13:48 04.11.2013

Association Agreement with EU could promote arrival of large car leasing players to Ukraine no earlier than in two or three years, say experts

3 min read

The signing of the Association Agreement with the European Union (EU) could promote the entry of new large players to the car leasing and renting market in Ukraine, although first realistic step in this direction could be seen only when Ukraine fulfills its liabilities under the Agreement, according to experts polled by Interfax-Ukraine.

"Despite the fact that there are representatives of many international leasing companies and car renting corporations in Ukraine, the agreement could promote the entering of new large players to the Ukrainian market, but no earlier than in two or three years," Avis Ukraine Director General Haim Kapelnikov told Interfax-Ukraine.

Deputy Board Chairman of the Ukrainian Union of Lessors Oleksandr Koscheyev said that the factors that impact the Ukrainian market could be divided into political and structural-economic ones.

Commenting on the political factors, Koscheyev said that the Ukrainian financial system depends on two camps – the Western European and Russian.

"The signing of the Association Agreement should improve the moods of European bankers. The appetite of leasing companies, which receive financing and/or instructions from Moscow, to financing of the Ukrainian economy could worsen," he said.

The expert said that supply on the leasing service market would not change much. The most influential factor could be trade cold war with Russia.

Koscheyev said that the above-mentioned scenario could be of only short-term character (up to one year), and then the real progress in the fulfillment of liabilities by Ukraine under the Association Agreement will get to the top of the issue and other factors will start working – structural-economic ones.

"Ukraine's choice of the European vector for the economic integration should return the interest of European financial institutions to our market. The euphoria of 2005-2008 will not be repeated, although it is too tight for European lessors in Western Europe, and it is very important for them to have an opportunity to develop in the east. Ukraine with its population and potential could not be ignored," he said.

He said that the car leasing potential is obvious for Europeans in the car-leasing segment.

"First, the penetration of leasing instruments is 5-10 times less than in neighboring Eastern European countries. Secondly, the car market could double with the development of the financing infrastructure, and for the sake of these prospects leasing companies could come to Ukraine and the companies that have been already presented on the market will also stir up," the expert said.

He said that market players believe in the quantitative and qualitative jump on the leasing market, although the trigger for it will be not the signing of the Association Agreement in Vilnius, but the first real steps in fulfilling Ukraine's liabilities to the EU.

Ukrainian Union of Lessors Board Chairman Roman Ivanenko said that the signing of the Association Agreement with the EU facilitates the movement of goods and unifies requirements on production, which was not seen earlier, while capital freely crossed the border before the signing of the Agreement.

"The problem is that foreign capital has been leaving the Ukrainian financing market for several years. The main reason is the absence of fair and honest court system and stagnation in the economy. This could be improved not with the help of the Association Agreement with the EU, but work inside the country," he said.

"I expect that culture of business and state administration will start slowly and radically change, and the above-mentioned problems will be settled in the long period of time. This is the issue of not one year, but at least several years," he said.

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