Why can cars from abroad become more expensive?
In July, Germany sold 25% fewer new cars than in the same month in 2020. We tell you why this could lead to higher car prices in Ukraine.
WHATʼS IN THE NEIGHBORS
According to autonews.com, 236,000 new cars were sold in Germany in July. This is a fairly low figure for the largest car market in the European Union. This situation is due to problems in the supply of components for the manufacture of cars. In particular, microprocessors and batteries, which automakers buy in Asia to reduce the final cost of the car.
In neighboring Poland, there was also a decline in sales of new cars by 10% compared to July 2020, according to samar.pl. In total, during the second month of July, the Poles bought almost 39,000 new cars. Of course, this also affected the import and sale of used cars. After all, in order for a car to appear on the secondary market, ie it is sold second-hand, it is necessary to replace it with a new car. There are no sales of new cars — sales of used ones are decreasing. As the demand for cars does not decrease, and their number on the market is insufficient — the price increases.
According to AAA AUTO, 204.5 thousand car sales ads appeared in Poland in July. This is 15.6 thousand less than in June. The market of used cars in Poland is declining, and the average price of used cars is rising. Today it is 20,900 Polish zlotys (about $ 5,375).
According to samar.pl, in July in Poland recorded the lowest monthly number of imported used cars from other countries since 2014 — 82.5 thousand. The general trend of the European car market in July is a decline in sales of both new and used cars.
AND WHAT IN UKRAINE?
In July, two car records were set : the most imported cars in the month of February 2019, and new ones in January 2014. More than 90% of the car market in Ukraine is used cars.
- The level of motorization in Ukraine is more than twice lower than the European average: 250 cars per 1,000 people against 600 cars per thousand population;
- Ukraine does not produce enough cars. In July, there were just over 1,000 such cars. All — by SKD method ;
- Due to the low level of the economy, Ukrainians have low purchasing power. According to experts from the Institute of Car Market Research, 60% of sales in Ukraine are used cars worth 2-10 thousand dollars;
- There is a shortage of cars in the domestic market, there is a shortage. Demand is met by imports of used cars from abroad.
In July, imports of cars with mileage amounted to 40% of the total number of purchased cars during the month. In the analysis of the secondary car market, experts have proved that with the increase in imports, the number of domestic sales increases. The Ukrainian car market and its prices depend on the import of used cars from abroad.
WHAT CAN HAPPEN?
Cars with mileage in the European Union may become more expensive. Factories will produce fewer new cars, so fewer cars will enter the secondary market. Demand for cars will remain the same as there is a need for mobility. In the context of the COVID-19 pandemic, the desire to travel individually, rather than on public transport, may increase. More Europeans will prefer to buy a used car.
There may be fewer cars to export to Ukraine. Consequently, their price will increase. To reduce the cost of cars in Ukraine, cars with high mileage or hidden defects in technical condition can be used. For example, victims of recent floods in Europe.
Thus, the temporary shutdown of automobile plants in the world and the COVID-19 pandemic may lead to higher prices for used cars in Ukraine and deterioration of the quality of imported cars.