Car market in Ukraine in 2013 at best to remain at 2012 level, says expert

Kyiv, November 26 (Interfax-Ukraine) - The Ukrainian car market in 2013, if the current situation does not change, including with regard to currency exchange rates, taxes and duties, at best will remain at the level of the current year (when sales of about 220,000 cars are expected), Nissan Ukraine Director Andriy Nesterenko has said.

"Despite the expectation of market growth in the current year of 20% in comparison with last year (220,600 cars), the Ukrainian car market will have nearly the same figures as in 2011. Next year it at best will remain at the current level, and if the market is influenced by the factors such as taxes, fees, and a national currency devaluation, it could fall," he said at a press conference at Interfax-Ukraine on Monday.

He said that in this case the elasticity of demand for cars (the dependence on the price of goods) is 3-4, .i.e. if car prices grow by 5%, we can suppose that the demand will fall by 15-20%.

"If such an increase is observed, companies will make use of the advantage of selling cars at a higher price," he said.

As reported, another tax that will entail the increase in car prices and the recession of the market will be a vehicle recycling tax, the draft law on which was adopted by the Verkhovna Rada at first reading on November 20, and the document will be considered as a whole on December 4.

Ukrainian automakers, whose share of the total car market is steadily declining and now stands at 18.5%, believe that the introduction of this fee will allow them to keep jobs, increase production and utilize production capacities, which are currently operating at a mere 20%.

Currently, the major automakers, Bogdan Corporation and UkrAVTO, have no plans to produce cars in December.

In 2011, Ukraine sold 220,620 cars, which is 36% up from a year ago.