Why are Tesla cheaper, and where did the shortage of pickups come from? Interview with Hromadske Radio

What is happening on the Ukrainian car market? Stanislav Buchatskyi, head of the Institute of Car Market Research, speaks on Hromadsky radio in the program «On the pulse». Live recording from March 12, 2024.

The following is an abbreviated text version of the conversation in the program «On the pulse» on the air of Hromadske Radio:

• Are Ukrainians really importing used cars more and more recently, but at the same time there are fewer «fresh» models on the market?

In February, Ukrainians registered about 20,000 used cars for the first time. Considering the fact that this month was difficult for those who wanted to buy a car abroad due to the blocking of the border by the so-called «activists» on the Polish side, this indicator is quite good. Compared to previous periods, this is not the best month, but on average about 25 thousand used cars came from abroad in previous months. Before the large-scale invasion began, we were seeing figures of about 50,000 imported cars every month.

• How does this compare to new cars?

If compared with new cars, this indicator is quite significant, because Ukrainians can afford to buy about 5-6 thousand new passenger cars every month. And if we add to this the statistics of sales of used cars in Ukraine, that is, those cars that Ukrainians already buy inside the country, we see that this is an additional 80,000 such transactions every year.

• And what about the import of cars now, given the blockade at the border? Does this process continue if we talk only about the Polish-Ukrainian border?

The main flow of cars, as before, goes through Poland, because from a logistical point of view it is the most convenient. Currently, it is most difficult to carry out transportation by road transporters, since it is cargo traffic that is blocked the most. However, if the car can move under its own power, it is possible to bypass the protesters at some checkpoints and still get into the territory of Ukraine, although it is longer, more difficult and, of course, more expensive.

• Why did people actively buy cars at the beginning of the full-scale invasion, during the period of zero clearance?

The temporary cancellation of customs payments on the import of cars provoked considerable interest among citizens in importing cars. This was due to the temporary nature of this norm, which prompted many to rush to take advantage of the opportunity. During this period, approximately 220,000 cars were imported into the country, which significantly exceeds the current figures, when about 20,000 imported cars are registered every month. The reason for the purchase was not the desire to own a used vehicle, but a more prosaic need to purchase a car at an affordable price in conditions of a limited budget.

Importing a car from abroad provides an opportunity to purchase a car that, although used, is of better quality for the same money. In the context of the general shortage of cars in Ukraine, compared to the situation in European countries, where there are an average of 500-600 cars per thousand people, in Ukraine this indicator is only about 260-270 cars. This indicates an insufficient number of vehicles for the population, which keeps demand at a high level.

Despite the significant increase in car imports during the zero-duty period, car prices do not decrease, which is consistent with the classic law of supply and demand: prices usually do not fall as long as increased demand continues. Ukrainians mainly buy cars worth up to 8-10 thousand dollars, which is more than 70% of all transactions. This demonstrates the limited purchasing power compared to European countries, where the average cost of a car is higher, and there are also available financing programs — lending and leasing.

• Why, despite a significant increase in the number of imported cars during zero customs clearance, the spare parts market does not experience a glut, and the prices of cars and spare parts do not decrease?

As for the spare parts market, imports of used cars have not significantly affected it, as most spare parts must be new anyway. Only a small part of used spare parts can be reused. Cars in Ukraine are often used to the last, including such old models as «Zhiguli» and «Muscovites», which shows the efforts of the population to use the available transport as much as possible.

• On average, how much does the price of imported cars increase after their sale in Ukraine?

Currently, we are observing a very interesting situation, when Tesla cars are becoming cheaper in Ukraine month after month, and the reduction can reach 20-30%. However, it is important to note that the cost of cars after their import into Ukraine is largely formed by customs payments, which can amount to 40-50% of the cost of the car. It is customs payments, and not the dealerʼs or importerʼs earnings, that is the main factor why cars in Ukraine are more expensive than abroad.

At the same time, if we look, for example, at electric cars, because today this is the only category of cars that can be transported to Ukraine practically without paying taxes, because to register an electric car in Ukraine you need to pay only 1 euro for 1 kW of battery, that is up to 100 euros for unit, then the cost of electric cars in Ukraine is approximately equal to the cost of the same brand-model abroad.

That is, probably if we were in the single economic space with the European Union and we did not have these huge taxes on cars, probably the prices of used cars in our country would be about the same as they are in neighboring Poland.

• What cars are most bought by Ukrainians now? Why are gasoline cars preferred?

We see that Ukrainians give the greatest preference to gasoline cars, which make up almost half of all purchases. Diesel cars make up about 27%, electric cars — 16%, and hybrids — only 4%. The main reason for the popularity of gasoline cars is their lower customs clearance costs compared to diesel cars, which are subject to an additional tax estimate. As for preferences, Ukrainians traditionally prefer such models as Volkswagen Golf, Škoda Octavia, and Volkswagen Passat, which are not luxurious, but suitable for daily needs.

• At the beginning of the full-scale war, Ukrainians massively bought used pickup trucks in Europe. Later, other types of cars were needed for the front. Is it really the case that Europe has already run out of such budget cars that an ordinary Ukrainian would pull from his budget? Is it better, perhaps, to search further, not in Europe, but in the same America?

The main advice, proven by time: it is worth buying cars in good condition, and you should not take away a cheap option that requires a lot of investment and is generally not reliable. If it is a car for personal use, someone may like to spend time in services or repair it themselves, and when we are talking about the front, then a second can cost the lives of Ukrainian defenders. It is better to buy one high-quality one than three of the cheapest options.

And then it should be considered specifically from the need. Pickup trucks are a non-mass segment. There are not as many of them in Europe as in America. However, shipping from there takes two to three months and is not cheap. Therefore, it makes sense to bring cars of the more expensive segment from the USA — buying a cheaper one, taking into account the cost of transportation, will turn out to be economically unprofitable.

If we talk about Europe, there are always fewer pickup trucks and SUVs on the market. Therefore, at the beginning of the war, cars were brought en masse also from Britain. For the front, it does not matter whether the steering wheel is on the left or the right, it is quite suitable for combat tasks. The problem is that there are few good options left. Often, the car needs to be restored for another month or two after import. Volunteers are working on it almost around the clock, searching in different markets. It complicates everything when usually the need for such cars is urgent — "for yesterday«.

I know that pickup trucks are already being transported even from the Arab Emirates. This is done by volunteer organizations that aim to provide high-quality transport for special tasks that will not fail at a critical moment.

• The average age of imported used cars in Ukraine is about 9 years. Are such cars still able to serve without significant damage to the environment, against the background of the war and Ukraineʼs ambitions for EU integration?

There are often myths about the European car market, where supposedly old cars are almost «thrown away», but in reality such cars are actively sold and bought in Europe. Not only to Ukraine, but also between such countries as Germany and France, from where cars often end up in Poland. It is important to understand that in EU countries there are no direct restrictions on the use of cars based on age. There are only economic incentives to switch to greener vehicles, for example in France where the government offers substantial support for the purchase of electric vehicles.

In Ukraine, we are trying to stimulate the use of more environmentally friendly vehicles through zero customs clearance on electric cars, which has already led to an increase in their share in imports. This approach, in my opinion, is a step in the right direction.

Control over the technical condition of cars is also an important aspect. It is not the age of the car that is the main factor affecting the ecology, but its technical condition and compliance of the actual emissions with the stated norms. Unfortunately, in Ukraine, this aspect is often neglected, which leads to the interchange of the concepts of «environmental friendliness» and «technical condition». Our task is not only to stimulate the purchase of environmentally friendly cars, but also to ensure effective control over the technical condition of all cars on the roads.

The cancellation of roadworthiness testing in 2011 due to its corruption component was an understanding of the problem, but we must find ways for effective control to ensure road safety and environmental protection. The perspective is to create a system that would take into account not only the age of the car, but also its actual technical condition.

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