The year 2023, which is only days away, has passed under the official status of martial law. In practice, this is the biggest possible stress test for any field of activity, including the auto business. Which continues for the second year.
At the same time, unlike 2022, this year there were not a significant number of changing external factors — the tax legislation related to the automobile segment remained unchanged, the exchange rate of foreign currencies fluctuated within relatively small limits, all other rules regarding the import, operation or resale of motor vehicles remained without changes
From this list, you can single out only fuel, or rather, its prices. Which have gradually decreased since the beginning of the year, approximately from UAH 52/l for A-95 gasoline, the price of which dropped to UAH 44/l in the summer (the average value for Ukrainian gas stations), and then began to rise again to about UAH 55/l, after which, closer to the beginning of winter, again decreased somewhat, to the mark of UAH 52/l. The prices for other types of liquid automotive fuel changed in approximately the same way.
Instead, the liquefied propane-butane mixture, after the lowest summer figure of 21 hryvnias/l, jumped sharply to 37 hryvnias/l in the winter, after which prices for LPG decreased slightly, until 32...33 hryvnias/l, and further fuel market experts predict a further decrease in the price of "autogas" to about UAH 30/l. While this did not affect the car market too much, the volume of installations of gas cylinder equipment decreased somewhat (by 18%).
Also, although it may sound somewhat paradoxical, the absence of bombings of the Ukrainian energy system contributes to the growth of trading volumes in the segment of electric vehicles. Contrary to mass reports from the authorities and the media, that with the onset of cold weather one should prepare for a repeat of last yearʼs "blackouts", fortunately, these warnings remained only warnings. We hope it will continue to be so.
Before moving on to part of the segment forecasts, we should note that last yearʼs forecast from IDA experts turned out to be quite true. Not implemented (however, it definitely did not depend on the Institute for Car Market Research) — only customs clearance and re-registration of cars in Diya (re-registration was launched, but it is unlikely to affect the market in less than 2 weeks), most other points can be done in practice copy and submit as summaries of the passing year.
What to expect on the car market in 2024?
Each forecast is more accurate the fewer "if" conditions it contains. We undoubtedly believe in our Victory, and, like all Ukrainians, we hope that it will come as soon as possible. And then we will create a separate detailed forecast for each of the segments, based on all the data available at that time. In the same publication, we will describe the vision of the car market in the next year, provided it remains in the current conditions, with a minimum number of "ifs".
Passenger car segment
The secondary market during 2023 showed an average monthly volume of 80 thousand resales per month, with some fluctuations throughout the year, and a slow decrease in volumes closer to winter. Next year, we should expect similar quantitative results for domestic sales transactions. The driver of the growth of this segment could be the import of cars, if it grows. Usually, every additional 10% of import volume creates +2% of volume in the secondary market. The monthly volume of the secondary market should be expected at the level of about 100,000 transactions.
Imports grew slowly but surely. The lack of cars on the domestic market creates an increasing pent-up demand for "freshly driven" passenger cars. Every month this year, on average, the Ukrainian car fleet was replenished by 18,000 cars with mileage, with a gradual increase in this volume to 23,500/month. at the end of the year. This gives reason to believe that this trend will continue next year, and the number of newly arrived used cars will continue to grow. Mainly from Europe, since significantly fewer passenger cars arrive from American countries (20-25%), and the average price of cars imported from the USA is twice as high as before the war (about $20k). The total potential of this sector, subject to relaxation of tax conditions, is up to 50,000 cars/month. Without it — up to 35 thousand cars/month.
New cars. The initiative in this segment is increasingly seized by independent dealers, forming a rather noticeable subclass of "almost new cars" — that is, actually new, but according to the rules used, because they had registration in the country of departure (most often — in China). The leader of the segment of new passenger cars was the Volkswagen ID.4 electric crossover, 99% of which were relocated from the Chinese market. Instead, the official dealers of the mentioned brand limited themselves to a text remark about the impracticality of buying such cars, but did not offer their own alternative adapted for the Ukrainian market.
An average of 5,000 first registrations of new cars took place every month this year. During the year, this number changed noticeably — from 3,200 to 6,000, and we note once again that while there is a shortage of cars at official dealers, independents manage to satisfy demand with other options, including importing cars for other markets. Probably, if the "officials" do not show more flexibility and intelligence, we will continue to record an increase in the share of cars relocated from China, and an increase in the activity of independent dealers. At the same time, since the majority of such purchases are made for the full amount and without additional financing, we should expect similar trading volumes to those observed this year, perhaps with a slight increase.
The drivers of sales growth here can be financing and economic growth. It is clear that everything has its limits of influence, so the market potential of new passenger cars sold by official dealers next year can be predicted up to 8 thousand/month. About the same amount, or 5-15% more, will be sold by independent multi-brand importers.
Electric cars
Although many models are variations of similar models with internal combustion engines, we will still single out this segment for a separate review. In 2023, this segment (in general, including new and used electric cars) grew steadily and significantly. However, the closer to the end of the year, the smaller the difference between the next and previous month became.
We would like to remind you that due to the current development of the charging infrastructure — the uneven location of the stations, the variety of standards (connectors) and electric vehicle operators, owners of electric cars are most often focused on the presence of a connection point at home. The number of such buyers is limited — you need to have an electrified garage or a private house. Or to arrange a "private" EMS (with a "reserved" parking space) in the yard of a high-rise building, which is quite difficult.
An increase in the supply of electric vehicles and some price reductions in the segment have a positive effect on its development. On the other hand, the lack of buyers with "own outlet" is a factor limiting the growth of volumes in this part of the market. Both new and used electric vehicle purchases are likely to continue to increase next year, but we will gradually see a saturation point and transition from steady growth to fluctuating in a range close to monthly averages.
An increase in the choice of electric cars abroad, a decrease in their prices, as well as a desire to save on expensive fuel will contribute to the growth of the sector. The segmentʼs potential for 2024 is a total of about 8-9 thousand passenger electric cars per month.
The volume of electric trucks is not expected to increase — for this, in principle, a suitable offer should appear on the market, which is currently extremely limited, and the second factor — customs clearance of these cars takes place without benefits, accordingly, interest in them is not high.
Segment of small commercial transport
In 2023, the demand for cars of the LCV group grew quite confidently. Businesses are likely to show the same practical interest in small cars next year. Especially since road transport is currently the most affordable and flexible. The total volume of the segment will be more than 5,000 cars per month.
Most will be imported used from abroad, up to 5 years old, unless the customs clearance (excise) conditions change. The demand is there and it will grow, but it will not always be covered by the financial capabilities of entrepreneurs.
Also, cars, which are often assigned to the unofficial groups of "medium distance" or "last mile delivery", this year proved to be quite confident "long haulers" — when Polish "activists" blocked the border, "beads" remained almost the only option for delivering goods. while large "trucks" stood in artificially created queues.
Truck groups >3.5 t
The Ukrainian fleet of trucks with a gross weight of more than 3,500 kg is quite diverse — it consists of relatively new trucks of well-known global manufacturers, and morally and physically outdated models of the Soviet automobile industry. It is the second part, which for the most part, due to its condition, is no longer able to perform the transport function reliably enough, is subject to gradual replacement, which should become the driving force of the segment.
However, this growth is hampered by low purchasing power and high excise duty on the import of such cars older than 5 years. To sum up, in 2024, the most likely (for the secondary market) is a repetition of the statistical picture of 2023: first, a decrease in the volume of trades, then, with the onset of seasonal agricultural work and an increase in the activity of builders, some intensification of trades in the segment.
New trucks of this group will be bought in smaller volumes, primarily due to the complete withdrawal from the market of products of Russian origin, on the chassis of which various special equipment was created, accordingly, these enterprises replaced the machine sets in their lists with those produced in Europe, China, Korea, India, etc., which dragged price increase for final products with Ukrainian VIN codes. Up to 40% in the segment of new trucks will be occupied by products based on Chinese and Indian (or similar) chassis.
Tractor units
During 2023, it was only possible to state a gradual decrease in the volumes of "trucks" purchased by Ukrainian carriers. Most of all, this is explained by the saturation of the parks with the necessary equipment, the sharp growth of which was a year earlier, when the turnover of cargo through air and sea transport stopped, as well as when the railway received general cargo with restrictions.
The blocking of the Ukrainian-Polish border by the so-called "activists" will further affect the demand for mainline tractors, because many carriers suffered (and continue to suffer) unforeseen and unjustified losses from this "action".
Accordingly, in 2024, a further slight decrease in the volume of purchased truck tractors is predicted. The majority in the segment will be used tractors from abroad. The peak of the segment was passed in 2022, now we should expect a volume of 1.5 to 2.5 thousand "trucks" per month.
Buses
This year there was an increase in the total volume of purchased buses of all types, with its quantitative fixation at the beginning of autumn. The further development of events in the segment will depend on the announcement of tenders for domestic or interregional transportation by the relevant authorities, this primarily concerns buses of local production.
As for large-capacity vehicles for long-distance transportation, the theoretical demand for them will remain until civil aviation operates, but carriers are cautious about buying tourist-class buses, since their price is quite high, and in case of a drop in passenger traffic on regular international transportation, in which they are involved now, on irregular tourist orders of this class (and price), cars are not too profitable.
To sum up, next year the total volume of trades in this segment should be expected at approximately the same level as now — 500...1000 buses every month, with the advantage of the secondary market and a slight replenishment of the fleet with newly arrived imported used or new locally produced buses.
Motorcycles
This part of the market is quite specific, with a significant shadow share. At the same time, based only on available official data, the number of purchased motorcycles is increasing every year. These are mostly Chinese-made affordable two-wheeled vehicles, which allow residents of villages and small settlements, where there is no internal public transport, or its frequency is insufficient, to maintain mobility. Probably, in 2024, we should expect a total volume of more than 60 thousand purchased motorcycles of all types.
We reviewed the main segments of the Ukrainian car market and made a forecast for each of them for the next year, assuming no change (or minor changes) in external factors that have a direct impact on the car market. And we will remind you once again that we are ready to immediately publish a new forecast (or even rather an economic calculation) as soon as martial law is lifted and our Victory comes, which, we hope, is close.
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