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Imports are falling, domestic sales are growing, and the average price is falling. Whatʼs next?

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In September, many changes took place on the Ukrainian car market: the volume of used car imports fell significantly, the share of domestic resales increased significantly, the average price of passenger cars decreased, and the active part of the fleet began to age. Experts of the Institute of Car Market Research analyzed the data of the Main Service Center of the Ministry of Internal Affairs, the aggregator , and identified the main trends and made a forecast.

The share of domestic sales is as high as possible

In September, Ukrainians bought 95,200 used cars. Of them, 79,000 are on the domestic market, and another 16,200 were brought from abroad. The share of imports in the total structure of sales fell to 17.1%, which is the lowest value since the end of 2018, since Ukraine changed the rules for importing used cars from abroad. The share of domestic resales was 82.9%, which is also a record for the Ukrainian car market in recent years.

Dynamics of used car imports and domestic resales, September 2021 — September 2022

The share of imports has been decreasing since the cancellation of the so-called "zero customs clearance", which took place on July 1, but the demand for passenger vehicles remains. The total number of used cars purchased in August was almost the same as in September — 94,000. However, instead of bringing a car from abroad, Ukrainians choose to buy it "on the spot". That is, there is a redistribution of shares in the market, where a significant advantage is observed in the domestic resale sector.

Import of used cars decreased by 70%

If compared quantitatively, Ukrainians bought 35.6% fewer cars in September than in September 2021. In comparison with August 2022, sales even increased slightly — by 1.5%.

The number of domestic resales increased by 11% compared to last September 2021, and increased by 5.8% compared to August 2022.

On the other hand, imports decreased by 70.3% compared to September 2021. Such a sharp decrease in import volumes was caused by:

  • the war in Ukraine and its consequences: economic crisis, decrease in purchasing power, exchange rate changes;
  • introduction and then cancellation of the so-called "zero customs clearance";
  • the crisis of the automobile industry in the world, the shortage of cars and the increase in the price of passenger cars with mileage abroad.

Compared to August 2022, the drop in imports was recorded at the level of 16.5%. That is, the trend of reducing the import of used cars from abroad continues.

The average price of cars on sale is decreasing

The average price of a used passenger car offered for sale on the Internet in September decreased by 5.4%, or by $300 in monetary terms: from $5,600 to $5,300. Price monitoring is carried out by experts of the Institute of Car Market Research based on data from the aggregator.

Change in the average price of used passenger cars, January-September 2022. Data:

However, the decrease in the average price does not mean that all car models on the market have become cheaper. If compared with August, in September there were fewer cars from the upper price segment of the mass market : the share of cars priced at $10-20 thousand and over $20 thousand in the sales offer decreased from 19.1% to 18% and from 8.5% to 8.0% respectively. The share of passenger cars priced up to $10,000, on the contrary, reached a maximum in 2022: 74% of the total number of ads.

That is, rather, it is about a decrease in the supply of cars worth more than $10,000, which entails a decrease in the average price of used cars in general.

The average age of the offer on the market is increasing

During the action of the so-called "zero customs clearance", the average age of cars on sale decreased and reached 15.2 years in June and July. After the change in legislation, the offer on the market began to "get old": the September indicator was recorded at the level of 16.1 years.

Change in the average age of passenger cars on Ukrainian marketplaces during January-September 2022. Data:

These data indicate that the renewal of the car market has slowed down, and there are fewer "fresh" cars on sale. This phenomenon is directly related to the decrease in the average price of a car, because older cars cost less.

What will happen to the car market next?

Since Ukraine has a high need for mobility and a low level of motorization, our compatriots will continue to buy cars at about the same pace as we see now. As of today, the potential of the Ukrainian market can be estimated at the level of about 100,000 passenger cars per month.

However, mostly buyers will choose to buy a car in Ukraine, and not bring it from abroad. Taking into account the increase in the price of cars in the main foreign markets, the change in the exchange rate and the increase in the cost of delivery, as well as the current system of calculation of customs payments, often the import of a passenger car with mileage simply does not make economic sense. Only some cars under 10 years old, as well as cars belonging to the premium segment, will be brought.

Activation in the sector of "importation" of used cars from abroad is possible only after a change in the current excise tax rates, or, at least as a first step, the introduction of the so-called " customs clearance in a smartphone " using the "Action" application.

As for the domestic market, the economic crisis caused by the war reduces purchasing power. Since most Ukrainians receive income in hryvnia, and prices on the Ukrainian car market are historically formed in US dollars, buying a car is becoming an increasing burden on the family budget. This may prompt individual sellers to lower prices in order to sell the car faster, or, more likely, to delay the sale until better times. Buyers, in turn, will more often pay attention to cheaper options on the market.

Provided the described trends are maintained, the market will continue to "age" — that is, the average age of the active part of the market and, accordingly, the fleet will increase. A decrease in the volume of imports will force sales to close within the country. If the situation does not change, after some time we will see an increase in the prices of cars in the budget segment, which will cause increased demand for them and the lack of alternatives.

A similar phenomenon has already occurred in the recent automotive history of Ukraine, when in order to "support the national manufacturer" imports were actually prohibited. A car bought for, say, $5,000 could be worth the same 10 years from now because its market price has risen in line with demand. In order to prevent such negative phenomena, legislators should review the import conditions, not only of cars, but also of buses and trucks — as experts of the Institute of Auto Market Research have repeatedly emphasized (including quite specific proposals).

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