Ukrainian car market: what influenced in 2022 and what to expect in 2023? Forecast of experts

Analytics 12 December, 2022

The difficult year 2022 is coming to an end, in which many events took place that could not but affect all areas of our lives. Experts of the Institute of Car Market Research determined what happened on the market in 2022 and made a forecast for the next year, 2023.

From the beginning of the year to December 1, Ukrainians bought 642,300 cars with mileage on the domestic market, another 378,000 were brought in used from abroad. Thus, the projected volume of the market by the end of the year will amount to more than 1.1 million deals for the purchase and sale of used cars: almost 700,000 within the country, and more than 400 — imported.

What and how affected the car market in 2022?

The Ukrainian car market in 2022 and the events affecting it

At the beginning of 2022, the quarantine was still going on. Its consequences were an economic crisis and a shortage of cars abroad.
The beginning of a full-scale invasion. During a threat, the first priority is to save yourself and your family, not to buy a new car. However, we saw that mobility in such a situation is extremely important. Therefore, even then, Ukrainians bought cars to take themselves and their loved ones to a safe place. But deals were made faster then, because there was no time to choose a car for a long time, and they bought any car in a "starts and drives" condition. And this despite the fact that the work of service centers of the Ministry of Internal Affairs was temporarily stopped. More than 1 million cars left the active part of the market, a large part went abroad.
Stoppage of work of sea ports. The number of cars from America decreased, delivery became more difficult and more expensive, but in the end the situation stabilized, new logistics routes through European ports were established. Thus, at the beginning of the year, four of the ten most popular checkpoints were ports, and already in the middle of the year they were checkpoints on the western border. In general, during 2022, the "Americans" managed to almost disappear from the Ukrainian car market and return there again, restoring their previous positions.
Exchange rate change (twice during the year). Since most Ukrainians receive income in hryvnias, and car prices have hardly changed, cars have become less affordable because purchasing power has decreased. That is, for the same money in hryvnia equivalent, Ukrainians can now buy a worse car.
Introduction of zero customs clearance. Such a decision made it possible to restore activity on the car market and satisfy the need for cars of the most affordable and popular category of cars (costing up to $5,000). During the three months of the lawʼs effect, the Ukrainian car fleet was replenished by more than 200,000 cars, of which 78% were in the customs value range of up to $5,000.
Fuel crisis. The shortage of fuel and its price increase have increased interest in electric cars and reduced interest in diesel cars. Buying cars with HBO has become less profitable. However, after the problems with fuel were solved, Ukrainians did not become less interested in cars — despite the fact that driving a car became more expensive due to the increase in the price of all types of fuel.
Cancellation of "zero" customs clearance. The return of customs payments on car imports reduced the volume of car imports from abroad by 7 times. However, since the interest in cars in Ukraine is high, buyers satisfy this need by buying cars on the domestic market. Its share increased from 58.9% in November 2021 to 81.5% in November 2022, and the share of imports decreased accordingly from 41.1% to 18.5%.
Shortage of cars abroad. This process has been ongoing since the start of the coronavirus pandemic in 2020. There are simply not enough cars due to the stoppage of production of new cars. In order not to wait several months for a new passenger car, a large part of Europeans began to prefer used cars, choosing mobility "today for today". As a result, used cars abroad become more expensive and, accordingly, become less affordable for Ukrainians who want to buy a car there. Along with the return of rather high customs payments, which are calculated in foreign currency, certain models of cars with mileage may cost less in Ukraine than abroad. A similar process is taking place in Ukraine: sales of "almost new" cars up to 3 years old have exceeded sales of new passenger cars.
Peak sales of truck tractors. Due to the change in logistics routes, the absolute majority of goods are transported by road transport — both in import and export. Due to the high demand for such transportation in Ukraine, there was a shortage of such vehicles: the fleet that was in Ukraine was not enough. This caused an active increase in the import of used tractor units from abroad and their semi-trailers.
Russian terrorist attacks on the energy infrastructure of Ukraine. In spite of the regular massive rocket attacks aimed at plunging our country into darkness and cold and the resulting blackouts, Ukrainians continue to buy cars, both new and used. But they even continue to buy electric cars.
Changing the car re-registration algorithm : the possibility to do it in a smartphone through Diya. With a significant number of restrictions (only for individuals, passenger cars and motorcycles), but this is the first step in the digitalization of the automotive market. In addition, an expert examination became mandatory when the car owner changed, but it was "unlinked" from the service centers of the Ministry of Internal Affairs — from now on, it can be done in any region, regardless of where you plan to register the vehicle later.

And in general, the main achievement of 2022: no matter what, we live, the economy works. On all graphs of activities on the car market, we see not zeros — and this is already a big victory. Car businesses are working, paying taxes, saving jobs. We are united and working for the Great Victory.

What to expect on the car market in 2023?

The most important dream for all of us is Victory as soon as possible. Regarding forecasts for the car market, it is extremely difficult to make them in conditions of uncertainty. Most of the processes will directly depend on the situation at the front, and as a result — on the general state of the economy.

If the situation is more or less stable, we can predict the following trends in the Ukrainian car market in 2023 (realistic scenario):

Depending on the electricity situation in the country, the monthly volume of the secondary car market can be from 50 to 100 thousand sales transactions. If there are no changes in the tax legislation regarding the import of cars, most of them ( 70-80% ) will be bought on the domestic market.
10,000-20,000 cars a month will be imported from abroad. This number can increase only in the event of a decrease in the rates of customs payments. Depending on their size, imports can be as high as 50,000 or even more cars with mileage per month (the average figure before the start of a full-scale invasion).
The main suppliers of used cars will remain the countries of the European Union. The share of cars from America will be fixed at the "pre-war" level — 25-35% of the total number, but their average cost will be higher, and they will bring mainly cars under 5 years old.
The new car market will grow more slowly. Sales volumes can be from 3 to 5 thousand new cars per month. Their increase will directly depend on the availability of financial support programs — lending and leasing on favorable terms.
When choosing a new car, Ukrainians will continue to prefer universal crossovers, but the presence of the car in the cabin will be decisive. The segment of "almost new" cars will continue to actively compete with new cars.
The hidden potential of the Ukrainian car market in regions where activity has decreased as a result of military operations. The fact that even in difficult times for these regions, Ukrainians conclude sales agreements gives hope. Thus, from the beginning of the full-scale invasion until December 1, Service centers registered: in the Donetsk region — 939 resales, 64 pcs. used "freshly driven" passenger cars and 7 new ones; in Luhansk region — 1,573 resales, 476 "freshly introduced" and 15 new ones; in the Kherson region — 1,253 resales, 458 "newly acquired" and 35 new ones. Of course, during the recovery of these and other affected regions, the need for vehicles will be high.
The need for commercial equipment will grow, because these categories of transport are necessary for the reconstruction of the country. However, the growth of this segment will not be high — the purchasing power of Ukrainians is low, and the current rules for importing such used cars from abroad make the import economically unprofitable.
As for car prices, there are still no reasons for significant price fluctuations on the market. However, there are many external factors that have a direct impact on the market — fuel prices and availability, foreign exchange rates, or even the operation of public transport.
Car re-registration in "Dia" can expand to other categories of vehicles and work for legal entities. At the same time, there is a good chance that the promised "smartphone customs clearance" will be implemented. This will require changes in the rates of customs payments, a vote in the Parliament and the signature of the President. However, the process continues, and this gives hope for positive changes next year. This may also entail customs reform in the field of import of used cars.
Since the choice of a car depends, first of all, on the purchasing power, which is unlikely to increase in 2023, most of the used cars will be bought in the usual price structure — at a cost of $2-5 thousand.
Theoretically, after the increase in fuel prices and daily traffic jams, which are by no means decreasing, buyers should reorient themselves to compact city cars, as it once happened in Western Europe. However, in practice, our motorists still gravitate towards cars of the highest class, including premium brands of "aged" ones. Considering the double gap in the number of used Volkswagens on the market, it will take more than one year for the leader of our "Tuesday" to change. Therefore , it is hardly worth expecting a radical change in the interests of Ukrainian buyers for used cars with internal combustion engines.
As for models, the standard "top" of popular used cars on the market will remain almost unchanged. Cars of Russian-Soviet and Ukrainian production will lose some ground in the domestic market, and they will gradually be replaced by used cars from abroad.
After the stabilization of electricity supply, a "second breath" will open in the segment of electric vehicles. After the establishment of the delivery of cars from Korea, the market will be more actively replenished with "gas" cars (such as the Hyundai Sonata LPI), of which 50-70 units are currently arriving. in a month, 500-700 cars are needed, which are very fond of taxi fleets.
Taking into account the extremely low (for Europe) level of motorization in Ukraine, which is approximately 260 cars per 1,000 population (with an average figure in the EU of 600 cars/1,000 citizens), the potential demand for cars of all segments will remain high for quite some time.

Each day brings us one day closer to Victory. We hope that the car market will remain in balance and we will not witness any sudden forced changes caused by external factors, and in 2023 we will only work on the reconstruction and development of our country. And a free Ukraine will develop — the economy will develop, and the automobile market along with it.

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