How have car prices changed in Ukraine and what to expect next?
Despite all the difficulties and circumstances, the Ukrainian car market is alive, and mobility remains one of the basic needs of a modern person. It makes you buy cars. But what happens to their prices?
The team of the Institute of Car Market Research analyzed the statistical data of the Automoto.ua aggregator , which collects announcements for the sale of ALL cars from 100 car websites in Ukraine. Based on more than 1.7 million unique ads from January to June 2022, experts determined how prices changed during 2022, what influenced it, and also predicted possible changes in the future.
Purchasing power has not changed
The absolute majority of offers for the sale of cars in Ukraine today, as well as before the beginning of the full-scale invasion, consist of cars worth up to $10 thousand.
However, if in February most Ukrainians sold cars in the price range of $1-2 thousand (9.1% of the total number of ads) and $5-6 thousand (8.7%), then already in June — in the range of $3-4 and $4- 5 thousand (9.5% and 10.6%, respectively).
Also, comparing February, April and June, you can notice a significant reduction in the number of ads for the sale of cars in the price ranges up to $1 thousand and $1-2 thousand. Such offers have almost halved.
The reasons for such changes are called by the experts of the Institute of Car Market Research:
- Increased demand for cheap cars at the beginning of a full-scale invasion. Ensuring the need for mobility, Ukrainians bought up the cheapest offers on the car market. Something similar already happened in the market with the beginning of the "lockdown" in the spring of 2020.
- Zero customs clearance made it possible for Ukrainians to bring better cars from abroad for less money than what is already available on the market. Such competition forced sellers to lower prices.
- A significant number of "freshly driven" cars worth $2-5 thousand entered the market, imported under "zero" customs clearance. An increase in supply in a market economy always contributes to a decrease in the price of goods.
The average price on the car market fell
As of February 21, 2022, the average price of a used car was $7,000. Already in a week, after the beginning of the full-scale invasion of Russia, this indicator decreased to $6300.
At the beginning of March, under the influence of war stress, prices continued to fall: on March 7, the average price of a used car on the Ukrainian market was fixed at $5,700. Over the next two weeks, the market stabilized and prices even started to rise somewhat ($6k as of March 21).
The next "breakthrough" took place at the end of March, when the Parliament adopted "zero" customs clearance : on March 28, the average price of a used car was already $5,550. The market was more or less stable for the next three weeks, until the first cars began to be imported into Ukraine "under zero". Ukrainians were convinced that the law works in practice, and continued to reduce the prices of their cars.
The lowest average price of used cars in 2022 was recorded on April 25: $5100 dollars. After that date, Ukrainians began to offer more expensive cars for sale. This does not necessarily mean that cars have become more expensive. Most likely, due to the high demand for sales, part of the ads from the lower price category disappeared, and slightly more expensive cars with "zero" customs clearance began to be sold on the Internet.
Until the middle of June, the curve of the average price, with small jumps, remained at the level of $5,800. Since mid-June, when it became known about the decision of the specialized committee of the Verkhovna Rada to cancel "zero" customs clearance, prices began to rise steadily. In the last week of June, a used car in Ukraine cost an average of $6,500.
The same cars, but cheaper
The list of the most popular models has hardly changed over the past six months. However, their average prices changed from February to June.
Volkswagen Passat fell in price by 16.4% in April, and by another 1% in June. With the increase in the number of these cars on the market, the competition has increased. To sell a car faster, sellers have to lower prices.
Skoda Octavia went down in price by 14% in April, but in June it went up minimally by 0.8%.
Volkswagen Golf in April became cheaper by 13%, but in June its average price became higher by 4.8%.
Renault Megane, which fell in price by almost 20% in April, rose in price by 1.4% in June.
These models are the leaders among the "slave", that is, imported used cars from abroad. Due to the abolition of "zero" customs clearance, sellers began to slightly raise their prices, realizing that it is now significantly more expensive to bring the same car from abroad.
The average price of Daewoo Lanos, the leader in domestic resale, increased by 2.5% in April. However, this does not mean that the car has become more expensive. Providing for the need for mobility, Ukrainians looked for the option "to drive" and bought up the cheapest offers of this model. Accordingly, the average price of cars remaining on sale also increased. In June, the average price of Lanos also decreased by 15.2%.
Overall, the average price of a used car in June was recorded at $6,424, down 14.1% from February in percentage terms and over $1,000 less in monetary terms.
What will happen to car prices in Ukraine next?
It is not easy to make any predictions in the conditions of war. In peacetime, the car market of Ukraine is affected, according to the experts of the Institute of Car Market Research, in particular:
- The exchange rate, which changes not in favor of the hryvnia;
- Declining purchasing power;
- Taxes on imports of used cars from abroad, which were returned to the conditions created in 2018, which contain a fairly high tax burden on most cars;
- The balance of supply and demand in the market, which is constantly changing due to instability;
- Buyersʼ priorities and their confidence in the future.
Having considered all factors, the experts of the Institute of Car Market Research reached the following conclusions:
- A sharp increase in the value (by 40%) of the US dollar, which is the currency used to set prices for motor vehicles in Ukraine, will cause a proportional decrease in the purchasing power of the population, which mainly receives income in hryvnias. This, in turn, will shift the focus of buyers to even cheaper cars, probably with the peak of the highest bidding activity moving to the $3,000-4,000 range. Now this peak is in the range of $4000-5000 (8.8% of the secondary car market);
- The practice of "drop sales" will continue, when individual owners under the pressure of circumstances will be forced to resort to a significant reduction in the prices of their cars, but the frequency of such cases will decrease;
- The need for mobility and insufficient availability of public transport will keep the demand for ultra-budget ($1,000-$3,000) and budget ($3,000-$6,000) cars with high mileage, which in turn will keep these segments from a general decrease in their prices;
- In connection with the decrease in import rates and the simultaneous increase in prices in the EU countries and the general increase in the level of rates at insurance auctions in the USA and the increase in delivery costs, a price decrease is not expected for cars in the $7000+ price segment, but in the $10000+ group it is possible their growth;
- A "stagnant" cluster of cars that consume a large amount of fuel may form on the market. On the one hand, there will not be much demand for them due to the increase in fuel prices, and on the other hand, the owners of such cars will not be ready to sell them in a hurry at significantly reduced prices. Therefore, such cars can simply "hang" in sales for a long time. According to experts, their share can be up to 10% of the Ukrainian market.
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