukraine Automotives Report
The Ukrainian automotive industry continues to exhibit high levels of output growth. In H108, ZAZ produced 153,407 cars, an increase of 29.0% year-on-year (y-o-y). This followed a strong 2007, when production increased 46.2% to 282,310 units. The year was also a good year for other Ukrainian automotive producers, with Eurocar increasing production by 38.4% y-o-y to 29,604 units, the Kremenchuk automobile assembly plant (KrASZ) up by 6.8% y-o-y to 20,749 units, and the Lutsk Automobile Plant (LuAZ) up by 33.6% y-o-y in 2007 to 53,919 cars. BMI believes total automotive output will reach just over 473,000 units (up 17.5% y-o-y) in 2008, a revision from the 519,450 (29.0% growth) we forecast in the previous quarterly report
Future growth will be supported by additional capacity. Hyundai began commercial production at the new US$364mn assembly plant in Cherkasy in July 2008. The plant, built by Ukraine’s Bogdan Corporation, will be relatively small-scale, adding output of just 60,000 units by 2010. Much of the output will be sold locally – Hyundai sold 22,015 vehicles in Ukraine in 2007, accounting for 4.1% of the country’s automotive market – or exported to neighbouring countries. BMI believes automotive production will reach just under 685,000 units by 2012, an increase of 70% compared to 2007, with new assembly lines due to come on-line over the period. Output growth is set to decline throughout the forecast period due to the impact of WTO accession on the Ukrainian automotive industry
Automotive sales are set to maintain the strong momentum recorded in 2007, when growth reached 43%
BMI is forecasting a further 25.6% growth in automotive sales in 2008, following reports of growth of around 40-50% in H108. The decline in growth in H208 is largely due to the base effect caused by a high level of sales seen in the same period in 2007. After 2008, growth levels will fall as inflationary pressures impact negatively on disposable income, although BMI anticipates a pickup in growth in 2012, when sales will total 1.06mn units, a downward revision from the 1.25mn units forecast in the previous quarterly report due to the pressures placed on household spending over the medium term
Ukraine scores 53.3 points (out of a theoretical maximum of 100) in the BMI automotive business environment rating, up by 5.6 points. The increase in score has led to a rise in its rank from seventh to fifth place, due to the strength of the country’s car market in the early months of 2008 which led to an upward revision in BMI’s sales forecasts. Ukraine has great potential for growth, although low incomes – average disposable income is around US$200 per month – could limit the size of the potential market and skews demand towards cheaper, smaller cars. Car ownership levels are quite low, at around 12% of the population, boding well for long-term domestic sales growth
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