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Atypical car market. We are investigating why the volumes in certain segments have increased sharply

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The relatively flat statistical picture of the Ukrainian car market changed in April to an atypical increase in volumes in some of its parts. In May, this process was even more noticeable. First of all, in the segment of resales of passenger cars in the domestic market, domestic resales of electric vehicles have slightly increased (although this should not happen under the current circumstances), a similar situation in the segment of small commercial vehicles (LCV), as well as in the group of trucks.

Studying the market picture in more detail, the IDA experts recorded a rapid increase in volumes in several more segments of the car market. And it is worth talking about them in more detail.

But first, about those parts of the market, the volumes of which have not increased — the import of used vehicles (of all types) and the sale of new ones. Here, the statistical picture is quite normal, with fluctuations in the number of TK from month to month within natural limits. Motorcycles will not be taken into account, since two-wheeler auctions are highly dependent on seasonality (and in some places also the annual climate).

Import of used and sales of new vehicles for 5 months of 2024

Why are these two diagrams shown? They serve as an indicator that there was no growth of the entire car market, in the sense of a real increase in the number of commodity transactions. Because if that were the case, more imported and new cars would be bought.

On the other hand, the re-registration of passenger cars, motorcycles and mopeds (these three categories are taken specifically, as so far only they can be re-registrated in the Diya application) significantly increased in April-May. As in the other segments mentioned at the beginning of the article.

Re-registration of TK in TSC and Diya application

Here is another part of the market — the gift of transport. Even without specifying numerical values, it is clear how much the number of officially donated TK has increased in the 4th and 5th months of the current year. For comparison, three times more TK was donated in May than in the entire past year of 2023.

Dynamics of TK donation for 5 months of 2024

Next, we should examine a rather specific service provided by the TCS of the Ministry of Internal Affairs — the removal of a vehicle from the register in connection with its elimination. This operation is mostly ordered when the car can no longer perform its functions due to old age and complete loss of resource reserve, or was destroyed in a road accident or as a result of other reasons (fire, flood, explosion, etc.).

However, despite the fact that this service actually has nothing to do with resale or gifting, its order volumes have also increased in sync with the ones we are looking at here.

The number of scrapped vehicles for 5 months of 2024

So what is the reason? It is here alone, common, and was already announced earlier by the analysts of the Institute of Car Market Research — the entry into force of the new law on mobilization, which provides for the possibility of seizing vehicles for defense needs from those owners who have more than one car.

Accordingly, this caused a massive influx of car owners to the territorial service centers of the Ministry of Internal Affairs (and a more active use of car sales in the Diya application) to reissue their TK to other persons (mostly family or family members) in order to eventually have no more than one vehicle registered to them means.

Regarding donation, this method is used as an alternative to re-registration (resale) to a new owner. Under certain conditions (defined by the Tax Code, Article 174), in the case of using a gift, the tax (which is levied upon the sale of the second or more vehicles during the year) is not applied.

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The question of culling requires a separate comment — why are car owners worried about non-working cars and are in a hurry to remove them from the register? First of all, for the same reason that prompts reissuance of TK for other persons — so as not to have two or more TK registered for yourself.

Another reason for the popularity of culling is old sales "by proxy" or by transfer of a registration certificate. The car could change a certain number of owners, but it legally belongs to the person whose last name is indicated in the SPR. Accordingly, this makes it difficult to reach the "1 TK per 1 person" format. Therefore, part of such legal (but no longer actual) owners, especially those who have lost contact with the actual owner, or have them, but he refuses to register the car for himself, apply culling.

One paragraph in the law — and thousands of "rewritten", donated and deregistered cars forever.

At the same time, according to the experts of the Auto Market Research Institute, the actual volume of the market has not increased — because there are no prerequisites (end of the war, demobilization, increase in the purchasing power of citizens, decrease in the exchange rate, etc.) for this to happen. And even vice versa — there are a number of factors that inhibit the development of the Ukrainian car market. Both external and internal, which limit or make certain operations economically impractical. As for the statistics, we will see them in their "pure" form, most likely, after the agitation with the re-registration of the "extra" transport is over, probably in the coming months.

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