In Germany, the share of companies in the trade of used cars is more than 70%, in Poland — at least 20%. In Ukraine, according to official statistics, in 2022 only 2.6% of cars were bought by legal entities, but in practice we see many sales platforms on the streets and their number is growing. Such companies actually trade cars with mileage, but they do not appear in official statistics. Why does this happen? Who is really selling cars, what is the difference between official statistics and reality, and what can change? Experts of the Institute of Car Market Research, together with analysts of YouControl.Market and Automoto.ua , analyzed data sets and found answers.
In a large study, experts found that the segment of domestic resale of used cars in Ukraine is in the shadows. According to the estimates of the experts of the Institute of Car Market Research, the real share of deals carried out by the auto business can be up to 40%-50% of the total number.
What are the volumes of auto business in Ukraine?
In 2022, Ukrainians purchased 100.7 thousand new cars: 71.3% were imported from abroad (71.8 thousand), another 28.7% were manufactured or converted in Ukraine (28.9 thousand). There are networks of official importers and dealers who sell new cars and report on their activities. In general, this segment is quite transparent and clear, unlike sales of cars with mileage.
Last year in Ukraine, almost 1.3 million transactions for the purchase and sale of vehicles with mileage were registered. Of these, 36.3% were registered for the first time after import from abroad (463.1 thousand), and 63.7% (811 thousand) were domestic resales.
If we analyze the place of conclusion of the contract, in only 66.8% of cases it was done in Service Centers of the Ministry of Internal Affairs, where such a service is provided free of charge to individuals. Therefore, most likely, most of them are direct sales from the previous owner to a new one, which is a real share of sales of ordinary citizens who sell their own cars once every few years.
At the same time , 32.8% of deals were concluded on commission platforms. This is due to the complexity of bureaucratic procedures. The sphere of import of used cars is more transparent: almost half ( 49% ) are officially imported by legal entities.
How much tax did car dealers pay?
In Ukraine, out of more than 5,300 active companies registered under KVEDs trade in cars and passenger vehicles, as well as trade in other motor vehicles, only about 1,300 submitted reports on their activities in 2022. The largest number of such companies are in Kyiv and the region, and they paid the most taxes on profits in 2022.
In general, in 2022, auto-trader companies reported 5.6 billion hryvnias of net profit, from which they should have paid more than a billion hryvnias in taxes.
The rankings of the regions by the number of registered auto traders and their shares in revenues do not coincide with the number of registration operations of different types of cars in the regions.
Who officially trades motor vehicles?
Most of the auto traders in the top 100 most active by net income in 2022 are official importers or dealers of new cars. The list includes only 7 companies that can potentially sell used cars, 6 of them are located in the Volyn region and, most likely, are engaged in the import of used cars from abroad, and not domestic resale.
Who then sells used cars?
Every month, used car dealers publish more than 30,000 ads on the Internet, which is 12.5% of the total number. In the top 15 sellers of used cars on the Internet, only two organizations entered the rating of the largest auto traders by net income. Some of the used car dealers either do not have a registered legal entity at all, or operate under another legal entity, or under a different trademark (not always registered in accordance with current legislation).
What to do with it?
The solution may be the adoption of draft law # 9083. It will allow companies that have the appropriate economic activity code and are registered with the Main Service Center of the Ministry of Internal Affairs not to register cars for themselves if they are purchased for further resale. It will be possible to account for them precisely as goods, and not as fixed assets of the company. This will reduce the bureaucratic burden on car dealers, optimize the work of Service Centers of the Ministry of Internal Affairs, and also relieve the unnecessary burden of TCC and SP. In this way, buyers get more opportunities to protect their rights as consumers, and more than 2,000 car dealers, who are currently in the shadows, will be able to move into the legal field, conduct buying and selling operations officially, reporting profits and paying appropriate taxes. According to the experts of the Auto Market Research Institute, we are talking about more than 260 million hryvnias of additional direct revenues to the state budget only from the payment of income tax every year.
