17:19 08.09.2020

Players of Ukrainian market where U.S. used cars sold creating association to take part in making legislative changes

5 min read

KYIV. Sept 8 (Interfax-Ukraine) – Participants in the market where used cars from the United States are sold intend to create the Ukrainian Association of Transport, Service and Repair with the aim of participating in making legislative changes in the car market in order to avoid initiatives that create obstacles to buying inexpensive cars and raise their prices.

"We plan to make an influential body that will participate in drafting bills, amendments and additions related to the car industry, in discussions of planned legislative changes that may restrict the sale of cars with the relevant ministries," Head of the association, co-founder of Columb Trade Pavlo Kazaryan said at a press conference at Interfax-Ukraine on Tuesday.

According to lawyer Roman Voloshyn, the main goal of the association is to simplify business activities and opportunities for buyers as much as possible in order to reduce the cost of registration and purchase of such cars.

He said that the need to create an association arose after the car market participants managed to achieve the abolition of the planned ban on imports of cars to Ukraine after a road accident, which a draft government resolution developed by the Ministry of Internal Affairs and published on its website contained.

After a public outcry, the government decided to abandon this idea of the Ministry of Internal Affairs, and the recently published updated text of the resolution on the registration of the vehicle no longer contains "scandalous provisions" prohibiting registrations of cars marked with the recycling label, as well as the need to translate accompanying documents into the state language with an apostille.

Meanwhile, as noted by the co-founder of the association, Volodymyr Kovel, negative changes have occurred since the publication of the resolution (February 2020), in particular, according to the surveys they conducted, about 72% of potential customers refused to buy a car from the United States in order to avoid risk and they overpaid 30% of the cost for the purchase of a car from Georgia and Europe or bought a car in a condition that was not desired.

In addition, he said that taxi services operating hybrids and electric cars received less money from investors for the purchase of cars and the development of the business, large contracts for the supply of spare parts from China, the United States and Germany were canceled due to the risk of closing the business, some companies were closed because customers stopped to sign transactions due to confusion, and dozens of service stations could go bankrupt, as they took large loans for business development.

"When we united to solve the problem, created a petition on the president's website, which received more than 18,000 votes, many companies joined us, and we were heard by the state, we realized that it was necessary to create an association that would participate in the development of legislative changes, both taking into account the wishes of business and the authorities, that is, to find a compromise," Kazaryan said.

According to him, the association intends to unite companies selling used cars from the United States, forwarding and brokerage companies, suppliers of spare parts, service stations and local carriers, as well as transport companies and taxi services.

"Any intention to amend the legislation affects the business, the pricing policy, and its entrepreneurs are afraid of such rumors in the market even more than inspections. The association is also needed in order to bring as many market participants to work legally and explain advantages of such work. I want about 85% of companies to work openly in a couple of years," Voloshyn said.

According to him, after the publication of the draft resolution, the demand for cars from the United States in Ukraine fell due to the fact that people did not understand whether it was worth buying now, how to redo the documents, whether it would be registered.

"After the changes were removed, the percentage of purchases started to grow by 5-10% every day, and we have already reached the average monthly purchases that were before," he said.

Asked about the impact of the situation with the spread of coronavirus in this country and lockdown restrictions on the business of selling cars (with a recycling label) from the United States, Kovel said that, of course, after the phases of falling prices for cars meant for recycling and the devastation of the market, prices increased, logistics due to temporary quarantine in ports has become more complicated.

"However, now the situation in the United States is leveling off, and prices are returning to the level before the COVID-19 pandemic. That is, there was no big decline in this area, and the expected changes in legislation brought much more losses," Kovel said.

He recalled that taking into account monthly deliveries of about 10,000 cars from the United States, $327.8 million annually comes to the budget, and the total volume of the market of cars from the United States, taking into account all related services, is $836.64 million.

He named the Volkswagen Jetta and Passat cars assembled in Mexico, as well as the Ford Focus and Fusion cars the most popular.