Zero customs clearance is in effect, but queues at borders have decreased. Whatʼs going on?

Why did the queues of used cars disappear at the border? How long will the "zero" customs clearance be valid? Are there risks to repealing the law, and as soon as possible? Experts of the Institute of Car Market Research understood.

A few days ago, queues at used checkpoints of used cars that Ukrainians bought abroad for customs clearance in Ukraine reached several kilometers. Sometimes we had to wait as long as 5-7 days. After May 25, the queues decreased sharply — at least at the checkpoints designated for such cars — Hrushiv-Budomezh and Ustyluh-Zosin on the Ukrainian-Polish border. Now these checkpoints can be crossed in a matter of hours. However, the situation has not changed in other parts of the border.

Why there are fewer cars at the borders for customs clearance

Since the law came into force in mid-April, when it became popular, and by May 25, Ukrainians had imported more than 100,000 used cars from abroad. Mostly — inexpensive cars worth up to $ 5 thousand. During this period, peak imports were observed twice: in late April and late May. The reason for this was in both cases the possible end of martial law in Ukraine, to the end of which is tied to the effect of "zero" customs clearance, according to experts from the Institute of Car Research.

Not fully understanding whether this period will be extended or not, and consequently not understanding how long it will be possible to bring a car from abroad at an affordable price, Ukrainians hurried and created a lot of excitement. After the law was extended for another three months — until August 23 — Ukrainians gained certainty and the opportunity to plan to buy a car. As a result, queues at the border have decreased.

As until recently the current taxes on car imports in Ukraine were actually banned for cars over 15 years old, Ukrainians have low purchasing power and the greatest demand in Ukraine is for cars worth up to $ 5-8 thousand, a significant number of imported cars can be explained by significant delayed demand.

Simply put: people needed affordable cars, they had a small accumulated amount of money, but in the domestic market they did not find a suitable option for themselves. Previously, importing this car from abroad was economically unprofitable due to high customs duties, including excise tax, which could exceed the cost of the car itself even several times. But the need for a car was formed earlier. Therefore, as soon as such an opportunity arose, they hurried to realize it.

Another category that actively imported cars is the business segment — large and small (so-called "racers"), who hurried to buy one or even several cars for resale. Since the "zero" customs clearance could end in April or May, they hoped to sell these cars here at market price. However, with each extension of the period of "preferential" customs clearance, the number of cars on the market increases, and the price gradually decreases. Selling a car is getting harder, it takes longer than before. To speed up sales, you need to lower the price, which makes potential earnings lower than originally expected.

The sale is also complicated by the fact that because the time to choose a car was limited, often cars were bought almost blindly — in any condition, without proper inspections. As a result , a large number of "freshly driven" cars need repair and maintenance, which makes them less attractive compared to cars in the domestic market.

The dynamics of imports is also negatively affected by the growing shortage of cars abroad. There are not enough cars and their prices are rising. Already today, for certain models, the final cost of a car brought at "zero" customs clearance is equal to the price that was a year or two ago for the same model, taking into account the full amount of taxes.

We should also not forget about the fuel crisis — shortages and rising fuel prices. These circumstances affect not only the import of cars from abroad, but also the car market in general, forcing hesitation in the feasibility of buying a car in general.

The latest factor in reducing the number of queues at the Hrushiv and Ustyluh checkpoints is the increase in demand for carrier services. After those who wanted to bring a car in person spent several days in line and counted all the costs, risks and circumstances, and shared their experience with others, many who wanted to buy a car began to order delivery by truck or carriage.

As the mentioned checkpoints are passenger and are not intended for the passage of cars weighing more than 3.5 tons, there are no car carriers and carriages in the queue. But they can be seen at other checkpoints, where queues are observed both at the entrance and exit from Ukraine. The reason is not cars heading for customs clearance, but a general change in logistics flows and an increase in the load on checkpoints as a result.

How long will zero customs clearance be valid?

Officially, "zero" customs clearance is valid until the end of martial law, ie until August 23, 2022. Until then, the exemption from import taxes will apply. Of course, the duration and possible continuation of martial law will directly depend on the situation at the front. However, currently this date should be taken into account when planning to buy a car from abroad.

Experts estimate that the probability of repealing the law in the "manual" mode, which until recently was quite high, is low. First, because of the ambiguity of the perception of such a decision in society. Secondly, due to the lack of a unified position among the representatives of the parliament. Thus, even the opponent of "zero" customs clearance, the chairman of the relevant "tax" committee of the Verkhovna Rada Danylo Getmantsev, in a recent interview with "Babel" admitted that the damage to the economy from such a decision is small because there is no national automaker in Ukraine.

Consideration of bills proposing the abolition of "zero" customs clearance, of which as many as four have been registered so far, has been postponed indefinitely. And even if one of them is considered, the profile committee recommended to make such a decision only in the first reading. This means that the draft law must first be adopted as a basis in the hall of parliament, then considered at a meeting of profile committees, put to a second vote in the hall, and after adoption the document must be signed by the Speaker and President. The changes take effect only after the official publication in the press. In practice, this procedure takes at least a few weeks. Thus, the immediate abolition of zero customs clearance can not occur in any of the options.

What happens next?

It is extremely difficult to make any predictions during martial law. Everything will directly depend on the development of events at the front. In general, experts from the Institute of Automotive Research believe that the pace of imports will decline slightly. After the deferred demand is met, when the car market is full enough, those who need the car will import the car, but they could not or did not want to do so during the mass excitement. This will improve the quality of imported cars and make it possible to buy a car, for example, at auctions, where waiting for the car to be delivered can take several weeks.

The second wave of import growth will take place when those who brought cars for resale will be able to sell them and go for the next one. And also if the economic situation in the country improves — that is, people will have more money that they can spend on buying a car.